0001646383-15-000005.txt : 20150710 0001646383-15-000005.hdr.sgml : 20150710 20150710172930 ACCESSION NUMBER: 0001646383-15-000005 CONFORMED SUBMISSION TYPE: 10-12B PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20150710 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Computer Sciences Government Services Inc. CENTRAL INDEX KEY: 0001646383 IRS NUMBER: 474310550 STATE OF INCORPORATION: NV FISCAL YEAR END: 0401 FILING VALUES: FORM TYPE: 10-12B SEC ACT: 1934 Act SEC FILE NUMBER: 001-37494 FILM NUMBER: 15984388 BUSINESS ADDRESS: STREET 1: 3170 FAIRVIEW PARK DRIVE CITY: FALLS CHURCH STATE: VA ZIP: 22042 BUSINESS PHONE: (703) 876-1000 MAIL ADDRESS: STREET 1: 3170 FAIRVIEW PARK DRIVE CITY: FALLS CHURCH STATE: VA ZIP: 22042 10-12B 1 csgsform10.htm 10-12B Form 10
As filed with the Securities and Exchange Commission on July 10, 2015
File No.
 
 
 


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

______________________

Form 10
_____________________

GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g)
OF THE SECURITIES EXCHANGE ACT OF 1934
_____________________
Computer Sciences Government Services Inc.
(Exact name of registrant as specified in its charter)
______________________

Nevada
47-4310550
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification Number)

3170 Fairview Park Drive
 
Falls Church, Virginia
22042
(Address of Principal Executive Offices)
(Zip Code)

Registrant’s telephone number, including area code:
703-641-3000
____________________________________
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class to be so Registered
 
Name of Each Exchange on
Which Each Class is to be Registered
Common Stock, par value $0.001
 
 
Securities to be registered pursuant to Section 12(g) of the Act:
None.
____________________________________
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
¨
Accelerated filer
¨
Non-accelerated filer
x (Do not check if a smaller reporting company)
Smaller reporting company
¨

 
 
 

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Computer Sciences Government Services Inc.
Information Required in Registration Statement
Cross-Reference Sheet Between the Information Statement and Items of Form 10

This Registration Statement on Form 10 incorporates by reference information contained in our Information Statement filed as Exhibit 99.1 to this Form 10. For your convenience, we have provided below a cross-reference sheet identifying where the items required by Form 10 can be found in the Information Statement.
Item No.
 
Caption
 
Location in Information Statement
1.
 
Business
 
See “Summary,” “Risk Factors,” “Cautionary Statement Concerning Forward-Looking Statements,” “The Spin-Off,” “Capitalization,” “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Where You Can Find More Information”
1A.
 
Risk Factors
 
See “Risk Factors” and “Cautionary Statement Concerning Forward-Looking Statements”
2.
 
Financial Information
 
See “Summary,” “Risk Factors,” “Capitalization,” “Selected Historical Combined Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
3.
 
Properties
 
See “Business—Properties”
4.
 
Security Ownership of Certain Beneficial Owners and Management
 
See “Security Ownership of Certain Beneficial Owners and Management”
5.
 
Directors and Executive Officers
 
See “Management”
6.
 
Executive Compensation
 
See “Management” and “Executive Compensation”
7.
 
Certain Relationships and Related Transactions, and Director Independence
 
See “Risk Factors,” “Management” and “Certain Relationships and Related Party Transactions”
8.
 
Legal Proceedings
 
See “Business—Legal Proceedings”
9.
 
Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters
 
See “The Spin-Off,” “Dividend Policy,” “Security Ownership of Certain Beneficial Owners and Management” and “Description of Our Capital Stock”
10.
 
Recent Sales of Unregistered Securities
 
See “Description of Our Capital Stock”
11.
 
Description of Registrant’s Securities to be Registered
 
See “Description of Our Capital Stock”

    
 
 
 

2

 
 
 

12.
 
Indemnification of Directors and Officers
 
See “Description of Our Capital Stock” and “Certain Relationships and Related Party Transactions—Agreements with CSC—Master Separation and Distribution Agreement”
13.
 
Financial Statements and Supplementary Data

 
See “Summary,” “Selected Historical Combined Financial Data” and “Index to Financial Statements” and the financial statements referenced therein
14.
 
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 
None
15.
 
Financial Statements and Exhibits
 
(a) Financial Statements
See “Index to Financial Statements” and the financial statements referenced therein
 
 
 
 
(b) Exhibits
 
 
 
 
See below

    
 
 
 

3

 
 
 

The following documents are filed as exhibits hereto:
Exhibit Number
 
Exhibit Description
2.1
 
Form of Master Separation and Distribution Agreement between CSC and Computer Sciences Government Services Inc.*
3.1
 
Form of Amended and Restated Articles of Incorporation of Computer Sciences Government Services Inc.
3.2
 
Form of Amended and Restated Bylaws of Computer Sciences Government Services Inc.
10.1
 
Form of Transition Services Agreement between CSC and Computer Sciences Government Services Inc.*
10.2
 
Form of Tax Matters Agreement between CSC and Computer Sciences Government Services Inc.*
10.3
 
Form of Employee Matters Agreement between CSC. and Computer Sciences Government Services Inc.*
10.4
 
Form of Real Estate Matters Agreement between CSC and Computer Sciences Government Services Inc.*
10.5
 
Form of IP Matters Agreement between CSC and Computer Sciences Government Services Inc.*
10.6
 
Form of Non-competition Agreement between CSC and Computer Sciences Government Services Inc.*
10.7
 
Form of Exclusive Non-U.S. Agency Agreement between CSC and Computer Sciences Government Services Inc.*
21.1
 
List of subsidiaries of Computer Sciences Government Services Inc.*
99.1
 
Preliminary Information Statement of Computer Sciences Government Services Inc., subject to completion, dated July 10, 2015
* To be filed by amendment.


    
 
 
 

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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this Registration Statement on Form 10 to be signed on its behalf by the undersigned, thereunto duly authorized.

COMPUTER SCIENCES GOVERNMENT SERVICES INC.


By:         /s/  Lawrence B. Prior III                                        
      Name: Lawrence B. Prior III
      Title: President and Chief Executive Officer


Dated: July 10, 2015

    
 
 
 

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EXHIBIT INDEX
Exhibit Number
 
Exhibit Description
2.1
 
Form of Master Separation and Distribution Agreement between CSC and Computer Sciences Government Services Inc.*
3.1
 
Form of Amended and Restated Articles of Incorporation of Computer Sciences Government Services Inc.
3.2
 
Form of Amended and Restated Bylaws of Computer Sciences Government Services Inc.
10.1
 
Form of Transition Services Agreement between CSC and Computer Sciences Government Services Inc.*
10.2
 
Form of Tax Matters Agreement between CSC and Computer Sciences Government Services Inc.*
10.3
 
Form of Employee Matters Agreement between CSC and Computer Sciences Government Services Inc.*
10.4
 
Form of Real Estate Matters Agreement between CSC and Computer Sciences Government Services Inc.*
10.5
 
Form of IP Matters Agreement between CSC and Computer Sciences Government Services Inc.*
10.6
 
Form of Non-competition Agreement between CSC and Computer Sciences Government Services Inc.*
10.7
 
Form of Exclusive Non-U.S. Agency Agreement between CSC and Computer Sciences Government Services Inc.*
21.1
 
List of subsidiaries of Computer Sciences Government Services Inc.*
99.1
 
Preliminary Information Statement of Computer Sciences Government Services Inc., subject to completion, dated July 10, 2015
* To be filed by amendment.



    
 
 
 

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EX-3.1 2 exhibit31amendedandrestate.htm EXHIBIT 3.1 Exhibit 3.1 Amended and Restated Articles of Incorporation

Exhibit 3.1



AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
COMPUTER SCIENCES GOVERNMENT SERVICES INC.


ARTICLE 1
NAME

The name of the Corporation is Computer Sciences Government Services Inc.

ARTICLE 2
PURPOSE

The nature of the business, or objects or purposes to be transacted, promoted or carried on are:

To engage in the business of selling computer machine time, computer programming services, mathematical and other related problem analysis, training in the use and application of computers, operation of computer centers and consulting service on matters relating to computer technology, associated analysis and related matters.

To engage in any other technical business whatsoever, and in connection therewith to manufacture, assemble, lease and sell technical equipment, supplies and other personal property.

To acquire, use, mortgage or otherwise encumber, sell or otherwise dispose of real and personal property of every kind and character, or any right or interest therein.

To acquire, use, deal in and with, to accept and grant licenses in respect to, pledge or otherwise encumber, sell or otherwise dispose of, trade names, trade marks, inventions, formulae, improvements and processes, of any nature whatsoever, copyrights, patent rights and letters patent, or any interest therein, of the United States and all foreign countries.

To acquire the whole or any part of, or any interest in, the good will and assets, and to undertake to assume the obligations or liabilities of, any person, firm, association or corporation engaged in a business or enterprise in which this corporation may lawfully engage.

To purchase or otherwise acquire, pledge or otherwise encumber, sell or otherwise dispose of, shares of the capital stock of, or any bonds, securities or evidences of indebtedness created by, any other corporation or association organized under the laws of this State or any other state, country, nation or government, and while the owner thereof to exercise all the rights, powers and privileges of ownership.

To promote or to aid in any manner, financially or otherwise, any person, corporation or association; and for this purpose to guarantee or become a surety upon the contracts, dividends, stocks, bonds, notes or other obligations of such person, corporation, or association; and to do any other act or thing designed to protect, preserve, improve or enhance the value of the stocks, bonds or other obligations or securities of such person, corporation or association.

To become a member of any partnership or joint venture and to enter into any lawful arrangements for sharing profits and/or losses, union of interests, reciprocal concessions or cooperation with any corporation, association, partnership, syndicate, person, governmental, municipal or public authority, domestic or foreign, in the carrying on of any business which this corporation is authorized to carry on, or any business or transaction deemed necessary, convenient or incidental to carrying out any of the purposes of this corporation.


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To borrow money and contract debts without limit for any of the purposes of this corporation, and to issue bonds, debentures, notes or other obligations therefor, and to secure the same by pledge or mortgage of the whole or any part of the property of this corporation, whether real or personal, or to issue bonds, debentures, notes or other obligations without any such security.

To purchase, hold, sell and transfer, shares of its own capital stock; provided it shall not use its funds for the purchase of its own shares of capital stock when such use would cause any impairment of its capital, except as permitted by law; and provided, further, that shares of its own capital stock belonging to it shall not be voted upon directly or indirectly.

To do any and all things necessary or convenient for the accomplishment of the foregoing purposes; to carry on any lawful business whatsoever which the corporation may deem proper or convenient in connection with any of the foregoing purposes or otherwise, or which may be calculated, directly or indirectly to promote the interests of the corporation or to enhance the value of its property; to have, enjoy and exercise, all the rights, powers and privileges, which are now or which may hereafter be conferred upon corporations organized under the same statutes as this corporation; to conduct its business anywhere in the world.

ARTICLE 3
CAPITAL

The total number of shares of capital stock which may be issued by the corporation is seven hundred fifty-one million (751,000,000), of which seven hundred fifty million (750,000,000) shares shall be Common Stock of the par value of one tenth of a cent ($0.001) per share (hereinafter referred to as the "Common Stock") and one million (1,000,000) shares shall be Preferred Stock of the par value of one tenth of a cent ($0.001) per share (hereinafter referred to as the "Preferred Stock").


The designations and the powers, preferences and rights, and the qualifications, limitations or restrictions of the shares of each class of stock and the manner in which shares of stock are to be voted for the election of directors are as follows:

PREFERRED STOCK

The Preferred Stock shall be all of one class but may be issued from time to time in one or more series, each of such series to have such full or limited voting powers, if any, and such designations, preferences and relative, participating, optional or other special rights or qualifications, limitations or restrictions thereof as shall be stated and expressed in a resolution or resolutions providing for the issue of such series as may be adopted by the board of directors as hereinafter provided. Each share of Preferred Stock shall rank on a parity with each other share of Preferred Stock, regardless of series, with respect to the payment of dividends at the respectively designated rates and with respect to the distribution of capital assets according to the amounts to which the shares of the respective series are entitled.

Authority is hereby expressly granted to and vested in the board of directors, subject to the provisions of this Article 3, to authorize one or more series of Preferred Stock and, with respect to each series, to fix by resolution or resolutions providing for the issue of such series:

(a)
the number of shares to constitute such series and the distinctive designation thereof;

(b)
the dividend rate on the shares of such series, dividend payment dates, whether such dividends shall be cumulative, and, if cumulative, the date or dates from which dividends shall accumulate;

(c)
whether or not the shares of such series shall be redeemable, and, if redeemable, the redemption prices which the holders of the shares of such series shall be entitled to receive upon the redemption thereof;


2


(d)
whether or not the shares of such series shall be subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares for retirement and, if such retirement or sinking fund or funds be established, the annual amount thereof and the terms and provisions relative to the operation thereof;

(e)
whether or not the shares of such series shall be convertible into, or exchangeable for, shares of any other class or classes or of any other series of the same class of stock of the corporation and the conversion price or prices or ratio or ratios or the rate or rates at which such exchange may be made, with such adjustments relating to changes in the outstanding shares of such other class or classes or series of the same class of stock into which it is convertible or exchangeable for or otherwise, if any, as shall be stated and expressed or provided in such resolution or resolutions;

(f)
the preferences, if any, and the amounts thereof, which the shares of such series shall be entitled to receive upon the voluntary and involuntary dissolution of, or upon any distribution of the assets of, the corporation;

(g)
the voting power, if any, of the shares of such series, which voting power may include, at the option of the board of directors, provisions for increasing the number of directors by two or more and for the election of that number of members of the board of directors by the holders of shares of such series in the event that dividends payable on such series shall be in default in an amount equivalent to six full quarter-yearly dividends on all shares of such series at the time outstanding; and

(h)
such other special rights and protective provisions as the board of directors may deem advisable.

Notwithstanding the fixing of the number of shares constituting a particular series upon the issuance thereof, the board of directors may at any time thereafter authorize the issuance of additional shares of the same series.

Holders of Preferred Stock shall be entitled to receive, when and as declared by the board of directors, out of funds legally available for the payment of dividends, dividends at the annual rates fixed by the board of directors for the respective series and no more, payable on such dates as the board of directors shall fix for the respective series as provided in this Article 3 (hereinafter referred to as "dividend dates"), in preference to dividends on any other class of stock of the corporation (except with respect to any other class of stock ranking prior to or on a parity with the Preferred Stock with respect to dividends), so that no cash payments or distributions shall be made to holders of the Common Stock of the corporation or any other class of stock ranking junior to the Preferred Stock with respect to dividends unless all accrued dividends for past and current dividend periods on all series of Preferred Stock entitled to cumulative dividends shall have been declared and set apart for payment and dividends for the current dividend period on all other series of Preferred Stock shall have been declared and set apart for payment. No dividend in respect of any current dividend period shall be declared and set apart for payment on any series of Preferred Stock unless there shall be or have been declared and set apart for payment on all outstanding shares of Preferred Stock (a) as to each series entitled to cumulative dividends, the full cumulative dividends for all past dividend periods, and (b) as to all series, dividends ratably in accordance with the sums which would be payable on the shares of the respective series for the current dividend period if all dividends for the current dividend period were declared and paid in full. No dividend in respect of past dividend periods shall be declared and set apart for payment on any series of Preferred Stock entitled to cumulative dividends unless there shall be or have been declared and set apart for payment on all outstanding shares of Preferred Stock entitled to cumulative dividends, dividends ratably in accordance with the sums which would be payable on the shares of the respective series entitled to cumulative dividends if all dividends due for all past dividend periods were declared and paid in full. Nothing contained in this Article 3 shall be deemed in any way to qualify or limit the right of the corporation or any subsidiary of the corporation to purchase or otherwise acquire at such time and for such consideration as the corporation shall deem appropriate any shares of its capital stock; provided that no shares of capital stock of the corporation shall be purchased or redeemed, by the corporation or by any subsidiary of the corporation, at any time when accrued dividends on any series of Preferred Stock entitled to cumulative dividends, remain unpaid for any period to and including the last preceding dividend date.


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For the purposes of this Article 3, and of any resolutions fixing the terms of any series of Preferred Stock, the amount of dividends "accrued" on any share of Preferred Stock of any series entitled to cumulative dividends as at any dividend date shall be deemed to be the amount of any unpaid dividends accumulated thereon to and including such dividend date, whether or not earned or declared, and the amount of dividends "accrued" on any share of Preferred Stock of any series entitled to cumulative dividends as at any date other than a dividend date shall be calculated as the amount of any unpaid dividends accumulated thereon to and including the last preceding dividend date, whether or not earned or declared, plus an amount computed, on the basis of a 360-day year, for the period after such last preceding dividend date to and including the date as of which the calculation is made at the annual dividend rate fixed for the shares of such series.

In the event that any series of Preferred Stock shall be entitled to a preference upon the dissolution of, or upon any distribution of the assets of, the corporation, then upon any such dissolution or distribution, before any payment or distribution of the assets of the corporation (whether capital or surplus) shall be made to or set apart for any other class or classes of stock (except with respect to any other class of stock ranking prior to or on a parity with the Preferred Stock with respect to assets), the holders of such series of Preferred Stock shall be entitled to payment of the amount of the preference, if any, payable upon such dissolution or distribution as may be fixed by the board of directors for the shares of the respective series as provided in this Article 3 before any payment or distribution shall be made on any other class or classes of capital stock. If, upon any such dissolution or distribution, the assets of the corporation distributable among the holders of any such series of the Preferred Stock entitled to a preference shall be insufficient to pay in full the preferential amount aforesaid, then such assets, or the proceeds thereof, shall be distributed among the holders of each such series of the Preferred Stock ratably in accordance with the sums which would be payable on such distribution if the preferential amount aforesaid were paid in full. The voluntary sale, conveyance, exchange, lease, transfer, or other disposal (for cash, shares of stock, securities or other consideration, or any combination of the foregoing) of all or substantially all of the property and assets of the corporation, the merger or consolidation of the corporation into or with any other corporation, or the merger of any other corporation into it, shall not be deemed to be a dissolution of, or a distribution of the assets of, the corporation, for the purpose of this paragraph.

In the event that any series of Preferred Stock shall be redeemable, then, at the option of the board of directors, the corporation at any time or from time to time may redeem all, or any number less than all, of the outstanding shares of any such series at the redemption price thereof as may be fixed by the board of directors as provided in this Article 3 (the sum so payable upon any redemption of Preferred Stock being herein referred to as the "redemption price"); provided, that not less than 30 days previous to the date fixed for redemption (hereinafter referred to as the "redemption date"), a notice of the time and place thereof shall be mailed to each holder of record of the shares so to be redeemed at his address as shown by the records of the corporation; and provided further, that in case of redemption of less than all of the outstanding shares of any series of Preferred Stock, the board of directors shall determine the shares to be redeemed by lot or pro rata in such manner as the board of directors deems equitable. At any time after notice of redemption shall have been mailed as above provided to the holders of the shares so to be redeemed, the corporation may deposit the aggregate redemption price, in trust, with a bank or trust company, the name and address of which shall be designated in such notice, for payment, on or before the redemption date, of the redemption price for the shares called for redemption. Upon the making of such deposit, or if no such deposit is made, then upon the redemption date (unless the corporation shall default in making payment of the redemption price), holders of the shares of Preferred Stock called for redemption shall cease to be stockholders with respect to such shares notwithstanding that any certificate for such shares shall not have been surrendered, and thereafter such shares shall no longer be transferable on the books of the corporation and such holders shall have no interest in or claim against the corporation with respect to said shares, except the right (a) to receive payment of the redemption price upon surrender of their certificates, or (b) to exercise on or before the redemption date the rights, if any, not theretofore expiring to convert the shares so called for redemption into, or to exchange such shares for, shares of stock of any other class or classes or of any other series of the same class of stock of the corporation. Any funds deposited in trust as aforesaid which shall not be required for such redemption because of the exercise of any right of conversion or otherwise subsequent to the date of such deposit, shall be returned to the corporation forthwith. The corporation shall be entitled to receive from any bank or trust company the interest, if any, allowed on any moneys deposited as in this paragraph provided, and the holders of any shares so

4


redeemed shall have no claim to any such interest. Any funds so deposited by the corporation and unclaimed at the end of five years from the redemption date shall be repaid to the corporation upon its request, after which repayment the holders of such shares who shall not have made claim against such moneys prior to such repayment shall be deemed to be unsecured creditors of the corporation, but only for a period of two years from the date of such repayment (after which all rights of the holders of such shares as unsecured creditors or otherwise shall cease), for an amount equivalent to the amount deposited as above stated for the redemption of such shares and so repaid to the corporation, but shall in no event be entitled to any interest.

In order to facilitate the redemption of any shares of Preferred Stock, the board of directors is authorized to cause the transfer books of the corporation to be closed as to the shares to be redeemed.

No shares of Preferred Stock which shall at any time have been purchased by the corporation or redeemed, or which shall at any time have been surrendered for conversion or exchange, or for cancellation pursuant to any retirement or sinking fund provisions with respect to any series of Preferred Stock, shall be reissued.

If the board of directors grants voting power to the holders of shares of any series of Preferred Stock, the holders of shares of such series shall be entitled to no more than one vote per share voting with the holders of shares of the Common Stock at each annual or special meeting of stockholders upon all matters upon which a vote is taken except that if the holders of shares of such series shall be entitled to elect two or more directors, as a class, the holders of shares of such series shall not be entitled to a vote for the election of any other directors of the corporation. In the event that the Common Stock is subdivided, or increased by reason of a dividend payable in shares of Common Stock, or combined, the number of votes to which each share of such series shall be so entitled shall be increased, in the case of a subdivision, or in the case of such a dividend, or reduced, in the case of a combination, in the same proportion as the subdivision, increase by dividend, or combination of the Common Stock.

The holders of Preferred Stock shall not be entitled to any preemptive or preferential right to subscribe for or purchase any shares of capital stock of the corporation or any securities convertible into shares of capital stock of the corporation.

COMMON STOCK

Each share of Common Stock shall be equal in all respects to every other share of Common Stock of the corporation. Each share of Common Stock shall be entitled to one vote per share at each annual or special meeting of stockholders for the election of directors and upon any other matter coming before such meeting. Subject to all the rights of the Preferred Stock, dividends may be paid upon the Common Stock as and when declared by the board of directors out of any funds of the corporation legally available therefor. Upon any liquidation, dissolution or winding up of the corporation, whether voluntary or involuntary, and after the holders of each series of the Preferred Stock shall have been paid in full, the amounts to which they respectively shall be entitled under this Article 3, the remaining assets of the corporation shall be distributed pro rata to the holders of the Common Stock.

The holders of Common Stock shall not be entitled to any preemptive or preferential right to subscribe for or purchase any shares of capital stock of the corporation or any securities convertible into shares of capital stock of the corporation.

VOTING

No holder of shares of capital stock possessing voting power shall have the right to cumulate his or her voting power in the election of directors.


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ARTICLE 4
GOVERNING BOARD

The members of the governing board shall be known as directors and the number thereof shall be not less than three nor more than fifteen, the exact number to be fixed by the by­ laws of the corporation; provided that the number so fixed by the by-laws may be increased or decreased within the limit above specified from time to time by by-law.

ARTICLE 5
SHARES NON-ASSESSABLE

The capital stock, after the amount of the subscription price, or par value, if greater, has been paid in shall be subject to no further assessment to pay the debts of the corporation.

ARTICLE 6
ELECTION OF DIRECTORS

At each meeting of holders of shares of capital stock for the election of directors at which a quorum is present, a nominee for election as a director in an uncontested election shall be elected to the board of directors if the number of votes cast for such nominee's election exceeds the number of votes cast against such nominee's election. For purposes of this Article 6, abstentions will not be considered votes cast for or against a nominee at the meeting. Notwithstanding the foregoing, if the number of candidates exceeds the number of directors to be elected, then, in that election, the nominees receiving the greatest number of votes shall be elected.

For purposes of this Article 6, an ''uncontested election" means any meeting of holders of shares of capital stock at which the number of nominees does not exceed the number of directors to be elected and with respect to which no holder of capital stock has submitted notice of an intent to nominate a candidate for election at such meeting in accordance with the by-laws, as they may be amended from time to time, or, if such a notice has been submitted with respect to such meeting, on or before the tenth day prior to the date that the corporation files its definitive proxy statement relating to such meeting with the Securities and Exchange Commission (regardless of whether or not it is thereafter revised or supplemented}, each such notice with respect to such meeting has been (A) withdrawn by its respective submitting stockholder in writing to the secretary of the corporation, (B) determined not to be a valid and effective notice of nomination (such determination to be made by the Board of Directors (or a designated committee thereof) pursuant to the by-laws, or, if challenged in court, by final court order) or (C) determined not to create a bona fide election contest by the Board of Directors (or a designated committee thereof).

ARTICLE 7
PERPETUAL EXISTENCE

This corporation is to have perpetual existence.

ARTICLE 8
BYLAWS

Subject to the by-laws, if any, adopted by the stockholders, the board of directors is expressly authorized to make, alter or amend the by-laws of the corporation.

The directors, without restriction or limitation, shall have all of the powers and authorities expressly conferred upon them by the statutes of this State and this corporation may in its by-laws confer powers upon its directors in addition to the powers and authorities expressly conferred upon them by the statutes of this State.


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ARTICLE 9
TRANSACTIONS WITH DIRECTORS

The corporation may enter into contracts or transact business with one or more of its directors, or with any firm of which one or more of its directors are members, or with any corporation or association in which any one of its directors is a stockholder, director or officer, and such contract or transaction shall not be invalidated or in any wise affected by the fact that such director or directors have or may have interests therein which are or might be adverse to the interests of the corporation, even though the vote of the director or directors having such adverse interest shall have been necessary to obligate the corporation upon such contract or transaction provided such adverse interest is either known or made known to the remaining directors; and no director or directors having such adverse interest shall be liable to the corporation or to any stockholder or creditor thereof, or to any other person, for any loss incurred by it under or by reason of any such contract or transaction; nor shall any such director or directors be accountable for any gains or profits realized thereon: Always provided, however, that such contract or transaction shall at the time at which it was entered into have been a reasonable one to have been entered into and shall have been upon terms that at the time were fair.

ARTICLE 10
MEETINGS OF STOCKHOLDERS

Meetings of stockholders may be held without the State of Nevada, if the by-laws so provide. The books of this corporation may be kept (subject to the provision of the statutes) outside of the State of Nevada at such places as may be from time to time designated by the board of directors or in the by-laws of the corporation.

ARTICLE 11
AMENDMENTS

This corporation reserves the right to amend, alter, change or repeal any provision contained in these articles of incorporation, in the manner now or hereafter prescribed by statute, or by these articles of incorporation, and all rights conferred upon stockholders herein are granted subject to this reservation.

ARTICLE 12
PREEMPTIVE RIGHTS DENIED

No holder of shares of stock of the corporation shall be entitled as of right to purchase or subscribe for any part of any unissued stock of this corporation or of any new or additional authorized stock of the corporation of any class whatsoever, or of any issue of securities of the corporation convertible into stock, whether such stock or securities be issued for money or for a consideration other than money or by way of dividend, but any such unissued stock or such new or additional authorized stock or such securities convertible into stock may be issued and disposed of to such persons, firms, corporations and associations, and upon such terms as may be deemed advisable by the board of directors without offering to stockholders then of record or any class of stockholders any thereof upon the same terms or upon any terms.

ARTICLE 13
LIABILITY OF OFFICERS AND DIRECTORS

A director or officer of the corporation shall have no personal liability to the corporation or its stockholders for damages for breach of fiduciary duty as a director or officer, except for (a) acts or omissions which involve intentional misconduct, fraud or a knowing violation of law; or (b) the payment of dividends in violation of the applicable statute of Nevada. If the Nevada General Corporation Law is amended after approval by the stockholders of this Article 13 to authorize corporate action further eliminating or limiting the personal liability of directors or officers, the liability of a director or officer of the corporation shall be eliminated or limited to the fullest extent permitted by the Nevada General Corporation Law, as so amended from time to time. No repeal or modification of this Article 13 by the stockholders shall adversely affect any right or protection of a director or officer of the corporation existing by virtue of this Article 13 at the time of such repeal or modification.

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ARTICLE 14
INDEMNIFICATION

(a)The corporation shall indemnify and hold harmless any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was or has agreed to become a director or officer of the corporation or is serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise or by reason of actions alleged to have been taken or omitted in such capacity or in any other capacity while serving as a director or officer. The indemnification of directors and officers by the corporation shall be to the fullest extent authorized or permitted by applicable law, as such law exists or may hereafter be amended (but only to the extent that such amendment permits the corporation to provide broader indemnification rights than permitted prior to the amendment). The indemnification of directors and officers shall be against all loss, liability and expense (including attorneys fees, costs, damages, judgments, fines, amounts paid in settlement and ERISA excise taxes or penalties) actually and reasonably incurred by or on behalf of a director or officer in connection with such action, suit or proceeding, including any appeal; provided, however, that with respect to any action, suit or proceeding initiated by a director or officer, the corporation shall indemnify such director or officer only if the action, suit or proceeding was authorized by the board of directors of the corporation, except with respect to a suit for the enforcement of rights to indemnification or advancement of expenses in accordance with Section (c) hereof.

(b)The expenses of directors and officers incurred as a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative shall be paid by the corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding; provided, however, that if applicable law so requires, the advance payment of expenses shall be made only upon receipt by the corporation of an undertaking by or on behalf of the director or officer to repay all amounts so advanced in the event that it is ultimately determined by a final decision, order or decree of a court of competent jurisdiction that the director or officer is not entitled to be indemnified for such expenses under this Article 14.

(c)Any director or officer may enforce his or her rights to indemnification or advance payments for expenses in a suit brought against the corporation if his or her request for indemnification or advance payments for expenses is wholly or partially refused by the corporation or if there is no determination with respect to such request within 60 days from receipt by the corporation of a written notice from the director or officer for such a determination. If a director or officer is successful in establishing in a suit his or her entitlement to receive or recover an advancement of expenses or a right to indemnification, in whole or in part, he or she shall also be indemnified by the corporation for costs and expenses incurred in such suit. It shall be a defense to any such suit (other than a suit brought to enforce a claim for the advancement of expenses under Section (b) of this Article 14 where the required undertaking, if any, has been received by the corporation) that the claimant has not met the standard of conduct set forth in the Nevada General Corporation Law. Neither the failure of the corporation to have made a determination prior to the commencement of such suit that indemnification of the director or officer is proper in the circumstances because the director or officer has met the applicable standard of conduct nor a determination by the corporation that the director or officer has not met such applicable standard of conduct shall be a defense to the suit or create a presumption that the director or officer has not met the applicable standard of conduct. In a suit brought by a director or officer to enforce a right under this Section (c) or by the corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that a director or officer is not entitled to be indemnified or is not entitled to an advancement of expenses under this Section (c) or otherwise, shall be on the corporation.

(d)The right to indemnification and to the payment of expenses as they are incurred and in advance of the final disposition of the action, suit or proceeding shall not be exclusive of any other right to which a person may be entitled under these articles of incorporation or any by-law, agreement, statute, vote of stockholders or disinterested directors or otherwise. The right to indemnification under Section (a) hereof shall continue for a person who has ceased to be a director or officer and shall inure to the benefit of his or her heirs, next of kin, executors, administrators and legal representatives.

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(e)The corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the corporation or another corporation, partnership, joint venture, trust or other enterprise against any loss, liability or expense, whether or not the corporation would have the power to indemnify such person against such loss, liability or expense under the Nevada General Corporation Law.

(f)The corporation shall not be obligated to reimburse the amount of any settlement unless it has agreed to such settlement. If any person shall unreasonably fail to enter into a settlement of any action, suit or proceeding within the scope of Section (a) hereof, offered or assented to by the opposing party or parties and which is acceptable to the corporation, then, notwithstanding any other provision of this Article 14, the indemnification obligation of the corporation in connection with such action, suit or proceeding shall be limited to the total of the amount at which settlement could have been made and the expenses incurred by such person prior to the time the settlement could reasonably have been effected.

(g)The corporation may, to the extent authorized from time to time by the board of directors, grant rights to indemnification and to the advancement of expenses to any employee or agent of the corporation or to any director, officer, employee or agent of any of its subsidiaries to the fullest extent of the provisions of this Article 14 subject to the imposition of any conditions or limitations as the board of directors of the corporation may deem necessary or appropriate.



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EX-3.2 3 exhibit32amendedandrestate.htm EXHIBIT 3.2 Exhibit 3.2 Amended and Restated Bylaws

Exhibit 3.2

   
 
 
 
  
  
 


AMENDED AND RESTATED

BYLAWS

OF

COMPUTER SCIENCES GOVERNMENT SERVICES INC.
 
 
 
 
 
 
 
 
 
effective July 2, 2015
 
 
 








 

BYLAWS
OF
COMPUTER SCIENCES GOVERNMENT SERVICES INC.
 
ARTICLE I
 
OFFICES
 
Section 1. Principal Office.  The principal office of the Corporation in the State of Nevada shall be in the City of Reno, County of Washoe.
 
Section 2.  Other Offices.  The Corporation may also have offices in such other places, both within and without the State of Nevada, as the Board of Directors may from time to time determine or the business of the Corporation may require.
 
ARTICLE II
 
MEETINGS OF STOCKHOLDERS
 
Section 1.  Place of Annual Meetings.  Annual meetings of the stockholders shall be held at such place as shall be designated by the Board of Directors.
 
Section 2.  Date of Annual Meetings; Election of Directors; Action at Meetings of Stockholders.
 
(a)           Annual meetings of the stockholders shall be held at such time and date as the Board of Directors shall determine.  At each annual meeting of the stockholders, the stockholders of the Corporation shall elect a Board of Directors and transact such other business as has been properly brought before the meeting in accordance with this Section 2.  To be properly brought before an annual meeting, nominations and other business must be:  (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (ii) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (iii) otherwise properly brought before the meeting by a stockholder of record at the time of giving notice provided for in these Bylaws, who is entitled to vote at the meeting and who complies with the notice procedures set forth in this Section 2.
 
(b)           For nominations or other business to be properly brought before an annual meeting by a stockholder of record, the stockholder of record must have given timely notice thereof in writing to the Secretary of the Corporation and such other business must be a proper subject for stockholder action.  To be timely, a stockholder of record’s notice must be delivered to or mailed and received at the principal executive offices of the Corporation not later than the close of business on the ninetieth (90th) day nor earlier than the close of business on the one hundred twentieth (120th) day prior to the first anniversary date of the preceding year’s annual meeting of stockholders; provided, however, that in the event that no annual meeting was held in the previous year or the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after the anniversary date of the previous year’s annual meeting, notice by the stockholder of record to be timely must be so received not earlier than the close of business on the one hundred twentieth (120th) day prior to the annual meeting and not later than the close of business on the later of (x) the ninetieth (90th) day prior to the annual meeting and (y) the tenth (10th) day following the date on which public announcement

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of the date of such meeting is first made.  For purposes of this Article II, the term “public announcement” means disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission, or in a notice pursuant to the applicable rules of an exchange on which the securities of the Corporation are listed.  In no event will the public announcement of an adjournment or postponement of a stockholders meeting commence a new time period (or extend any time period) for the giving of a stockholder of record’s notice as described above.
 
(c)           A stockholder of record’s notice to the Secretary to be proper must set forth as to each matter such stockholder proposes to bring before the annual meeting (other than director nominations by such stockholder, which are governed by Section 2(e) of this Article II):  (1) a brief description of the business desired to be brought before the annual meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws of the Corporation, the language of the proposed amendment), the reasons for conducting such business at the annual meeting and any material interest in such business of such stockholder and any beneficial owner (within the meaning of Section 13(d) of the Securities Exchange Act of 1934 (the “1934 Act”)), if different from such stockholder, on whose behalf the business is being proposed by such stockholder; (2) as to the stockholder of record giving the notice and any beneficial owner, if different from such stockholder, on whose behalf the business is being proposed by such stockholder:  (A) the name and address, as they appear on the Corporation’s books, of the stockholder of record proposing such business, and the name and address of any such beneficial owner, (B) the class and number of shares of the Corporation which are owned of record by such stockholder and any such beneficial owner as of the date of the notice, and such stockholder’s agreement to notify the Corporation in writing within five (5) business days after the record date for the annual meeting of the class and number of shares of the Corporation owned of record by such stockholder and any such beneficial owner as of the record date for the meeting, (C) a representation that such stockholder intends to appear in person or by proxy at the meeting to propose such business; (D) a description of any agreement, arrangement or understanding with respect to the business between or among such stockholder and/or any such beneficial owner, on the one hand, and any other person, on the other hand, including without limitation any agreements that would be required to be disclosed pursuant to Item 5 or Item 6 of 1934 Act Schedule 13D (regardless of whether the requirement to file a Schedule 13D is applicable to such stockholder or any such beneficial owner) and such stockholder’s agreement to notify the Corporation in writing within five (5) business days after the record date for the annual meeting of any such agreement, arrangement or understanding in effect as of the record date for the meeting, and (E) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of such stockholder’s notice by, or on behalf of, such stockholder or any such beneficial owner, the effect or intent of which is to mitigate loss, manage risk or benefit from changes in the share price of any class of shares of the Corporation, or increase or decrease the voting power of such stockholder or any such beneficial owner with respect to shares of the Corporation, and such stockholder’s agreement to notify the Corporation in writing within five (5) business days after the record date for such meeting of any such agreement, arrangement or understanding in effect as of the record date for the meeting;  provided, however, that with respect to a stockholder of record who is merely a nominee on behalf of any other person or entity that may be the beneficial owner of the shares held of record by such stockholder, and is not itself a beneficial owner of such shares, such stockholder shall not be required to provide the information in clauses (2)(D) and (2)(E) of this sentence as to such stockholder of record, but shall be required to provide such information as to any such other beneficial owner.
 
Notwithstanding anything in these Bylaws to the contrary, no business will be conducted at any annual meeting except in accordance with the procedures set forth in this Section 2.  The chairman of the

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annual meeting may determine and declare, if the facts warrant, at the meeting that business was not properly brought before the meeting and in accordance with the provisions of this Section 2, and, if he or she should so determine, he or she will so declare at the meeting that any such business not properly brought before the meeting will not be transacted. Notwithstanding the foregoing provisions of this Section 2, unless otherwise required by law, if the stockholder of record does not provide the information required under clauses (2)(B), (2)(D) and (2)(E) of this Section 2(c) to the Corporation within five (5) business days following the record date for an annual meeting of stockholders or if such stockholder (or a qualified representative of such stockholder) does not appear at the annual meeting to present the business described in such stockholder’s notice delivered pursuant to this Section 2(c), such business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.  For purposes of this Section 2, to be considered a qualified representative of a stockholder of record, a person must be a duly authorized officer, manager or partner of such stockholder or authorized by a writing executed by such stockholder (or a reliable reproduction or electronic transmission of the writing) delivered to the Corporation prior to the proposing of the business at the meeting by such stockholder stating that the person is authorized to act for such stockholder as proxy at the meeting of stockholders.
 
Notwithstanding the foregoing, in order to include information with respect to a stockholder proposal in the Corporation’s proxy statement and form of proxy for an annual meeting, stockholders must provide notice as required by the regulations promulgated under the 1934 Act, and the foregoing notice requirements of this Section 2 will not apply to stockholders who have notified the Corporation of their intention to present a stockholder proposal only pursuant to and in compliance with such regulations.
 
(d)           Only persons who are nominated in accordance with the procedures set forth in this Section 2(d) and Section 2(e) will be eligible for election as directors.  Nominations of persons for election to the Board of Directors may be made at an annual meeting of stockholders, or at a special meeting of stockholders at which directors are to be elected pursuant to the notice for such meeting, by or at the direction of the Board of Directors or by any stockholder of record of the Corporation at the time of giving notice provided for in these Bylaws, who is entitled to vote in the election of directors at the meeting and who complies with the notice procedures set forth in this Section 2.
 
(e)           Nominations, other than those made by or at the direction of the Board of Directors, to be proper must be made by a stockholder of record pursuant to timely notice in writing to the Secretary of the Corporation in accordance with the time periods described in Section 2(b) in the case of an annual meeting and Section 3(c) in the case of a special meeting.  Such stockholder of record’s notice to be proper must set forth (1) as to each person, if any, whom such stockholder proposes to nominate for election or re-election as a director:  (A) the name, age, business address and residence address of such person, (B) the principal occupation or employment of such person, (C) the class and number of shares of the Corporation which are owned by such person, including shares beneficially owned and shares held of record, (D) any other information relating to such person that is required to be disclosed in solicitations of proxies for elections of directors in an election contest (even if an election contest is not involved), or is otherwise required, in each case pursuant to Regulation 14A under the 1934 Act (including without limitation such person’s written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected), and (E) a written statement executed by such nominee acknowledging that, as a director of such corporation, such person will owe a fiduciary duty, pursuant to the Nevada General Corporation Law, exclusively to the Corporation and its stockholders; (2) as to the stockholder of record giving the notice and any beneficial owner, if different from such stockholder, on whose behalf the nomination is being made:  (A) the name and address, as they appear on the Corporation’s books, of the stockholder of record giving the notice, and the name and address of any such beneficial owner, (B) the class and number of shares of the Corporation which are owned of record by such stockholder and any such beneficial owner as of the date of the notice, and such

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stockholder’s agreement to notify the Corporation in writing within five (5) business days after the record date for the annual meeting of the class and number of shares of the Corporation owned of record by such stockholder and any such beneficial owner as of the record date for the meeting, (C) a representation that such stockholder intends to appear in person or by proxy at the meeting to present the nomination; (D) a description of any agreement, arrangement or understanding with respect to the nomination between or among such stockholder and/or any such beneficial owner, on the one hand, and any other person, on the other hand, including without limitation any agreements that would be required to be disclosed pursuant to Item 5 or Item 6 of 1934 Act Schedule 13D (regardless of whether the requirement to file a Schedule 13D is applicable to such stockholder or any such beneficial owner) and such stockholder’s agreement to notify the Corporation in writing within five (5) business days after the record date for the annual meeting of any such agreement, arrangement or understanding in effect as of the record date for the meeting, and (E) a description of any agreement, arrangement or understanding (including any derivative or short positions, profit interests, options, hedging transactions, and borrowed or loaned shares) that has been entered into as of the date of such stockholder’s notice by, or on behalf of, such stockholder or any such beneficial owner, the effect or intent of which is to mitigate loss, manage risk or benefit from changes in the share price of any class of shares of the Corporation, or increase or decrease the voting power of such stockholder or any such beneficial owner with respect to shares of the Corporation, and such stockholder’s agreement to notify the Corporation in writing within five (5) business days after the record date for such meeting of any such agreement, arrangement or understanding in effect as of the record date for the meeting;  provided, however, that with respect to a stockholder of record who is merely a nominee on behalf of any other person or entity that may be the beneficial owner of the shares held of record by such stockholder, and is not itself a beneficial owner of such shares, such stockholder shall not be required to provide the information in clauses (2)(D) and (2)(E) of this sentence as to such stockholder of record, but shall be required to provide such information as to any such other beneficial owner.  At the request of the Board of Directors or the chairman of the Board of Directors, any person nominated by a stockholder of record for election as a director will furnish to the Secretary of the Corporation that information required to be set forth in such stockholder’s notice of nomination which pertains to the nominee and such other information as the Corporation may reasonably require to determine the eligibility of the proposed nominee to serve as a director of the Corporation.  No person will be eligible for election as a director of the Corporation unless nominated by or at the direction of the Board of Directors or by a stockholder in accordance with the procedures set forth in this Section 2(e).
 
Notwithstanding the foregoing provisions of this Section 2, unless otherwise required by law, if the stockholder of record does not provide the information required under clauses (2)(B), (2)(D) and (2)(E) of this Section 2(e) to the Corporation within five (5) business days following the record date for an annual or special meeting of stockholders or if such stockholder (or a qualified representative of such stockholder) does not appear at the annual or special meeting to present the nomination, such nomination shall be disregarded, notwithstanding that proxies in respect of such vote may have been received by the Corporation.
 
(f)           The chairman of the annual meeting may determine and declare, if the facts warrant, at the meeting that a nomination was not made in accordance with the procedures prescribed by these Bylaws, and in such event the defective nomination will be disregarded.
 
Section 3. Special Meetings.
 
(a)           Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute, by the Articles of Incorporation or by these Bylaws, may be called by the Chairman of the Board, the Board of Directors or the Chief Executive Officer, and shall be called by the Chief Executive Officer or Secretary at the request in writing of stockholders of record owning not less than seventy-five

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percent (75%) of the entire capital stock of the Corporation issued and outstanding and entitled to vote, and shall not otherwise be called except as provided in Section 3(b).  A request to the Secretary to be proper shall be signed by each stockholder of record, or a duly authorized agent of such stockholder, requesting the special meeting and must set forth a brief description of each matter of business (other than director nominations by such stockholder, which are governed by Section 3(c)) desired to be brought before the special meeting and the reasons for conducting such business at the special meeting and the information required pursuant to Sections 2(c), in the case of business other than the election of directors, or 2(e), in the case of the election of directors.  A special meeting requested by such stockholders shall be held at such date, time and place as the Board of Directors shall determine; provided, however, that the date of any such special meeting shall be not more than ninety (90) days after the request to call the special meeting is received by the Secretary.  Notwithstanding the foregoing, a special meeting requested by the stockholders of record shall not be held if the Board of Directors has called or calls for an annual meeting of stockholders to be held within ninety (90) days after the Secretary receives the request for the special meeting and the Board of Directors determines in good faith that the business of such annual meeting includes (among any other matters brought properly before the annual meeting) business specified in the request.  A stockholder of record may revoke a request for a special meeting at any time by written revocation delivered to the Secretary, and if, following such revocation, there are unrevoked requests from stockholders of record holding in the aggregate less than the requisite number of shares entitling the stockholders of record to request the calling of a special meeting, the Board of Directors, in its discretion, may cancel the special meeting. Business transacted at a special meeting requested by stockholders of record shall be limited to the matters described in the special meeting request; provided, however that nothing herein shall prohibit the Board of Directors from submitting matters to such stockholders at any special meeting requested by such stockholders.
 
(b)           In the event the Corporation shall have failed to hold its annual meeting of stockholders for a period of 18 months from the last preceding annual meeting at which directors were elected or if such annual meeting shall have been held but directors shall not have been elected at such annual meeting, a special meeting of the stockholders shall be called by the Chief Executive Officer or Secretary at the request in writing of a majority of the Board of Directors or at the request in writing of stockholders of record owning a majority in amount of the entire capital stock of the Corporation issued and outstanding and entitled to vote.  Such request from stockholders shall be directed to the Chairman of the Board, the Chief Executive Officer or the Secretary.
 
(c)           In the event a special meeting is called for the purpose of electing one or more directors to the Board of Directors, any stockholder of record entitled to vote in the election of directors may nominate a person or persons (as the case may be) for election to such position(s) as specified in the notice for such meeting, if such stockholder’s notice required by Section 2(e) shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not earlier than the close of business on the ninetieth (90th) day prior to the special meeting nor later than the close of business on the later of:  (i) the sixtieth (60th) day prior to the special meeting or (ii) the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.  In no event shall the public announcement (as defined in Section 2(b) of this Article II) of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder of record’s notice as described above.
 
(d)           Only such business will be considered at a special meeting of stockholders as will have been stated in the notice for such meeting.
 

        

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Section 4. Record Date for Meetings of Stockholders.  The directors may fix, in advance, a record date not more than sixty (60) or less then ten (10) days before the date of any meeting of the stockholders as the date as of which stockholders entitled to notice of and to vote at such meeting shall be determined.  Only stockholders of record on that date shall be entitled to notice or to vote at such meeting.  If a record date is not fixed, the record date is at the close of business on the day before the day on which the first notice is given or, if notice is waived, at the close of business on the day before the meeting is held.  A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting unless the Board of Directors fixes a new record date for the adjourned meeting.  The Board of Directors shall fix a new record date if the meeting is adjourned to a date more than sixty (60) days later than the date set for the original meeting.
 
Section 5. Notices of Meetings.  Notices of meetings of the stockholders shall be in writing and signed by the Chief Executive Officer or Secretary, or by such other person or persons as the directors shall designate.  Such notice shall state the purpose or purposes for which the meeting is called and the time when, and the place where, it is to be held, and the means of electronic communications, if any, by which stockholders and proxies shall be deemed to be present in person and vote.  A copy of such notice shall be delivered personally, mailed postage prepaid, or given by a form of electronic transmission permitted for such purpose by applicable law and the rules and regulations of the U.S.  Securities and Exchange Commission and each national securities exchange upon which the Corporation’s voting stock is then listed, to each stockholder of record entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before such meeting.  If mailed, it shall be directed to the stockholder at his or her address as it appears upon the records of the Corporation and upon such mailing of any such notice, the service thereof shall be complete, and the time of the notice shall begin to run from the date upon which such notice is deposited in the mail for transmission to such stockholder.  If no such address appears on the books of the Corporation and a stockholder has given no address for the purpose of notice, then notice shall be deemed to have been given to such stockholder if it is published at least once in a newspaper of general circulation in the county in which the principal executive office of the Corporation is located.  An affidavit of the mailing or publication of any such notice shall be prima facie evidence of the giving of such notice.
 
Personal delivery of any such notice to any officer of a corporation or association, to any member of a limited liability company managed by its members, to any manager of a limited liability company managed by its managers, to any general partner of a partnership or to any trustee of a trust shall constitute delivery of such notice to such corporation, association limited liability company, partnership or trust.  If any notice addressed to the stockholder at the address of such stockholder appearing on the books of the Corporation is returned to the Corporation by the United States Postal Service marked to indicate that it is unable to deliver the notice to the stockholder at such address, all future notices shall be deemed to have been duly given to such stockholder, without further mailing, if the same shall be available for the stockholder upon written demand of the stockholder at the principal executive office of the Corporation for a period of one year from the date of the giving of the notice to all other stockholders.

        Section 6. Quorum.  The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by the statutes of Nevada or by the Articles of Incorporation.  Regardless of whether or not a quorum is present or represented at any annual or special meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present in person or represented by proxy, provided that when any stockholders’ meeting is adjourned for more than forty-five (45) days, or if a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall

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be given to each stockholder of record entitled to vote at the meeting.  At such adjourned meeting at which a quorum shall be present or represented by proxy, any business may be transacted which might have been transacted at the meeting as originally noticed.
 
Section 7. Vote Required.  When a quorum is present or represented at any meeting, the holders of a majority of the stock present in person or represented by proxy and voting shall decide any question brought before such meeting, unless the question is one upon which, by express provision of the statutes of Nevada, the Articles of Incorporation or these Bylaws, a different vote is required, in which case such express provision shall govern and control the decision of such question.  The stockholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.
 
Section 8. Election of Directors.  The Corporation’s Articles of Incorporation set forth voting standards applicable in the election of directors at each meeting of stockholders to elect directors.
 
Section 9. Conduct of Meetings.  Subject to the requirements of the statutes of Nevada, and the express provisions of the Articles of Incorporation and these Bylaws, all annual and special meetings of stockholders shall be conducted in accordance with such rules and procedures as the Board of Directors may determine and, as to matters not governed by such rules and procedures, as the chairman of such meeting shall determine.  The chairman of any annual or special meeting of stockholders shall be designated by the Board of Directors and, in the absence of any such designation, shall be the Chief Executive Officer of the Corporation.
  
Section 10. Proxies.  At any meeting of the stockholders, any stockholder may be represented and vote by a proxy or proxies appointed by an instrument in writing.  In the event that such instrument in writing shall designate two or more persons to act as proxies, a majority of such persons present at the meeting, or, if only one shall be present, then that one shall have and may exercise all of the powers conferred by such written instrument upon all of the persons so designated unless the instrument shall otherwise provide.  No such proxy shall be valid after the expiration of six (6) months from the date of its execution, unless coupled with an interest, or unless the person executing it specifies therein the length of time for which it is to continue in force, which in no case shall exceed seven (7) years from the date of its execution.  Subject to the above, any proxy duly executed is not revoked and continues in full force and effect until (i) an instrument revoking it or duly executed proxy bearing a later date is filed with the Secretary of the Corporation or, (ii) the person executing the proxy attends such meeting and votes the shares subject to the proxy, or (iii) written notice of the death or incapacity of the maker of such proxy is received by the Corporation before the vote pursuant thereto is counted.
 
Section 11. Action by Written Consent.  Any action, except election of directors, which may be taken by a vote of the stockholders at a meeting, may be taken without a meeting and without notice if authorized by the written consent of stockholders holding at least ninety percent (90%) of the voting power.  The Board of Directors may adopt a resolution prescribing a date upon which the stockholders of record entitled to give written consent shall be determined.  The date prescribed by the Board of Directors shall not precede or be more than ten (10) days after the date the resolution is adopted by the Board of Directors.  If the Board of Directors does not adopt a resolution prescribing a date upon which the stockholders of record entitled to give written consent shall be determined and:
 
(a)           No prior action by the Board of Directors is required by the statutes of Nevada, the date is the first date on which a valid, written consent is delivered in accordance with the statutes of Nevada.

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(b)           Prior action by the Board of Directors is required by the statutes of Nevada, the date is at the close of business on the day the Board of Directors adopts the resolution.
 
Section 12. Inspectors of Election.  In advance of any meeting of stockholders, the Board of Directors may appoint inspectors of election to act at such meeting and any adjournment thereof.  If inspectors of election are not so appointed, or if any persons so appointed fail to appear or refuse to act, then, unless other persons are appointed by the Board of Directors prior to the meeting, the chairman of any such meeting may, and on the request of any stockholder or a stockholder proxy shall, appoint inspectors of election (or persons to replace those who fail to appear or refuse to act) at the meeting.  The number of inspectors shall not exceed three.
 
The duties of such inspectors shall include:  (a) determining the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity and effect of proxies; (b) receiving votes, ballots or consents; (c) hearing and determining all challenges and questions in any way arising in connection with the right to vote; (d) counting and tabulating all votes or consents and determining the result; and (e) taking such other action as may be proper to conduct the election or vote with fairness to all stockholders.  In the determination of the validity and effect of proxies, the dates contained on the forms of proxy shall presumptively determine the order of execution of the proxies, regardless of the postmark dates on the envelopes in which they are mailed.  The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical.  If there are three inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all.  Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.
 
ARTICLE III
 
DIRECTORS
 
Section 1. Number of Directors. The exact number of directors that shall constitute the authorized number of members of the Board shall be three (3), all of whom shall be at least 18 years of age. The authorized number of directors may from time to time be increased to not more than fifteen (15) or decreased to not less than three (3) by resolution of the directors of the Corporation amending this Section of these Bylaws in compliance with Article VIII, Section 2 of these Bylaws. Except as provided in Section 2 of this Article III, each director elected shall hold office until his or her successor is elected and qualified. Directors need not be stockholders.
Section 2. Vacancies.  Vacancies, including those caused by (i) the death, removal, or resignation of directors, (ii) the failure of stockholders to elect directors at any annual meeting, and (iii) an increase in the number of directors, may be filled by a majority of the remaining directors though less than a quorum.  When one or more directors shall give notice of resignation to the Board, effective at a future date, the acceptance of such resignation shall not be necessary to make it effective; provided, however, a resignation by a director pursuant to a director resignation policy set forth from time to time in the Corporation’s Corporate Governance Guidelines shall not be effective until accepted by the Board.  The Board shall have the power to cause such vacancy or vacancies to be filled when such resignation or resignations shall become effective, and each director so appointed shall hold office during the remainder of the term of office of the resigning director and until his or her successor is elected and qualified or until his or her earlier death, removal or resignation.  The directors of the Corporation may be removed from office by the vote of stockholders representing not less than two-thirds (2/3) of the voting power of the issued and outstanding stock entitled to voting power.

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Section 3. Authority.  The business of the Corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors.
 
Section 4. Meetings.  The Board of Directors of the Corporation may hold meetings, both regular and special, at such place, either within or without the State of Nevada, which has been designated by resolution of the Board of Directors.
 
Section 5. First Meeting.  The first meeting of the newly elected Board of Directors shall be held immediately following the annual meeting of the stockholders and no notice of such meeting to the newly elected directors shall be necessary in order legally to constitute a meeting, provided a quorum shall be present.
 
Section 6. Regular Meetings.  Regular meetings of the Board of Directors may be held without notice at such time and place as shall from time to time be determined by the Board.
 
Section 7. Special Meetings.  Special meetings of the Board of Directors may be called by the Chairman of the Board, or the Chief Executive Officer and shall be called by the Chief Executive Officer or Secretary at the written request of two directors.  Notice of the time and place of special meetings shall be given within 30 days to each director (a) personally or by telephone, telegraph, facsimile or electronic means, in each case at least twenty four (24) hours prior to the holding of the meeting, or (b) by mail, charges prepaid, addressed to such director at his or her address as it is shown upon the records of the Corporation (or, if it is not so shown on such records and is not readily ascertainable, at the place at which the meetings of the directors are regularly held) at least three (3) days prior to the holding of the meeting.  Notice by mail shall be deemed to have been given at the time a written notice is deposited in the United States mails, postage prepaid.  Any other written notice shall be deemed to have been given at the time it is personally delivered to the recipient or is delivered to a common carrier for transmission, or actually transmitted by the person giving the notice by electronic means, to the recipient.  Oral notice shall be deemed to have been given at the time it is communicated, in person or by telephone or wireless, to the recipient or to a person at the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient.  Any notice, waiver of notice or consent to holding a meeting shall state the time, date and place of the meeting but need not specify the purpose of the meeting.
 
Section 8. Quorum.  Presence in person of a majority of the Board of Directors, at a meeting duly assembled, shall be necessary to constitute a quorum for the transaction of business and the act of a majority of the directors present and voting at any meeting, at which a quorum is then present, shall be the act of the Board of Directors, except as may be otherwise specifically provided by the statutes of Nevada or by the Articles of Incorporation.  A meeting at which a quorum is initially present shall not continue to transact business in the absence of a quorum.

        Section 9. Action by Written Consent.  Unless otherwise restricted by the Articles of Incorporation or by these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if a written consent thereto is signed by all members of the Board.  Such written consent shall be filed with the minutes of proceedings of the Board of Directors.
 
Section 10. Telephonic Meetings.  Unless otherwise restricted by the Articles of Incorporation or these Bylaws, members of the Board of Directors or of any committee designated by the Board of Directors may participate in a meeting of the Board or committee by means of a telephone conference or similar methods of communications by which all persons participating in the meeting can

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hear each other.  Participation in a meeting pursuant to the preceding sentence constitutes presence in person at such meeting.
 
Section 11. Adjournment.  A majority of the directors present at any meeting, whether or not a quorum is present, may adjourn any directors’ meeting to another time, date and place.  If any meeting is adjourned for more than twenty-four (24) hours, notice of any adjournment to another time, date and place shall be given, prior to the time of the adjourned meeting, to the directors who were not present at the time of adjournment.  If any meeting is adjourned for less than twenty-four (24) hours, notice of any adjournment shall be given to absent directors, prior to the time of the adjourned meeting, unless the time, date and place is fixed at the meeting adjourned.
 
Section 12. Committees.  The Board of Directors may, by resolution passed by a majority of the whole Board, designate one or more committees of the Board of Directors.  Such committee or committees shall have such name or names, shall have such duties and shall exercise such powers as may be determined from time to time by the Board of Directors.
 
Section 13. Committee Minutes.  The committees shall keep regular minutes of their proceedings and report the same to the Board of Directors.
 
Section 14. Compensation of Directors.  The directors shall receive such compensation for their services as directors, and such additional compensation for their services as members of any committees of the Board of Directors, as may be authorized by the Board of Directors.
 
Section 15. Mandatory Retirement of Directors.  A director of the Corporation shall not serve beyond, and shall automatically retire at, the close of the first annual meeting of stockholders held after the director shall become age 72; provided, however that if the Board of Directors shall determine that it is in the best interests of the Corporation and its stockholders for a person to continue to serve as a director of the Corporation until the close of any annual meeting after the annual meeting upon which this Section 15 would otherwise require such person to retire, then such person shall not be so required to retire until the close of such later annual meeting.
 
ARTICLE IV
 
OFFICERS
 
Section 1. Principal Officers.  The officers of the Corporation shall be elected by the Board of Directors and shall be a Chief Executive Officer, a President, a Secretary and a Treasurer.  A resident agent for the Corporation in the State of Nevada shall be designated by the Board of Directors.  Any person may hold two or more offices.
 
Section 2. Other Officers.  The Board of Directors may also elect one or more Vice Presidents, Assistant Secretaries and Assistant Treasurers, and such other officers and agents, as it shall deem necessary.
 
Section 3. Qualification and Removal.  The officers of the Corporation mentioned in Section 1 of this Article IV shall hold office until their successors are elected and qualify.  Any such officer

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and any other officer elected by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors.

Section 4. Resignation.  Any officer may resign at any time by giving written notice to the Corporation, without prejudice, however, to the rights, if any, of the Corporation under any contract to which such officer is a party.  Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
 
Section 5. Powers and Duties; Execution of Contracts.  Officers of the Corporation shall have such powers and duties as may be determined by the Board of Directors.  Unless otherwise specified by the Board of Directors, the President shall be the Chief Executive Officer of the Corporation.  Contracts and other instruments in the normal course of business may be executed on behalf of the Corporation by the Chief Executive Officer, the President or any Vice President of the Corporation, or any other person authorized by resolution of the Board of Directors.
 
ARTICLE V
 
STOCK AND STOCKHOLDERS
 
Section 1. Issuance.  Every stockholder shall be issued a certificate representing the number of shares owned by such stockholder in the Corporation.  If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the certificate shall contain a statement setting forth the office or agency of the Corporation from which stockholders may obtain a copy of a statement or summary of the designations, preferences and relative or other special rights of the various classes of stock or series thereof and the qualifications, limitations or restrictions of such rights.  The Corporation shall furnish to its stockholders, upon request and without charge, a copy of such statement or summary.
 
         Section 2. Facsimile Signatures.  Whenever any certificate is countersigned or otherwise authenticated by a transfer agent or transfer clerk, and by a registrar, then a facsimile of the signatures of the officers of the Corporation may be printed or lithographed upon such certificate in lieu of the actual signatures.  In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates shall cease to be such officer or officers of the Corporation, before such certificates shall have been delivered by the Corporation, such certificates may nevertheless be issued as though the person or persons who signed such certificates, had not ceased to be an officer of the Corporation.
 
Section 3. Lost Certificates.  The Board of Directors may direct a new stock certificate to be issued in place of any certificate alleged to have been lost or destroyed, and may require the making of an affidavit of that fact by the person claiming the stock certificate to be lost or destroyed.  When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent, require the owner of the lost or destroyed certificate to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed.
 
Section 4. Transfer of Stock.  Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed for transfer, it shall be the duty of the Corporation to issue a new certificate, cancel the old certificate and record the transaction upon its books.
 

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Section 5. Uncertificated Shares.  Notwithstanding Sections 1-4 of this Article V, the Board of Directors, pursuant to applicable law and the rules and regulations of the U.S. Securities and Exchange Commission and each national securities exchange upon which the Corporation’s stock is then listed (collectively, the “Applicable Regulations”), may authorize the issuance of uncertificated shares of some or all of the shares of any or all of the Corporation’s classes or series of stock.  Any such issuance shall have such effect upon existing certificates for shares, and upon the Corporation’s obligations with respect thereto, as may be prescribed by the Applicable Regulations, notwithstanding anything to the contrary in Sections 1-4 of this Article V.
 
Section 6. Registered Stock.  The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the statutes of Nevada.
 
Section 7. Dividends.  In the event a dividend is declared, the stock transfer books will not be closed, but a record date will be fixed by the Board of Directors and only stockholders of record on that date shall be entitled to the dividend.
  
ARTICLE VI
 
INDEMNIFICATION
 
Section 1. Indemnity of Directors, Officers and Agents.  The Corporation shall indemnify and hold harmless any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was or has agreed to become a director or officer of the Corporation or is serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise or by reason of actions alleged to have been taken or omitted in such capacity or in any other capacity while serving as a director or officer.  The indemnification of directors and officers by the Corporation shall be to the fullest extent authorized or permitted by applicable law, as such law exists or may hereafter be amended (but only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior to the amendment).  The indemnification of directors and officers shall be against all loss, liability and expense (including attorneys fees, costs, damages, judgments, fines, amounts paid in settlement and ERISA excise taxes or penalties) actually and reasonably incurred by or on behalf of a director or officer in connection with such action, suit or proceeding, including any appeals; provided, however, that with respect to any action, suit or proceeding initiated by a director or officer, the Corporation shall indemnify such director or officer only if the action, suit or proceeding was authorized by the Board of Directors of the Corporation, except with respect to a suit for the enforcement of rights to indemnification or advancement of expenses in accordance with Section 3 hereof.
 
Section 2. Expenses.  The expenses of directors and officers incurred as a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative shall be paid by the Corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding; provided, however, that if applicable law so requires, the advance payment of expenses shall be made only upon receipt by the Corporation of an undertaking by or on behalf of the director or officer to repay all amounts as advanced in the event that it is ultimately determined by a final

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decision, order or decree of a court of competent jurisdiction that the director or officer is not entitled to be indemnified for such expenses under this Article VI.
 
Section 3. Enforcement.  Any director or officer may enforce his or her rights to indemnification or advance payments for expenses in a suit brought against the Corporation if his or her request for indemnification or advance payments for expenses is wholly or partially refused by the Corporation or if there is no determination with respect to such request within 60 days from receipt by the Corporation of a written notice from the director or officer for such a determination.  If a director or officer is successful in establishing in a suit his or her entitlement to receive or recover an advancement of expenses or a right to indemnification, in whole or in part, he or she shall also be indemnified by the Corporation for costs and expenses incurred in such suit.  It shall be a defense to any such suit (other than a suit brought to enforce a claim for the advancement of expenses under Section 2 of this Article VI where the required undertaking, if any, has been received by the Corporation) that the claimant has not met the standard of conduct set forth in the Nevada Revised Statutes.  Neither the failure of the Corporation to have made a determination prior to the commencement of such suit that indemnification of the director or officer is proper in the circumstances because the director or officer has met the applicable standard of conduct nor a determination by the Corporation that the director or officer has not met such applicable standard of conduct shall be a defense to the suit or create a presumption that the director or officer has not met the applicable standard of conduct.  In a suit brought by a director or officer to enforce a right under this Section 3 or by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that a director or officer is not entitled to be indemnified or is not entitled to an advancement of expenses under this Section 3 or otherwise, shall be on the Corporation.
 
Section 4. Non–exclusivity.  The right to indemnification and to the payment of expenses as they are incurred and in advance of the final disposition of the action, suit or proceeding shall not be exclusive of any other right to which a person may be entitled under the Articles of Incorporation, these Bylaws or any agreement, statute, vote of stockholders or disinterested directors or otherwise.  The right to indemnification under Section 1 of this Article VI shall continue for a person who has ceased to be a director or officer and shall inure to the benefit of his or her heirs, next of kin, executors, administrators and legal representatives.
 
Section 5. Settlement.  The Corporation shall not be obligated to reimburse the amount of any settlement unless it has agreed to such settlement.  If any person shall unreasonably fail to enter into a settlement of any action, suit or proceeding within the scope of Section 1 hereof, offered or assented to by the opposing party or parties and which is acceptable to the Corporation, then, notwithstanding any other provision of this Article VI, the indemnification obligation of the Corporation in connection with such action, suit or proceeding shall be limited to the total of the amount at which settlement could have been made and the expenses incurred by such person prior to the time the settlement could reasonably have been effected.
 
Section 6. Purchase of Insurance.  The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article VI.
 
Section 7. Conditions.  The Corporation may, to the extent authorized from time to time by the Board of Directors, grant rights to indemnification and to the advancement of expenses to any employee

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or agent of the Corporation or to any director, officer, employee or agent of any of its subsidiaries to the fullest extent of the provisions of this Article VI, subject to the imposition of any conditions or limitations as the Board of Directors may deem necessary or appropriate.

ARTICLE VII
 
GENERAL PROVISIONS
 
Section 1. Exercise of Rights.  All rights incident to any and all shares of another corporation or corporations standing in the name of the Corporation may be exercised by such officer, agent or proxyholder as the Board of Directors may designate.  In the absence of such designation, such rights may be exercised by the Chairman of the Board or any officer of the Corporation, or by any other person authorized to do so by the Chairman of the Board or any officer of the Corporation.  Except as provided below, shares of the Corporation owned by any subsidiary of the Corporation shall not be entitled to vote on any matter.  Shares of the Corporation held by the Corporation in a fiduciary capacity and shares of the Corporation held in a fiduciary capacity by any subsidiary of the Corporation, shall not be entitled to vote on any matter, except to the extent that the settler or beneficial owner possesses and exercises a right to vote or to give the Corporation or such subsidiary binding instructions as to how to vote such shares.
 
Solely for purposes of Section 1 of this Article VII, a “subsidiary” of the Corporation shall mean a corporation, shares of which possessing more than fifty percent (50%) of the power to vote for the election of directors at the time determination of such voting power is made, are owned directly, or indirectly through one or more subsidiaries, by the Corporation.
 
Section 2. Interpretation.  Unless the context of a Section of these Bylaws otherwise requires, the terms used in these Bylaws shall have the meanings provided in, and these Bylaws shall be construed in accordance with, the Nevada statutes relating to private corporations, as found in Chapter 78 of the Nevada Revised Statutes or any subsequent statute.
 
Section 3. Provisions contrary to Provisions of Law.  Any article, section, subsections, subdivision, sentence, clause, or phrase of these Bylaws which, upon being construed in the manner provided in Section 2 of this Article VII, is contrary or inconsistent with any applicable provisions of law, will not apply so long as such provisions of law remain in effect, but such result will not affect the validity or applicability of any other portions of these Bylaws, it being hereby declared that these Bylaws would have been adopted and each article, section, subsection, subdivision, sentence, clause, or phrase thereof, irrespective of the fact that any one or more articles, sections, subsections, subdivisions, sentences, clauses, or phrase is or are illegal.
 
ARTICLE VIII
 
AMENDMENTS
 
Section 1. Stockholder Amendments.  Bylaws may be adopted, amended or repealed by the affirmative vote of not less than seventy-five percent (75%) of the outstanding voting shares of the Corporation.
 
Section 2. Amendments by Board of Directors.  Subject to the right of stockholders as provided in Section 1 of this Article VIII, Bylaws may be adopted, amended or repealed by the Board of Directors.

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ARTICLE IX
 
“ACQUISITION OF CONTROLLING INTEREST” PROVISIONS OF THE NEVADA REVISED STATUTES SHALL NOT APPLY
 
On and after February 16, 1998, the provisions of Section 78.378 to 78.3793, inclusive, of the Nevada Revised Statutes shall not apply to the Corporation.
   
 
 


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EX-99.1 4 ex991informationstatement.htm EXHIBIT 99.1 Exhibit 99.1 Information Statement


Exhibit 99.1
Information contained herein is subject to completion or amendment. A Registration Statement on Form 10 relating to these securities has been filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.
SUBJECT TO COMPLETION, DATED JULY 10, 2015
INFORMATION STATEMENT
Computer Sciences Government Services Inc. 

3170 Fairview Park Drive
Falls Church, Virginia 22042
Common Stock
(par value $0.001)
We are sending you this Information Statement in connection with Computer Sciences Corporation’s spin-off of its wholly-owned subsidiary, Computer Sciences Government Services Inc. or “Computer Sciences GS.” To effect the spin-off, Computer Sciences Corporation, or “CSC,” will distribute all of the shares of Computer Sciences GS common stock on a pro rata basis to the holders of CSC common stock. We expect that the distribution of Computer Sciences GS common stock will be tax-free to CSC stockholders for U.S. federal income tax purposes.
If you are a record holder of CSC common stock as of the close of business on                   , 2015, which is the record date for the distribution, you will be entitled to receive one share of Computer Sciences GS common stock for every one share of CSC common stock you hold on that date. CSC will distribute the shares of Computer Sciences GS common stock in book-entry form, which means that we will not issue physical stock certificates.
The distribution will be effective as of             p.m., New York City time, on                        , 2015. Immediately after the distribution becomes effective, we will be an independent publicly-traded company.
CSC’s stockholders are not required to vote on or take any other action in connection with the spin-off. We are not asking you for a proxy, and request that you do not send us a proxy. CSC stockholders will not be required to pay any consideration for the shares of Computer Sciences GS common stock they receive in the spin-off, and they will not be required to surrender or exchange their shares of CSC common stock or take any other action in connection with the spin-off.
CSC currently owns all of the outstanding shares of Computer Sciences GS common stock. Accordingly, no trading market for Computer Sciences GS common stock currently exists. We expect, however, that a limited trading market for Computer Sciences GS common stock, commonly known as a “when-issued” trading market, will develop as early as two trading days prior to the record date for the distribution, and we expect “regular-way” trading of Computer Sciences GS common stock will begin on the first trading day after the distribution date. We intend to list Computer Sciences GS common stock on                                        under the symbol “               .”
In reviewing this Information Statement, you should carefully consider the matters described in the section titled “Risk Factors” beginning on page 14 of this Information Statement.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this Information Statement is truthful or complete. Any representation to the contrary is a criminal offense.
This Information Statement is not an offer to sell, or a solicitation of an offer to buy, any securities.
The date of this Information Statement is                   , 2015.






TABLE OF CONTENTS
 
 
TRADEMARKS AND COPYRIGHTS
INDUSTRY AND MARKET DATA
SUMMARY
RISK FACTORS
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
THE SPIN-OFF
DIVIDEND POLICY
CAPITALIZATION
SELECTED HISTORICAL COMBINED FINANCIAL DATA
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
BUSINESS
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MANAGEMENT
EXECUTIVE COMPENSATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
DESCRIPTION OF OUR CAPITAL STOCK
WHERE YOU CAN FIND MORE INFORMATION
INDEX TO FINANCIAL STATEMENTS
    




TRADEMARKS AND COPYRIGHTS
We own or have rights to various trademarks, logos, service marks and trade names that we use in connection with 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 Information Statement are listed without the ™, ® and © symbols, but such references do not constitute a waiver of any rights that might be associated with the respective trademarks, service marks, trade names and copyrights included or referred to in this Information Statement.



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INDUSTRY AND MARKET DATA
Unless otherwise indicated, information contained in this Information Statement concerning our industry and the markets in which we operate is based on information from independent industry and research organizations, other third-party sources and management estimates. Third-party sources include, but are not limited to, Gartner, Inc. (“Gartner”) and Deltek. Management estimates are derived from publicly available information released by independent industry analysts and third-party sources, as well as data from our internal research, and are based on assumptions made by us upon reviewing such data and our knowledge of such industry and markets, which we believe to be reasonable. Such data involve uncertainties and risk and are subject to change due to a variety of factors, including those described under “Risk Factors.”



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SUMMARY
This summary highlights information from this Information Statement and provides an overview of our company, our separation from CSC and CSC’s distribution of our common stock to its stockholders. For a more complete understanding of our business and the spin-off, you should read the entire Information Statement carefully, particularly the discussion of “Risk Factors” beginning on page 14 of this Information Statement, our historical combined financial statements and our unaudited pro forma combined financial statements and the respective notes to those historical and pro forma combined financial statements appearing elsewhere in this Information Statement.
Prior to CSC’s distribution of the shares of our common stock to its stockholders, CSC is undertaking a series of internal transactions, following which Computer Sciences GS will hold the businesses constituting CSC’s current North American Public Sector segment, as described in CSC’s Annual Report on Form 10-K for the year ended April 3, 2015, which we refer to as the “Computer Sciences GS Business.” We refer to this series of internal transactions, which is described in more detail under “Certain Relationships and Related Party Transactions—Agreements with CSC—Master Separation and Distribution Agreement,” as the “Internal Reorganization.”
We refer to CSC’s distribution of the shares of our common stock to its stockholders as the “Distribution” and to the Internal Reorganization and the Distribution collectively as the “Spin-Off.” We refer to the payment by us of approximately $1.5 billion in cash (or approximately $10.50 per share) concurrently with the Distribution to holders of CSC common stock on the record date as the “Special Dividend.”
In this Information Statement, unless the context otherwise requires:
“Computer Sciences GS,” “we,” “our” and “us” refer to Computer Sciences Government Services Inc. and its combined subsidiaries after giving effect to the Spin-Off; and
“CSC” refers to Computer Sciences Corporation and its consolidated subsidiaries other than, for all periods following the Spin-Off, Computer Sciences Government Services Inc. and its combined subsidiaries.
Our Company
We deliver information technology (“IT”), mission- and operations-related services across the United States (“U.S.”) federal government to Department of Defense (“DoD”), Intelligence Community, homeland security, civil and healthcare agencies, as well as to certain state and local government agencies. We leverage deep domain-based customer intimacy and decades of experience in helping customers execute their mission with a fundamental understanding of their IT environment that has earned us the ability to introduce next-generation technologies. We bring scalable and more cost-effective IT solutions to government departments and agencies that are seeking to improve mission-critical effectiveness and efficiency through innovation. This approach is designed to yield lower implementation and operational costs as well as a higher standard of delivery excellence. Demand for our U.S. public sector offerings is driven by evolving government priorities such as: (1) migration to next-generation IT solutions, such as hybrid cloud infrastructure, application modernization, and as-a-service delivery, (2) big data solutions, (3) health IT and informatics, (4) cyber security and (5) mobility.
Business Overview
We are one of the nation’s largest independent providers of IT services to the U.S. federal government. With more than five decades of government partnership, we believe we make best practices succeed in government contexts. With public sector customers that include nearly every agency in the U.S. federal government, we leverage our domain expertise and extensive resources to support our customers through dedicated, customer-focused teams.
Headquartered in Falls Church, Virginia, and with approximately 14,000 employees, we deliver comprehensive offerings from concept through sustainment. We manage our business with a matrix model composed of industry verticals that are customer-facing and have deep knowledge of our customers’ missions, and horizontal delivery organizations with a depth of technical expertise that is delivered across industries. As a new public company, we


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will operate in two industry verticals: (1) Defense and Intelligence and (2) Civil. Our two horizontal delivery organizations that provide capabilities and solutions across our customer base are: (1) Mission Services and (2) Enterprise Services. We believe we differentiate ourselves by combining our technical expertise in applications and IT infrastructure solutions with our deep public sector mission knowledge and experience in order to engage our customers at the highest levels with thought leadership that drives change.
Strategic Overview
In the U.S. public sector, technology demands are increasing and government customers are increasingly looking for providers with a strong, focused vision to address the unique challenges and resource needs of the U.S. federal government. The success of our business will depend on our ability to deliver solutions that generate real and measurable business results in terms of mission value and cost efficiency. Targeting specific growth areas in the government and rapidly adapting next-generation solutions tailored to the public sector environment will be key. We expect to continue to work in concert with our next-generation IT partners to create, position and deliver innovative solutions from across our delivery capabilities to support our customers’ mission success, which will be critical to our efforts to sustain and grow our market position.
Other Information
We are a Nevada corporation. Our principal executive offices are located at 3170 Fairview Park Drive, Falls Church, Virginia 22042. Our telephone number is           . Our website address is           . Information contained on, or connected to, our website or CSC’s website does not and will not constitute part of this Information Statement or the Registration Statement on Form 10 of which this Information Statement is a part.
The Spin-Off
Overview
On May 19, 2015, CSC announced plans for our complete legal and structural separation from CSC. To effect the separation, first, CSC will undertake the Internal Reorganization described under “Certain Relationships and Related Party Transactions—Agreements with CSC—Master Separation and Distribution Agreement.” Following the Internal Reorganization, Computer Sciences GS, CSC’s wholly-owned subsidiary, will hold the shares of the legal entities operating the Computer Sciences GS Business. Then, CSC will distribute all of Computer Sciences GS’s common stock to CSC’s stockholders, and Computer Sciences GS will become an independent publicly-traded company.
Prior to completion of the Spin-Off, we intend to enter into a Master Separation and Distribution Agreement and several other agreements with CSC related to the Spin-Off. These agreements will govern the relationship between CSC and us up to and after completion of the Spin-Off and allocate between CSC and us various assets, liabilities and obligations, including employee benefits, intellectual property and tax-related assets and liabilities and contingencies. See “Certain Relationships and Related Party Transactions—Agreements with CSC” for more detail.
Completion of the Spin-Off is subject to the satisfaction or waiver of a number of conditions. In addition, CSC has the right not to complete the Spin-Off if, at any time, CSC’s board of directors, or the “CSC Board,” determines, in its sole and absolute discretion, that the Spin-Off is not in the best interests of CSC or its stockholders, or is otherwise not advisable. See “The Spin-Off—Conditions to the Spin-Off” for more detail. Additionally, prior to the completion of the Spin-Off, we will raise indebtedness estimated at approximately $1.5 billion. The amount of indebtedness to be incurred by us prior to the Spin-Off will be determined by CSC based on its view regarding an appropriate capital structure and amount of leverage for us as a standalone entity. We expect the net proceeds of the indebtedness we incur at or prior to the Distribution to fund some or all of the Special Dividend. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.”


2


Questions and Answers about the Spin-Off
The following provides only a summary of the terms of the Spin-Off. You should read the section titled “The Spin-Off” below in this Information Statement for a more detailed description of the matters described below.
Q:
What is the Spin-Off?
A:
The Spin-Off is the method by which we will separate from CSC. In the Spin-Off, CSC will distribute to its stockholders all the outstanding shares of our common stock. Following the Spin-Off, we will be an independent publicly-traded company, and CSC will not retain any ownership interest in us.
Q:
Will the number of CSC shares I own change as a result of the Spin-Off?
A:
No, the number of shares of CSC common stock you own will not change as a result of the Spin-Off.
Q:
What are the reasons for the Spin-Off?
A:
The CSC Board considered the following potential benefits in deciding to pursue the Spin-Off:
Strategic Focus and Flexibility. Following the Spin-Off, CSC and Computer Sciences GS will each have a more focused business and be better able to dedicate financial resources to pursue appropriate growth opportunities and execute strategic plans best suited to its respective business. The Spin-Off will also allow each of CSC and Computer Sciences GS to enhance its strategic flexibility to respond to industry dynamics.
Focused Management. The Spin-Off will allow the management of each of CSC and Computer Sciences GS to devote its time and attention to the development and implementation of corporate strategies and policies that are based primarily on the specific business characteristics of their respective companies.
Management Incentives. The Spin-Off will enable Computer Sciences GS to create incentives for its management and employees that are more closely tied to its business performance and stockholder expectations. Computer Sciences GS’s equity-based compensation arrangements will more closely align the interests of Computer Sciences GS’s management and employees with the interests of its stockholders and should increase Computer Sciences GS’s ability to attract and retain personnel.
Capital Structure and Stockholder Flexibility. The segments in which CSC and Computer Sciences GS expect to operate have historically had different growth profiles and cash flow dynamics. The Spin-Off will allow CSC and Computer Sciences GS to separately manage their capital strategies and cost structures and will allow investors to make independent investment decisions with respect to CSC and Computer Sciences GS, including the ability for Computer Sciences GS to achieve alignment with a more natural stockholder base. Investment in one or the other company may appeal to investors with different goals, interests and concerns.
Q:
Why is the separation of Computer Sciences GS structured as a spin-off?
A:
CSC believes that a tax-free distribution of our shares is the most efficient way to separate our business from CSC in a manner that will achieve the above benefits.
Q:
What will I receive in the Spin-Off?
A:
As a holder of CSC common stock, you will receive a dividend of one share of our common stock for every one share of CSC common stock you hold on the Record Date (as defined below). Thus, the distribution agent will distribute only whole shares of our common stock in the Spin-Off. No fractional shares of our common stock will be issued pursuant to the dividend. Your proportionate interest in CSC will not change as a result of the Spin-Off. For a more detailed description, see “The Spin-Off.”


3


Q:
What is being distributed in the Spin-Off?
A:
CSC will distribute approximately           shares of our common stock in the Spin-Off, based on the approximately           shares of CSC common stock outstanding as of          , 2015. The actual number of shares of our common stock that CSC will distribute will depend on the number of shares of CSC common stock outstanding on the Record Date. The shares of our common stock that CSC distributes will constitute all of the issued and outstanding shares of our common stock immediately prior to the Distribution. For more information on the shares being distributed in the Spin-Off, see “Description of Our Capital Stock—Common Stock.”
Q:
What is the record date for the Distribution?
A:
CSC will determine record ownership as of the close of business on          , 2015, which we refer to as the “Record Date.”
Q:
When will the Distribution occur?
A:
The Distribution will be effective as of           p.m., New York City time, on          , 2015, which we refer to as the “Distribution Date.” On or shortly after the Distribution Date, shares of our common stock will be credited in book-entry accounts for stockholders entitled to receive the shares in the Distribution. See “How will CSC distribute shares of our common stock?” for more information on how to access your book-entry account or your bank, brokerage or other account holding the Computer Sciences GS common stock you receive in the Distribution on and following the Distribution Date.
Q:
What do I have to do to participate in the Distribution?
A:
You are not required to take any action, but we urge you to read this document carefully. Holders of CSC common stock on the Record Date will not need to pay any cash or deliver any other consideration, including any shares of CSC common stock, in order to receive shares of our common stock in the Distribution. In addition, no stockholder approval of the Distribution is required. We are not asking you for a vote and request that you do not send us a proxy card.
Q:
If I sell my shares of CSC common stock on or before the Distribution Date, will I still be entitled to receive shares of Computer Sciences GS common stock in the Distribution?
A:
If you hold shares of CSC common stock on the Record Date and decide to sell them on or before the Distribution Date, you may choose to sell your CSC common stock with or without your entitlement to our common stock. You should discuss these alternatives with your bank, broker or other nominee. See “The Spin-Off—Trading Prior to the Distribution Date” for more information.
Q:
How will CSC distribute shares of our common stock?
A:
Registered stockholders: If you are a registered stockholder (meaning you own your shares of CSC common stock directly through CSC’s transfer agent, Computershare Trust Company, N.A.), our distribution agent will credit the shares of our common stock you receive in the Distribution to a new book-entry account with our transfer agent on or shortly after the Distribution Date. Our distribution agent will mail you a book-entry account statement that reflects the number of shares of our common stock you own. You will be able to access information regarding your book-entry account holding the Computer Sciences GS shares at           .
“Street name” or beneficial stockholders: If you own your shares of CSC common stock beneficially through a bank, broker or other nominee, your bank, broker or other nominee will credit your account with the shares of our common stock you receive in the Distribution on or shortly after the Distribution Date. Please contact your bank, broker or other nominee for further information about your account.


4


We will not issue any physical stock certificates to any stockholders, even if requested. See “The Spin-Off—When and How You Will Receive Computer Sciences GS Shares” for a more detailed explanation.
Q:
What are the U.S. federal income tax consequences to me of the Distribution?
A:
For U.S. federal income tax purposes, no gain or loss should be recognized by, or be includible in the income of, a U.S. Holder (as defined in “The Spin-Off—Material U.S. Federal Income Tax Consequences of the Spin-Off”) as a result of the Distribution. In addition, the aggregate tax basis of the CSC common stock and our common stock held by each U.S. Holder immediately after the Distribution (and immediately prior to the Special Dividend) should be the same as the aggregate tax basis of the CSC common stock held by the U.S. Holder immediately before the Distribution, allocated between the CSC common stock and our common stock in proportion to their relative fair market values on the date of the Distribution (subject to certain adjustments).
See “The Spin-Off—Material U.S. Federal Income Tax Consequences of the Spin-Off” for more information regarding the potential tax consequences to you of the Spin-Off.
Q:
Does Computer Sciences GS intend to pay cash dividends?
A:
We currently anticipate paying quarterly cash dividends following the Spin-Off, subject to our Board’s approval. The timing, declaration, amount and payment of any future dividends to our stockholders will fall within the discretion of our Board of Directors and will depend on many factors, including our financial condition, results of operations and capital requirements, legal requirements, regulatory constraints, industry practice and other business considerations that our Board of Directors deems relevant from time to time. In addition, the terms of the agreements governing our debt or debt that we may incur in the future may restrict the payments of dividends. See “Dividend Policy” for more information.
Q:
How will Computer Sciences GS common stock trade?
A:
Currently, there is no public market for our common stock. We intend to list our common stock on              under the symbol “          .”
We anticipate that trading in our common stock will begin on a “when-issued” basis as early as two trading days prior to the Record Date for the Distribution and will continue up to and including the Distribution Date. “When-issued” trading in the context of a spin-off refers to a sale or purchase made conditionally on or before the Distribution Date because the securities of the spun-off entity have not yet been distributed. “When-issued” trades generally settle within four trading days after the Distribution Date. On the first trading day following the Distribution Date, any “when-issued” trading of our common stock will end and “regular-way” trading will begin. “Regular-way” trading refers to trading after the security has been distributed and typically involves a trade that settles on the third full trading day following the date of the trade. See “The Spin-Off—Trading Prior to the Distribution Date” for more information. We cannot predict the trading prices for our common stock before, on or after the Distribution Date.
Q:
What will be the relationship between CSC and Computer Sciences GS following the Distribution?
A:
Following the Distribution, CSC will not own any of our shares and we will operate independently of CSC. Apart from our Chairman, who will remain Chief Executive Officer (“CEO”) of CSC after the Distribution, we do not expect any members of our Board to be officers or directors of CSC. In addition, we do not expect to depend on CSC to conduct our business following the Distribution apart from certain limited transitional support services as well as intellectual property licenses and non-U.S. agency services. In order to govern the ongoing relationships between us and CSC after the Spin-Off and to facilitate an orderly transition, we and CSC intend to enter into agreements providing for various services and rights following the Spin-Off and under which we and CSC will agree to indemnify each other against certain liabilities arising from our respective businesses. These agreements will, among other things, provide arrangements for employee and pension-related matters, tax matters, intellectual property matters as well as transitional services and non-U.S. agency services.


5


See “Risk Factors—Risks Relating to the Spin-Off” and “Certain Relationships and Related Party Transactions—Agreements with CSC” for details.
Q:
Will the Spin-Off affect the trading price of my CSC common stock?
A:
We expect the trading price of shares of CSC common stock immediately following the Distribution to be lower than immediately prior to the Distribution because the trading price will no longer reflect the value of the Computer Sciences GS Business. Furthermore, until the market has fully analyzed the value of CSC without the Computer Sciences GS Business, the trading price of shares of CSC common stock may fluctuate. There can be no assurance that, following the Distribution, the combined trading prices of CSC common stock and our common stock will equal or exceed what the trading price of CSC common stock would have been in the absence of the Spin-Off.
It is possible that after the Spin-Off, the combined market value of the equity of CSC and Computer Sciences GS will be less than CSC’s equity value before the Spin-Off even after adjusting for the effect of the Special Dividend.
Q:
Do I have appraisal rights in connection with the Spin-Off?
A:
No. Holders of CSC common stock are not entitled to appraisal rights in connection with the Spin-Off.
Q:
Who is the transfer agent and registrar for Computer Sciences GS common stock?
A:
Computershare Trust Company, N.A.
Q:
Are there risks associated with owning shares of Computer Sciences GS common stock?
A:
Yes. Our business faces both general and specific risks and uncertainties. Our business also faces risks relating to the Spin-Off. Following the Spin-Off, we will also face risks associated with being an independent publicly-traded company. Accordingly, you should read carefully the information set forth in the section titled “Risk Factors” in this Information Statement.
Q:
Where can I get more information?
A:
If you have any questions relating to the mechanics of the Distribution, you should contact the distribution agent at:
Computershare Trust Company, N.A.
250 Royall Street
Canton, MA 02021
Phone: 800-676-0654 or 201-680-6578 (for international callers)
Before the Spin-Off, if you have any questions relating to the Spin-Off, you should contact CSC at:
George Price
Director of Investor Relations
Computer Sciences Corporation
3170 Fairview Park Drive
Falls Church, Virginia 22042
Phone: 800-542-3070 Option #1 or 703-641-3000 (for international callers)
Email: investorrelations@csc.com


6


After the Spin-Off, if you have any questions relating to Computer Sciences GS, you should contact us at:
Investor Relations
Computer Sciences Government Services Inc.
3170 Fairview Park Drive
Falls Church, Virginia 22042


7


Summary of the Spin-Off

Distributing Company
Computer Sciences Corporation, a Nevada corporation that holds all of our common stock issued and outstanding prior to the Distribution. After the Distribution, CSC will not own any shares of our common stock.
Distributed Company
Computer Sciences Government Services Inc., a Nevada corporation and a wholly-owned subsidiary of CSC. At the time of the Distribution, we will hold through our subsidiaries assets and liabilities relating to Computer Sciences GS as well as certain other assets and liabilities allocated to us by CSC. After the Spin-Off, we will be an independent publicly-traded company.
Distributed Securities
100% of our common stock issued and outstanding immediately prior to the Distribution. Based on the approximately           shares of CSC common stock outstanding on           , 2015, and applying the distribution ratio of one share of Computer Sciences GS common stock for every share of CSC common stock, approximately           shares of Computer Sciences GS common stock will be distributed.
Record Date
The Record Date is the close of business on            , 2015.
Distribution Date
The Distribution Date is           , 2015.
Internal Reorganization
In connection with the Spin-Off, CSC will undertake the Internal Reorganization so that we hold the Computer Sciences GS Business together with certain other assets and liabilities. See “Certain Relationships and Related Party Transactions—Agreements with CSC—Master Separation and Distribution Agreement” for a description of the Internal Reorganization.
Distribution Ratio
Each holder of CSC common stock will receive a dividend of one share of our common stock for every one share of CSC common stock it holds on the Record Date. Thus, the distribution agent will distribute only whole shares of our common stock in the Spin-Off. No fractional shares of our common stock will be issued pursuant to the dividend. Please note that if you sell your shares of CSC common stock on or before the Distribution Date, the buyer of those shares may in some circumstances be entitled to receive the shares of our common stock to be distributed in respect of the CSC shares that you sold. See “The Spin-Off—Trading Prior to the Distribution Date” for more detail.
The Distribution
On the Distribution Date, CSC will release the shares of our common stock to the distribution agent to distribute to CSC stockholders. CSC will distribute our shares in book-entry form and thus we will not issue any physical stock certificates. We expect that it will take the distribution agent up to two weeks to electronically issue shares of our common stock to you or your bank or brokerage firm on your behalf by way of direct registration in book-entry form. The ability to trade our shares will not be affected during that time. You will not be required to make any payment, surrender or exchange your shares of CSC common stock or take any other action to receive your shares of our common stock.


8


Incurrence of Debt
It is anticipated that, prior to the completion of the Spin-Off, Computer Sciences GS will incur approximately $1.5 billion in principal amount of debt, which preliminarily is assumed to consist of $750 million in bank term loans and $750 million in senior notes. The amount and sources of indebtedness to be incurred by us prior to the Spin-Off will be determined by CSC based on its view regarding an appropriate capital structure and amount of leverage for us as a standalone entity. We expect the net proceeds of the indebtedness we incur at or prior to the Distribution to fund some or all of the Special Dividend.
Conditions to the Spin-Off
The Spin-Off is subject to the satisfaction, or the CSC Board’s waiver, of the following conditions:
 
•    
the CSC Board shall have authorized and approved the Internal Reorganization and Distribution and not withdrawn such authorization and approval, and shall have declared the dividend of Computer Sciences GS common stock to CSC stockholders;
 
•    
the ancillary agreements contemplated by the Master Separation and Distribution Agreement shall have been executed by each party to those agreements;
 
•    
the Securities and Exchange Commission (which we refer to in this Information Statement as the “SEC”) shall have declared effective our Registration Statement on Form 10, of which this Information Statement is a part, under the Securities Exchange Act of 1934, as amended (which we refer to in this Information Statement as the “Exchange Act”), and no stop order suspending the effectiveness of the Registration Statement shall be in effect and no proceedings for that purpose shall be pending before or threatened by the SEC;
 
•    
our common stock shall have been accepted for listing on              or another national securities exchange approved by CSC, subject to official notice of issuance;
 
•    
CSC shall have received the written opinion of Allen & Overy LLP, which shall remain in full force and effect, that, subject to the accuracy of and compliance with certain representations, warranties and covenants, the Distribution should qualify as tax-free under Section 355 of the Internal Revenue Code of 1986, as amended (the “Code”);
 
•    
the Internal Reorganization (as described in “Certain Relationships and Related Party Transactions—Agreements with CSC—Master Separation and Distribution Agreement”) shall have been completed;
 
•    
no order, injunction or decree issued by any governmental authority of competent jurisdiction or other legal restraint or prohibition preventing consummation of the Distribution shall be in effect, and no other event outside the control of CSC shall have occurred or failed to occur that prevents the consummation of the Distribution;
 
•    
no other events or developments shall have occurred prior to the Distribution Date that, in the judgment of the CSC Board, would result in the Spin-Off having a material adverse effect on CSC or its stockholders;
 
•    
prior to the Distribution Date, this Information Statement shall have been mailed to the holders of CSC common stock as of the Record Date;


9


 
•    
CSC shall have duly elected the individuals to be listed as members of our post-Distribution board of directors in this Information Statement, and such individuals shall be the members of our board of directors, which we refer to as our “Board,” immediately after the Distribution;
 
•    
prior to the Distribution Date, CSC’s Board shall have obtained opinions from a nationally recognized valuation firm, in form and substance satisfactory to CSC, with respect to the capital adequacy and solvency of each of CSC and Computer Sciences GS after giving pro forma effect to the Distribution and the Special Dividend;
 
•    
immediately prior to the Distribution Date, our Articles of Incorporation and Bylaws, each in substantially the form filed as an exhibit to the Registration Statement on Form 10 of which this Information Statement is a part, shall be in effect; and
 
•    
prior to the Distribution Date, CSC shall have transferred its U.S. federal government contracts and subcontracts to one or more wholly-owned subsidiaries of Computer Sciences GS and, for its U.S. federal government prime contracts, it shall have finalized a Change of Name agreement with the Defense Contract Management Agency (“DCMA”).
 
The fulfillment of the foregoing conditions will not create any obligation on the part of CSC to effect the Spin-Off. We are not aware of any material federal, foreign or state regulatory requirements with which we must comply, other than SEC rules and regulations, or any material approvals that we must obtain, other than the approval for listing of our common stock and the SEC’s declaration of the effectiveness of the Registration Statement, in connection with the Distribution. CSC has the right not to complete the Spin-Off if, at any time, the CSC Board determines, in its sole and absolute discretion, that the Spin-Off is not in the best interests of CSC or its stockholders or is otherwise not advisable.
Trading Market and Symbol
We intend to file an application to list our common stock on              under the symbol “           .” We anticipate that, as early as two trading days prior to the Record Date, trading of shares of our common stock will begin on a “when-issued” basis and will continue up to and including the Distribution Date, and we expect that “regular-way” trading of our common stock will begin the first trading day after the Distribution Date.

We also anticipate that, as early as two trading days prior to the Record Date, there will be two markets in CSC common stock: (i) a “regular-way” market on which shares of CSC common stock will trade with an entitlement for the purchaser of CSC common stock to receive shares of our common stock to be distributed in the Distribution, and (ii) an “ex-distribution” market on which shares of CSC common stock will trade without an entitlement for the purchaser of CSC common stock to receive shares of our common stock. See “The Spin-Off—Trading Prior to the Distribution Date.”


10


Tax Consequences to CSC Stockholders
For U.S. federal income tax purposes, no gain or loss should be recognized by, or be includible in the income of, a U.S. Holder (as defined in “The Spin-Off—Material U.S. Federal Income Tax Consequences of the Spin-Off”) as a result of the Distribution. In addition, the aggregate tax basis of the CSC common stock and our common stock held by each U.S. Holder immediately after the Distribution (and immediately prior to the Special Dividend) should be the same as the aggregate tax basis of the CSC common stock held by the U.S. Holder immediately before the Distribution, allocated between the CSC common stock and our common stock in proportion to their relative fair market values on the date of the Distribution (subject to certain adjustments). See “The Spin-Off—Material U.S. Federal Income Tax Consequences of the Spin-Off.”

We urge you to consult your tax advisor as to the specific tax consequences of the Distribution to you, including the effect of any U.S. federal, state, local or foreign tax laws and of changes in applicable tax laws.
Relationship with CSC after the Spin-Off
Following the Distribution, CSC will not own any of our shares and we will operate independently of CSC. In addition, we do not expect to depend on CSC to conduct our business following the Distribution apart from certain limited transitional support services as well as intellectual property licenses and non-U.S. agency services. In order to govern the ongoing relationships between us and CSC after the Spin-Off and to facilitate an orderly transition, we and CSC intend to enter into agreements providing for various services and rights following the Spin-Off and under which we and CSC will agree to indemnify each other against certain liabilities arising from our respective businesses. These agreements include:
 
•    
a Master Separation and Distribution Agreement that will set forth CSC’s and our agreements regarding the principal actions that both parties will take in connection with the Spin-Off and aspects of our relationship following the Spin-Off;
 
•    
a Master Transition Services Agreement pursuant to which CSC and we will provide each other specified services on a transitional basis to help ensure an orderly transition following the Spin-Off;
 
•    
a Tax Matters Agreement that will govern the respective rights, responsibilities and obligations of CSC and us after the Spin-Off with respect to all tax matters and will include restrictions to preserve the tax-free status of the Distribution;
 
•    
an Employee Matters Agreement that will address employment, compensation and benefits matters, including the allocation and treatment of assets and liabilities arising out of employee compensation and benefits programs in which our employees participated prior to the Distribution as well as matters relating to transfer to and assumption by us of assets and liabilities related to defined benefit pension plans;
 
•    
a Real Estate Matters Agreement that will address the sharing and leasing of facilities owned by CSC and/or us following the Distribution Date;
 
•    
an Intellectual Property Matters Agreement that will govern the respective rights to intellectual property developed by CSC and us including limitations on our ability to use intellectual property for certain purposes and on behalf of certain customers other than the U.S. federal government;


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•    
a Non-competition Agreement that will restrict CSC from engaging in certain business activities relating to the U.S. federal government for a period after the Distribution and restrict us from engaging in certain business activities for shared state and local customers for a period after the distribution; and
 
•    
a Non-U.S. Agency Agreement that will appoint CSC as our exclusive agent outside the U.S. for certain non-U.S. customers.
 
We describe these arrangements in greater detail under “Certain Relationships and Related Party Transactions—Agreements with CSC,” and describe some of the risks of these arrangements under “Risk Factors—Risks Relating to the Spin-Off.”
Dividend Policy
We currently anticipate paying quarterly cash dividends following the Spin-Off. The timing, declaration, amount and payment of any future dividends to our stockholders will fall within the discretion of our Board and will depend on many factors, including our financial condition, results of operations and capital requirements, legal requirements, regulatory constraints, industry practice and other business considerations that our Board deems relevant from time to time. In addition, the terms of the agreements governing our debt or debt that we may incur in the future may restrict the payments of dividends. See “Dividend Policy.”
Transfer Agent
Computershare Trust Company, N.A.
Risk Factors
Our business faces both general and specific risks and uncertainties. Our business also faces risks relating to the Spin-Off. Following the Spin-Off, we will also face risks associated with being an independent publicly-traded company. Accordingly, you should read carefully the information set forth under “Risk Factors.”


12


Summary Historical and Unaudited Pro Forma Combined Financial Data
The following table presents our summary historical and unaudited pro forma combined financial data. The combined statement of operations data and the combined statement of cash flows data for each of the twelve months ended April 3, 2015, March 28, 2014 and March 29, 2013, and the combined balance sheet data as of April 3, 2015 and March 28, 2014 set forth below are derived from our audited combined financial statements included in this Information Statement.
The summary unaudited pro forma combined financial information as of and for the twelve months ended April 3, 2015 is based upon the historical combined financial information of Computer Sciences GS included elsewhere in this Information Statement, and has been prepared to reflect the Spin-Off.
The summary financial data should be read in conjunction with our “Unaudited Pro Forma Combined Financial Statements,” “Capitalization,” “Selected Historical Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited combined financial statements and accompanying notes included in this Information Statement. The financial information included herein may not necessarily reflect our financial position, results of operations and cash flows in the future or what our financial position, results of operations and cash flows would have been had we been an independent publicly-traded company during the periods presented. In addition, our historical financial information does not reflect changes that we expect to experience in the future as a result of our separation from CSC, including changes in the financing, operations, cost structure and personnel needs of our business. Further, the historical financial information includes allocations of certain CSC corporate expenses. We believe the assumptions and methodologies underlying the allocation of these expenses are reasonable. Such expenses may not, however, be indicative of the expenses that we would have incurred if we had operated as an independent, publicly-traded company during the period presented or of the costs expected to be incurred in the future.
 
 
As of or for the twelve months
 
 
April 3, 2015
 
April 3, 2015
 
March 28, 2014
 
March 29, 2013
 
 
Pro Forma
 
Historical
 
 
(Dollars in millions)
Combined Statement of Operations data:
 
 
 
 
 
 
 
 
Revenue
$
 
$
4,070

$
4,103

$
4,676

Income from continuing operations
 
 
 
268

 
254

 
269

Net income attributable to Parent
 
 
 
252

 
296

 
281

 
 
 
 
 
 
 
 
 
Combined Balance Sheet data:
 
 
 
 
 
 
 
 
Total assets
$
 
$
2,161

$
2,216

$
2,513

Capital lease liabilities
 
 
 
151

 
169

 
169

Other long-term liabilities
 
 
 
81

 
106

 
105

 
 
 
 
 
 
 
 
 
Combined Statements of Cash Flows data:
 
 
 
 
 
 
 
 
Cash flows provided by operating activities
$
 
$
487

$
578

$
563

Cash flows (used in) provided by investing activities
 
 
 
(117
)
 
75

 
(115
)
Cash flows used in financing activities
 
 
 
(369
)
 
(659
)
 
(454
)




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RISK FACTORS
You should carefully consider all of the information in this Information Statement and each of the risks described below, which we believe are the principal risks that we face. Some of the risks relate to our business, others to the Spin-Off. Some risks relate principally to the securities markets and ownership of our common stock.
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 Information Statement. In such case, the trading price of our common stock could decline, and you could lose all or part of your investment. While we believe we have identified and discussed below the material risks affecting our business, there may be additional risks and uncertainties that we do not presently know or that we do not currently believe to be material that may adversely affect our business, financial condition and results of operations in the future.
Past performance may not be a reliable indicator of future financial performance. Future performance and historical trends may be adversely affected by the following factors, as well as other variables, and should not be relied upon to project future period results.
Risks Relating to Our Business
Contracts with the U.S. federal government and its prime contractors account for most of our revenue and earnings; consequently, a decline in the U.S. federal government budget, changes in spending or budgetary priorities or delays in contract awards may significantly and adversely affect our future revenues and limit our growth prospects.
We generated approximately 91% of our total revenues for the twelve months ended April 3, 2015 from sales to the U.S. federal government either as a prime contractor or subcontractor to other contractors. We generated approximately 53% of our total revenues from the DoD (including all branches of the U.S. military) and Intelligence Community and approximately 38% of our total revenues from civilian agencies. We expect to continue to derive most of our revenues from work performed under U.S. federal government contracts.
We also provide services to state and local governments. Approximately 8% of our total revenues for fiscal 2015 were generated from state government contracts.
Because we derive a substantial majority of our revenue from contracts with the U.S. federal government, we believe that the success and development of our business will continue to depend on our successful participation in U.S. federal government contract programs. Changes in U.S. federal government budgetary priorities could directly affect our financial performance. A significant decline in government expenditures, a shift of expenditures away from programs that we support or a change in U.S. federal government contracting policies could cause U.S. federal government agencies to reduce their purchases under contracts, to exercise their right to terminate contracts at any time without penalty or not to exercise options to renew contracts. Consequently, we closely monitor federal budget, legislative and contracting trends and activities and continually examine our strategies to take these into consideration.
The U.S. federal government continues to face significant fiscal and economic challenges such as financial deficits and the debt ceiling limit. The Administration and Congress make decisions in a constrained fiscal environment largely imposed by the Budget Control Act of 2011 (the “Budget Act”). The Budget Act established limits on discretionary spending that began with U.S. federal government fiscal year (“GFY”) 2012 (a GFY starts on October 1 and ends on September 30). The Bipartisan Budget Act of 2013 (the “BBA”) that was signed into law on December 26, 2013 did not significantly alter the spending constraints established by the Budget Act.
The Budget Act provided for additional automatic spending reductions, known as sequestration, which went into effect on March 1, 2013, and further reduced planned government spending. The BBA extended the sequestration budget caps into GFY 2023. While the defense budget sustained the largest single reduction, civil agencies and programs were also impacted significantly by sequestration cuts. In light of the Budget Act, the BBA


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and other deficit reduction pressures, it is likely that discretionary spending by the U.S. federal government will remain constrained for the foreseeable future. As a result of sequestration, our U.S. federal government customers are more cautious with contract awards and spending, resulting in longer procurement cycles, smaller award values and an inclination towards an extension of existing customer contracts, and we expect this behavior to continue.
We are continuously reviewing our operations in an attempt to identify those programs that could be at risk so that we can make appropriate contingency plans. While we have experienced reduced funding on some of our programs, and may see further reductions, we do not expect the cancellation of any of our major programs. Although sequestration continued into GFY 2014, the BBA revised the amount of discretionary spending to be reduced for GFY 2014 and GFY 2015 under the Budget Act. Even with the reduced amount of sequestration for GFY 2014 and GFY 2015, the resulting automatic across-the-board budget cuts are having, and may continue to have, significant consequences for our business and industry.
Our business could be adversely affected by delays caused by our competitors protesting major contract awards received by us, resulting in delay of the initiation of work.
Our contracts and subcontracts are composed of a wide range of contract types, including firm fixed-price, cost reimbursement, and time-and-materials. Some contracts are ordering vehicles, including indefinite delivery/indefinite quantity and government-wide acquisition contracts such as General Services Administration (“GSA”) schedule contracts, and orders under these contracts include firm fixed-price, time-and-materials or cost reimbursable types. We expect that a majority of the business that we seek in the foreseeable future will be awarded through a competitive bidding process. The U.S. federal government has increasingly relied on contracts that are subject to a competitive bidding process, including indefinite delivery/indefinite quantity, GSA schedule and other multi-award contracts, which has resulted in greater competition, increased pricing pressure and more protested awards. It can take many months to resolve protests by one or more of our competitors of contract or task order awards we receive. The resulting delay in the start-up and funding of the work under these vehicles may cause our actual results to differ materially and adversely from those anticipated. Due to the competitive process to obtain contracts and an increase in bid protests, we may be unable to achieve or sustain revenue growth and profitability.
Our U.S. federal government contracts may be terminated by the government at any time and may contain other provisions permitting the government not to continue with contract performance and, if lost contracts are not replaced, our operating results may differ materially and adversely from those anticipated.
We derive substantially all of our revenue from U.S. federal government contracts that typically span one or more base years and one or more option years. The option periods typically cover more than half of a contract’s potential duration. U.S. federal government agencies generally have the right not to exercise these option periods. In addition, our contracts typically also contain provisions permitting a government customer to terminate the contract for its convenience. A decision not to exercise option periods or to terminate contracts for convenience could result in significant revenue shortfalls from those anticipated. If the government terminates a contract for convenience, we may recover only our incurred or committed costs, settlement expenses and profit on work completed prior to the termination. If the government terminates a contract for default, we may be unable to recover even those amounts and instead may be liable for excess costs incurred by the government in procuring undelivered items and services from another source. As is common with government contractors, we have experienced and continue to experience occasional performance issues under certain of our contracts. Depending upon the value of the matters affected, a performance problem that impacts our performance of a program or contract could cause our actual results to differ materially and adversely from those anticipated.
Our state and local government contracts subject us to similar budgetary and termination risks. Unlike U.S. federal government contracts, where limitations of liability are established in the Federal Acquisition Regulation (the “FAR”) and agency supplements, state and local government contracts have negotiated liability limits that are often higher than typical commercial liability caps and, in some instances, are uncapped.
U.S. federal government contracts contain numerous provisions that are unfavorable to us.


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U.S. federal government contracts contain provisions and are subject to laws and regulations that give the government rights and remedies, some of which are not typically found in commercial contracts, including allowing the government to:
cancel multi-year contracts and related orders if funds for contract performance for any subsequent year become unavailable;
claim rights in systems and software developed by us;
suspend or debar us from doing business with the U.S. federal government or with a governmental agency;
impose fines and penalties and subject us to criminal prosecution;
control or prohibit the export of our data and technology; and
impose special handling and control requirements for controlled unclassified information.
Certain contracts also contain organizational conflict of interest (“OCI”) clauses that limit our ability to compete for or perform certain other contracts. OCIs arise any time we engage in activities that: (i) make us unable or potentially unable to render impartial assistance or advice to the government; (ii) impair or might impair our objectivity in performing contract work; or (iii) provide us with an unfair competitive advantage. For example, when we work on the design of a particular system, we may be precluded from competing for the contract to develop and install that system or supporting a prime contractor. We have divested lines of business in the past to avoid and/or mitigate OCIs. Depending upon the value of the matters affected, an OCI issue that precludes our participation in, or performance of, a program or contract could cause our actual results to differ materially and adversely from those anticipated.
Our failure to comply with a variety of complex procurement rules and regulations could result in our being liable for penalties, including termination of our U.S. federal government contracts, disqualification from bidding on future U.S. federal government contracts and suspension or debarment from U.S. federal government contracting.
We must comply with laws and regulations relating to the formation, administration and performance of U.S. federal government contracts, which affect how we do business with our customers and may impose added costs on our business. Some significant statutes and regulations that affect us include:
the FAR and agency supplements, which regulate the formation, administration and performance of U.S. federal government contracts;
the Truth in Negotiations Act, which requires certification and disclosure of cost and pricing data in connection with certain contract negotiations;
the Procurement Integrity Act, which regulates access to competitor bid and proposal information and government source selection information, and our ability to provide compensation to certain former government officials;
the Civil False Claims Act, which provides for substantial civil penalties for violations, including for submission of a false or fraudulent claim to the U.S. federal government for payment or approval; and
the U.S. Government Cost Accounting Standards, which impose accounting requirements that govern our right to reimbursement under certain cost-based U.S. federal government contracts.


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Our business is subject to reviews, audits and cost adjustments by the U.S. federal government which, if resolved unfavorably, could adversely affect our profitability, cash position or growth prospects.
U.S. federal government agencies, including the Defense Contract Audit Agency (“DCAA”), the DCMA and others, routinely audit and/or review a contractor’s performance on government contracts, indirect rates and pricing practices, and compliance with applicable contracting and procurement laws, regulations and standards. They also review the adequacy of the contractor’s compliance with government standards for its business systems, including its accounting system, earned value management system, estimating system, materials management and accounting system, property management system and purchasing system.
Both contractors and the U.S. federal government agencies conducting these audits and reviews have come under increased scrutiny. As a result, the current audits and reviews have a greater scope, have become more rigorous and the standards to which we are held are being more strictly interpreted, increasing the likelihood of an audit or review resulting in an adverse outcome. During the course of its audits, the DCAA has made unfavorable audit findings and recommendations with regard to the qualifications of employees and subcontractors for contract labor categories that were charged under contracts and have concluded that costs we deemed to be allowable costs under the FAR cost principles were unallowable. We have vigorously disputed many of the DCAA’s findings over the years. Some of these audits have been resolved through negotiation with a lesser amount recovered by the government while other audit findings remain in dispute. This is a typical pattern for us and the DCAA that we expect to continue.
A finding of significant control deficiencies in our system audits or other reviews can result in decremented billing rates to our U.S. federal government customers until the control deficiencies are corrected and our corrections are accepted by the DCMA. Government audits and reviews may conclude that our practices are not consistent with applicable laws and regulations and result in adjustments to contract costs and mandatory customer refunds. Such adjustments can be applied retroactively, which could result in significant customer refunds. The receipt of adverse audit findings or the failure to obtain an “approved” determination of our various accounting and management internal control systems from the responsible U.S. federal government agency could significantly and adversely affect our business, including our ability to bid on new contracts and our competitive position in the bidding process. A determination of non-compliance with applicable contracting and procurement laws, regulations and standards could also result in the U.S. federal government imposing penalties and sanctions against us, including the withholding of payments, suspension of payments and increased government scrutiny that could delay or adversely affect our ability to invoice and receive timely payment on contracts, perform contracts or compete for contracts with the U.S. federal government. Most of our subcontractors are subject to these same regulatory requirements. As a prime contractor, we may incur additional costs or our ability to invoice and receive timely payment on contracts may be affected if a subcontractor does not comply with these regulations and its lack of compliance affects our performance under a prime contract.
CSC’s indirect cost audits by the DCAA have not been completed for fiscal 2004 and subsequent fiscal years. Although we have recorded contract revenues subsequent to fiscal 2003 based upon our estimate of costs that we believe will be approved upon final audit or review, we do not know the outcome of any ongoing or future audits or reviews and adjustments and, if future adjustments exceed our estimates, our profitability would be adversely affected.
Our state and local government contracts are also subject to audits and reviews by state and local government agencies including state comptrollers and inspector generals. Where federal funds are used by a state to fund all or part of a contract we perform, the state and the Computer Sciences GS Business may be subject to audit by a U.S. federal government agency and/or the Government Accountability Office. See “Business—Legal Proceedings” for more information.


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Our business is subject to governmental review and investigation which could adversely affect our profitability, cash position and growth prospects.
We are routinely subject to governmental investigations relating to our contracts and operations. If a review or investigation identifies improper or illegal activities, we may be subject to civil or criminal penalties or administrative sanctions, including the termination of contracts, forfeiture of profits, the triggering of price reduction clauses, suspension of payments, fines and suspension or debarment from doing business with governmental agencies. We may suffer harm to our reputation if allegations of impropriety are made against us, which would impair our ability to win new contract awards or receive contract renewals. Penalties and sanctions are not uncommon in our industry. If we incur a material penalty or administrative sanction or otherwise suffer harm to our reputation, our profitability, cash position and future prospects could be adversely affected.
More generally, increases in scrutiny and investigations from government organizations, legislative bodies or agencies into business practices and major programs supported by contractors may lead to increased legal costs and may harm our reputation, profitability, growth prospects and ability to recruit and retain employees.
If our customers request out-of-scope work, we may not be able to collect our receivables, which would materially and adversely affect our profitability.
We may perform work for the U.S. federal government and state governments, with respect to which we must file requests for equitable adjustment or claims with the proper agency to seek recovery in whole or in part, for out-of-scope work directed or caused by the government customer in support of its critical missions. While we may resort to other methods to pursue our claims or collect our receivables, these methods are expensive and time consuming and successful collection is not guaranteed. Failure to collect our receivables or prevail on our claims would have an adverse effect on our profitability.
The U.S. federal government may adopt new contract rules and regulations or revise its procurement practices in a manner adverse to us at any time.
Our industry has experienced, and we expect it will continue to experience, significant changes to business practices as a result of an increased focus on affordability, efficiencies and recovery of costs, among other items. U.S. federal government agencies may face restrictions or pressure regarding the type and amount of services that they may obtain from private contractors. Legislation, regulations and initiatives dealing with procurement reform, mitigation of potential conflicts of interest, deterrence of fraud and environmental responsibility or sustainability, as well as any resulting shifts in the buying practices of U.S. federal government agencies, such as increased usage of fixed-price contracts, multiple award contracts and small business set-aside contracts, could have adverse effects on government contractors, including us. Any of these changes could impair our ability to obtain new contracts or renew our existing contracts when those contracts are recompeted. Any new contracting requirements or procurement methods could be costly or administratively difficult for us to implement and could adversely affect our future revenues, profitability and prospects.
Misconduct of employees, subcontractors, agents and business partners could cause us to lose existing contracts or customers and adversely affect our ability to obtain new contracts and customers and could have a significant adverse impact on our business and reputation.
Misconduct could include fraud or other improper activities such as falsifying time or other records and violations of laws and regulations, including anti-corruption laws. Other examples could include the failure to comply with our Code of Business Conduct, policies and procedures or with federal, state or local government procurement regulations, rules regarding the use and safeguarding of classified or other protected information, legislation regarding the pricing of labor and other costs in government contracts, laws and regulations relating to environmental, health or safety matters, bribery of foreign government officials, international trade controls (particularly the International Traffic and Arms Regulations), lobbying or similar activities and any other applicable laws or regulations. Any data loss or information security lapses resulting in the compromise of personal information or the improper use or disclosure of sensitive or classified information could result in claims, remediation costs,


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regulatory sanctions against us, loss of current and future contracts and serious harm to our reputation. Although we have implemented policies, procedures and controls to prevent and detect these activities, these precautions may not prevent all misconduct and, as a result, we could face unknown risks or losses. Our failure to comply with applicable laws or regulations or misconduct by any of our employees, subcontractors, agents or business partners could damage our reputation and subject us to fines and penalties, restitution or other damages, loss of security clearance, loss of current and future customer contracts and suspension or debarment from contracting with federal, state or local government agencies, any of which would adversely affect our business and our future results.
Our ability to perform services for certain of our U.S. federal government customers is dependent on our ability to maintain necessary security clearances.
Select U.S. federal government customers require us to maintain security clearances for certain of our facilities used in the performance of classified contracts. Employees who perform under certain government contracts are required to possess appropriate personnel security clearances for access to classified information granted by the respective government agency. The competition for qualified personnel who possess security clearance is very strong in certain public sector markets. In the event that a government customer were to revoke the facility and/or personnel clearances of all or substantially all of the employees performing work under a classified contract, such revocation could be grounds for termination of the contract by the government customer. Similarly, if we are unable to hire sufficient qualified and cleared personnel to meet contractual commitments, a contract could be terminated for non-performance. Under either circumstance, such termination, depending on the contract value, could have a material adverse effect on our consolidated financial position, results of operations and cash flows.
We have contracts with the U.S. federal government that are classified which may limit investor insight into portions of our business.
We derive a portion of our revenues from classified programs with the U.S. federal government that are subject to security restrictions which preclude the dissemination of information that is classified for national security purposes. We are limited in our ability to provide information about these classified programs, their risks or any disputes or claims relating to such programs. As a result, investors may have less insight into our classified programs than our other programs and therefore less ability to fully evaluate the risks related to our classified business.
Our failure to attract and retain qualified employees, including our senior management team, could adversely affect our business.
Our success depends to a substantial degree on our ability to recruit and retain the technically-skilled personnel we need to serve our customers effectively. Our business involves the development of tailored solutions for our customers, a process that relies heavily upon the expertise and services of our employees. Accordingly, our employees are our most valuable resource. Competition for skilled personnel in the IT services industry is intense, and technology service companies often experience high attrition among their skilled employees. There is a shortage of people capable of filling these positions, particularly those with government security clearances, and they are likely to remain a limited resource for the foreseeable future. Recruiting and training these personnel require substantial resources. Our failure to attract and retain technical personnel could increase our costs of performing our contractual obligations, reduce our ability to efficiently satisfy our customers’ needs, limit our ability to win new business and cause our actual results to differ materially and adversely from those anticipated.
In addition to attracting and retaining qualified technical personnel, we believe that our success will depend on the continued employment of our senior management team and its ability to generate new business and execute projects successfully. Our senior management team is very important to our business because personal reputations and individual business relationships are a critical element of obtaining and maintaining customer engagements in our industry, particularly with agencies performing classified operations. The loss of any of our senior executives could cause us to lose customer relationships or new business opportunities, which could cause actual results to differ materially and adversely from those anticipated.


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Our markets are highly competitive, and many of the companies we compete against have substantially greater resources.
The markets in which we operate include a large number of participants and are highly competitive. Many of our competitors may compete more effectively than we can because they are larger, better financed and better known companies than we are. In order to stay competitive in our industry, we must also keep pace with changing technologies and customer preferences. If we are unable to differentiate our services from those of our competitors, our revenue may decline. In addition, our competitors have established relationships among themselves or with third parties to increase their ability to address customer needs. As a result, new competitors or alliances among competitors may emerge and compete more effectively than we can. There is also a significant industry trend towards consolidation, which may result in the emergence of companies which are better able to compete against us. The results of these competitive pressures could cause our actual results to differ materially and adversely from those anticipated.
We may not realize as revenues the full amounts reflected in our backlog, which could adversely affect our expected future revenues and growth prospects.
As of April 3, 2015, our total backlog was $11.1 billion, which included $2.6 billion in funded backlog. Due to the U.S. federal government’s ability to not exercise contract options or to terminate, modify or curtail our programs or contracts and the rights of our state customers to cancel contracts and purchase orders in certain circumstances, we may realize less than expected or in some cases never realize revenues from some of the contracts that are included in our backlog. Our unfunded backlog, in particular, contains management’s estimate of amounts expected to be realized on unfunded contract work that may never be realized as revenues. If we fail to realize as revenues amounts included in our backlog, our expected future revenues, growth prospects and profitability could be adversely affected.
Our earnings and profitability may vary based on the mix of our contracts and may be adversely affected by our failure to accurately estimate and manage costs, time and resources.
We generate revenues under various types of contracts, which include cost reimbursement, time-and-materials, fixed-price-level-of-effort and firm-fixed-price contracts. The accounting for these contracts requires judgment relative to assessing risks, estimating contract revenues and costs, and making assumptions for schedule and technical issues. Our earnings and profitability may vary materially depending on changes in the proportionate amount of revenues derived from each type of contract, the nature of offerings provided, our ability to negotiate advantageous reseller agreements with vendors as well as the achievement of performance objectives and the stage of performance at which the right to receive fees, particularly under incentive and award fee contracts, is finally determined. Subcontractors’ assertions are also assessed and considered in estimating costs and profitability. In addition, our contracts contain provisions relating to cost controls and audit rights.
To varying degrees, each contract type involves some risk that we could underestimate the costs and resources necessary to fulfill the contract. Cost reimbursement and time-and-materials contracts generally have lower profitability than firm fixed-price contracts; however, due to their nature, fixed-price contract types tend to have more risk than cost type contracts. While firm fixed-price contracts allow us to benefit from cost savings, these contracts also increase our exposure to the risk of cost overruns. Revenues derived from firm fixed-price contracts represented approximately 44% of our total revenues for fiscal 2015. When making proposals on these types of contracts, we rely heavily on our estimates of costs and timing for completing the associated projects, as well as assumptions regarding technical issues. In each case, our failure to accurately estimate costs or the resources and technology needed to perform our contracts or to effectively manage and control our costs during the performance of our work could result, and in some instances has resulted, in reduced profits or in losses.
More generally, any increased or unexpected costs or unanticipated delays in connection with the performance of our contracts, including costs and delays caused by contractual disputes or other factors outside of our control, such as performance failures of our subcontractors, government shutdown due to congressional inaction, the effect of any changes in laws or regulations, natural disasters or other force majeure events, could make our contracts less


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profitable than expected or unprofitable. Our profitability is adversely affected when we incur contract costs that we cannot bill to our customers.
Internal system or service failures, including as a result of cyber or other security threats, could disrupt our business and impair our ability to effectively provide our services to our customers, which could damage our reputation and have a material adverse effect on our business and results of operations.
We create, deploy, and maintain IT and engineering systems, and provide services that are often critical to our customers’ missions, some of which involve sensitive information and may be conducted in war zones or other hazardous environments. As a result, we are subject to systems or service failures, not only resulting from our own failures or the failures of third-party service providers, natural disasters, power shortages, or terrorist attacks, but also from continuous exposure to cyber and other security threats, including computer malware and attacks by computer hackers or physical break-ins. There has been an increase in the frequency and sophistication of the cyber and security threats we face, with attacks ranging from those common to businesses generally to those that are more advanced and persistent, which may target us because we hold controlled unclassified, classified or other sensitive information. As a result, we face a heightened risk of a security breach or disruption with respect to sensitive information resulting from an attack by computer hackers, foreign governments, and cyber terrorists. We have been the target of these types of attacks in the past and future attacks are likely to occur. Threat incidents identified to date have not resulted in a material adverse effect on us or our business operations. Our security measures are designed to identify and protect against security breaches and cyber attacks; however, if successful, these types of attacks on our network or other systems or service failures could have a material adverse effect on our business and results of operations, due to, among other things, the loss of customer or proprietary data, interruptions or delays in our customers’ businesses and damage to our reputation. In addition, the failure or disruption of our systems, communications or utilities could cause us to interrupt or suspend our operations, which could have a material adverse effect on our business and results of operations. In addition, if our employees inadvertently do not adhere to appropriate information security protocols, our protocols are inadequate, or our employees intentionally avoid these protocols, our or our customers’ sensitive information may be released thereby causing significant negative impacts to our reputation and could expose us or our customers to liability.
If our systems, services or other applications have significant defects or errors, are successfully attacked by cyber and other security threats, suffer delivery delays, or otherwise fail to meet our customers’ security expectations, we may:
lose revenue due to adverse customer reaction;
be required to provide additional services or remediation to a customer at no charge;
incur additional costs related to monitoring and increasing our security posture;
lose revenue due to the deployment of internal staff for remediation efforts instead of performing billable work;
receive negative publicity, which could damage our reputation and adversely affect our ability to attract or retain customers;
suffer claims by customers or impacted third parties for substantial damages, particularly as a result of any successful network or systems breach and exfiltration of customer and/or third-party information; or
lose our ability to perform and pursue classified work and/or experience a suspension of our export privileges.


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In addition to any costs resulting from contract performance or required corrective action, these failures may result in increased costs or loss of revenue if they result in customers postponing subsequently scheduled work or canceling or failing to renew contracts.
The costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means. Additionally, some cyber technologies and techniques that we utilize or develop may raise potential liabilities related to legal compliance, intellectual property and civil liberties, including privacy concerns, which may not be fully insured or indemnified. Our errors and omissions insurance coverage may not continue to be available on reasonable terms or in sufficient amounts to cover one or more large claims or the insurer may disclaim coverage as to some types of future claims. The successful assertion of any large claim against us could seriously harm our business. Even if not successful, these claims could result in significant legal and other costs, may be a distraction to our management and may harm our customer relationships. In certain new business areas, we may not be able to obtain sufficient insurance and may decide not to accept or solicit business in these areas.
As a contractor supporting national security customers, we are also subject to regulatory compliance requirements under the Defense Federal Acquisition Regulations and other federal regulations requiring that our networks and IT systems comply with the security and privacy controls in National Institute of Standards and Technology Special Publication 800-53. Failure to comply with the security control requirements could result in our ineligibility to bid for certain agency contracts.
The strength of our financial capitalization and our credit ratings may impact our borrowing costs, our ability to raise additional capital for future needs, and our competitiveness.
We expect our balance sheet to be capitalized consistent with an investment grade credit profile and expect to execute financial policies consistent with such strategy. However, there is no assurance that our credit ratings will reflect such capitalization or financial policies, as our credit ratings are determined by credit rating agencies from their own independent review, assessment and information sources. Our credit ratings are subject to revision, suspension or withdrawal by one or more rating agencies at any time. Rating agencies may review our credit ratings 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 adverse changes in our credit ratings were to occur, it could result in higher borrowing costs, may limit our access to capital markets or may negatively impact our financial condition and the market price for our common stock. Any ratings downgrades could negatively impact the perception of us by lenders and other third parties, including our customers. Some of our customer contracts are long-term and mission critical to our customers’ operations, and we believe that our credit ratings may be relied upon to assess our financial strength and our financial wherewithal to perform such critical services. In certain situations, we are required to procure financial surety bonds in order to guarantee our financial performance, and the cost of such surety bonds may increase as a result of adverse changes in our credit ratings.
We may make acquisitions, which could involve inherent risks and uncertainties.
We may make acquisitions, which could involve inherent risks and uncertainties, including:
the difficulty in integrating newly acquired businesses and operations in an efficient and effective manner and acclimating the employees to our culture of compliance, integrity and values;
the challenge in achieving strategic objectives, cost savings and other anticipated benefits;
the potential loss of key employees of the acquired businesses;
the potential diversion of senior management’s attention from our operations;


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the risks associated with integrating financial reporting and internal control systems;
the difficulty in expanding IT systems and other business processes to incorporate the acquired businesses;
potential future impairments of goodwill associated with the acquired businesses; and
in some cases, the potential for increased regulation.
If an acquired business fails to operate as anticipated, cannot be successfully integrated with our existing business, or one or more of the other risks and uncertainties identified occur in connection with our acquisitions, our business, results of operations and financial condition could be adversely affected.
Our ability to pursue strategic acquisitions and partnerships may impact our ability to compete in the markets we serve.
Besides pursuing organic growth, we intend to explore potential strategic acquisitions that could allow us to expand our operations. However, we may be unable to identify attractive candidates or complete acquisitions on terms favorable to us. In addition, our ability to successfully integrate the operations we acquire and leverage these operations to generate revenue and earnings growth may significantly impact future revenue and earnings as well as investor returns. Integrating acquired operations is a significant challenge and there is no assurance that we will be able to manage such integrations successfully. Failure to successfully integrate acquired operations may adversely affect our cost structure, thereby reducing our margins and return on investment.
We have also entered into, and expect to seek to enter into additional strategic partnerships with other industry participants as part of an effort to expand our business. However, we may be unable to identify attractive strategic partnership candidates or complete such 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 do not prove advantageous to our business, our investments in such partnerships and our anticipated business expansion could be adversely affected.
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, our ability to consummate or integrate acquisitions or to consummate or implement our strategic partnerships may be materially and adversely affected.
We could suffer 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 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 have acquired or internally developed software and other long-lived intangible assets that are tested for impairment whenever events or changes in circumstances indicate the carrying amount of the asset, or group of assets, may not be recoverable. If the carrying amount is not recoverable and it exceeds its fair value, a non-cash impairment charge would be recognized.
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.


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We are defendants in pending litigation that may have a material and adverse impact on our profitability.
As noted in “Business—Legal Proceedings” and Note 18 to the Combined Financial Statements, we are currently party to a number of disputes which 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 which may have a material and adverse impact on our liquidity and earnings.
We may be exposed to negative publicity and other potential risks if we are unable to maintain effective internal controls over financial reporting.
We will be required under the Sarbanes-Oxley Act of 2002 to prepare a report of management on our internal controls that contains an assessment by management of the effectiveness of our internal control over financial reporting. In addition, the public accounting firm that will be auditing our financial statements will report on the effectiveness of our internal control over financial reporting. 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 us with 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. The resulting negative publicity may materially and adversely affect our business and stock price.
Pension costs are dependent on several economic assumptions which if changed may cause our future earnings and cash flow to fluctuate significantly as well as affect the affordability of our products and services.
As a result of the Internal Reorganization, we expect to assume most obligations under substantially all of CSC’s material U.S. domestic defined benefit pension plans, excluding various supplemental executive retirement plans, including substantial assets and liabilities in respect of pension obligations to current and former CSC employees who are not our current or former employees. We will also have obligations to provide certain health care and life insurance benefits to eligible retirees. The impact of these plans on our U.S. generally accepted accounting principles (“GAAP”) earnings may be volatile in that the amount of expense we record for our pension and other postretirement benefit plans may materially change from year to year because those calculations are sensitive to changes in several key economic assumptions that will impact our annual remeasurement “mark-to-market,” or under immediate recognition, accounting results, including interest rates, realized investment returns, and other actuarial assumptions including participant longevity (also known as mortality) estimates. Changes in these factors may also affect our required plan funding, cash flow and stockholders’ equity. In addition, the funding of our plans and recovery of costs on our contracts, as described below, may be subject to changes caused by legislative or regulatory actions. CSC has taken certain actions over the last few years to mitigate the volatility the defined benefit pension plans may have on our earnings and cash flows, including amendments made in 2009 to certain of our defined benefit pension plans to freeze pension accrual benefits, making discretionary contributions from proceeds from the sale of businesses, diversifying our investment asset allocation strategies, and liquidating liabilities via lump sum settlements. In addition, CSC implemented heath care insurance exchanges during fiscal 2015 to improve local medical care and to reduce our costs in providing retiree medical benefits and other post-employment benefits and, where possible, eliminated future financial impact on us from inflation in retiree medical care costs. However, the impact of these actions may be less than anticipated or may be offset by other pension and other post-employment benefits (“OPEB”) cost increases due to factors such as changes in actuarial assumptions, reduced investment returns, or changes in discount rates.
Changes in our tax rates could affect our future results.
Our future effective tax rates could be affected by 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 U.S. Internal Revenue Service (“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.


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We may be adversely affected by disruptions in the credit markets, including disruptions that reduce our suppliers’ access to credit.
The credit markets have historically been volatile and therefore it is not possible for us to predict the ability of our suppliers or partners 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 certain government suppliers are unable to obtain financing to meet payment or delivery obligations to us.
We will have substantial indebtedness after the Spin-Off and Special Dividend and we will have the ability to incur significant additional indebtedness, which could adversely affect our business, financial condition and results of operations.
Following the Spin-Off and Special Dividend, we will have substantial indebtedness and we may increase our indebtedness in the future. As of April 3, 2015, after giving effect to the incurrence of indebtedness in connection with the Spin-Off and Special Dividend, our pro forma total outstanding indebtedness would have been approximately $1.65 billion.
Our level of indebtedness could have important consequences. For example, it could:
increase our vulnerability to general adverse economic and industry conditions;
limit our ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements or to carry out other aspects of our business;
increase our cost of borrowing;
require us to dedicate a substantial portion of our cash flow from operations to payments on indebtedness, thereby reducing the availability of such cash flow to fund working capital, capital expenditures and other general corporate requirements or to carry out other aspects of our business;
limit our ability to make material acquisitions or take advantage of business opportunities that may arise;
expose us to fluctuations in interest rates, to the extent our borrowings bear variable rates of interest;
limit our flexibility in planning for, or reacting to, changes in our business and industry; and
place us at a potential disadvantage compared to our competitors that have less debt.
Our ability to make scheduled payments on and to refinance our indebtedness will depend on and be subject to our future financial and operating performance, which in turn is affected by general economic, financial, competitive, business and other factors beyond our control, including the availability of financing in the banking and capital markets. Our business may fail to generate sufficient cash flow from operations or to borrow funds in an amount sufficient to enable us to make payments on our debt, to refinance our debt or to fund our other liquidity needs. If we were unable to make payments on or refinance our debt or obtain new financing under these circumstances, we would have to consider other options, such as asset sales, equity issuances or negotiations with our lenders to restructure the applicable debt. The terms of debt agreements that we enter into in connection with the Spin-Off and market or business conditions may limit our ability to take some or all of these actions. In addition, if we incur additional debt, the related risks described above could be exacerbated.


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We may need to raise additional capital, and we cannot be sure that additional financing will be available.
Subsequent to the Spin-Off, we will need to fund our ongoing working capital, capital expenditure and financing requirements through cash flows from operations and new sources of capital, including additional financing. Our ability to obtain future financing will depend, among other things, on our financial condition and results of operations as well as on the condition of the capital markets or other credit markets at the time we seek financing. Increased volatility and disruptions in the financial markets could make it more difficult and more expensive for us to obtain financing. In addition, the adoption of new statutes and regulations, the implementation of recently enacted laws or new interpretations or the enforcement of older laws and regulations applicable to the financial markets or the financial services industry could result in a reduction in the amount of available credit or an increase in the cost of credit. Historically, we have relied on CSC and its credit facilities and its access to capital for our financing needs but, after the Spin-Off, we will not have access to CSC’s credit for our future financings. There can be no assurance that, as a new independent public company, we will have sufficient access to the capital markets on terms that we will we find acceptable.
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 and equitable relief.
The solutions we provide to our customers may inadvertently infringe on the intellectual property rights of third parties resulting in claims for damages and equitable relief against us or our customers. Customer agreements can require a solution provider to indemnify the customer for infringement. Under the FAR, the government can require a contractor to indemnify it for infringement. 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.
Our business may suffer if we cannot continue to enforce the intellectual property rights on which our business depends.
Our business carefully maintains a combination of patents, trade secrets, trademarks, trade names, copyrights and proprietary rights, as well as contractual arrangements, including licenses, to protect our intellectual property. Our other intellectual property rights are important to our continued success and our competitive position. See “Business—Intellectual Property” for a description of our intellectual property assets. Any impairment of our intellectual property, including due to changes in U.S. and worldwide intellectual property laws or the absence of effective legal protections or enforcement measures, could adversely impact our business, financial condition and results of operations.
We have been, and may be in the future, subject to claims of intellectual property infringement, which could require us to change our business practices.
Successful claims that we infringe the intellectual property of others could require us to enter into royalty or licensing agreements on unfavorable terms, incur substantial monetary liability or be enjoined preliminarily or permanently from further use of the intellectual property in question. This could require us to change our business practices and limit our ability to compete effectively. Even if we believe that claims of intellectual property infringement are without merit, defending against the claims can be time-consuming and costly and divert management’s attention and resources away from our business.
Risks Relating to the Spin-Off
The Spin-Off could result in significant tax liability to CSC and its stockholders.
Completion of the Spin-Off is conditioned on CSC’s receipt of a written opinion of Allen & Overy LLP to the effect that the Distribution should qualify for non-recognition of gain and loss, or “tax-free” treatment under Section 355 of the Code. CSC can waive receipt of the tax opinion as a condition to the completion of the Spin-Off.


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The opinion of counsel does not address any U.S. state, local or foreign tax consequences of the Spin-Off. The opinion assumes that the Spin-Off will be completed according to the terms of the Master Separation and Distribution Agreement and relies on facts as stated in the Master Separation and Distribution Agreement, the Tax Matters Agreement, the other ancillary agreements, this Information Statement and a number of other documents. In addition, the opinion is based on certain representations as to factual matters from, and certain covenants by, CSC and us. The opinion cannot be relied on if any of the assumptions, representations or covenants are incorrect, incomplete or inaccurate or are violated in any material respect.
The opinion of counsel is not binding on the IRS or the courts, and there can be no assurance that the IRS or a court will not take a contrary position. CSC has not requested, and does not intend to request, a ruling from the IRS regarding the U.S. federal income tax consequences of the Spin-Off.
If the Distribution were determined not to qualify for tax-free treatment, U.S. Holders could be subject to tax. In this case, each U.S. Holder who receives our common stock in the Distribution would generally be treated as receiving a distribution in an amount equal to the fair market value of our common stock received, which would generally result in: (i) a taxable dividend to the U.S. Holder to the extent of that U.S. Holder’s pro rata share of CSC’s current and accumulated earnings and profits; (ii) a reduction in the U.S. Holder’s basis (but not below zero) in CSC common stock to the extent the amount received exceeds the stockholder’s share of CSC’s earnings and profits; and (iii) a taxable gain from the exchange of CSC common stock to the extent the amount received exceeds the sum of the U.S. Holder’s share of CSC’s earnings and profits and the U.S. Holder’s basis in its CSC common stock.
If the Distribution were determined not to qualify for tax-free treatment, then CSC would recognize gain in an amount up to the fair market value of our common stock held by it immediately before the Distribution. Under certain circumstances, we could have an indemnification obligation to CSC with respect to tax on any such gain. See below and “The Spin-Off—Material U.S. Federal Income Tax Consequences of the Spin-Off.”
We could have an indemnification obligation to CSC if the Distribution were determined not to qualify for tax-free treatment, which could materially adversely affect our financial condition.
If, due to any of our representations being untrue or our covenants being breached, it were determined that the Distribution did not qualify for tax-free treatment under Section 355 of the Code, we could be required to indemnify CSC for the resulting taxes and related expenses. Any such indemnification obligation could materially adversely affect our financial condition.
In addition, Section 355(e) of the Code generally creates a presumption that the Distribution would be taxable to CSC, but not to stockholders, for U.S. federal income tax purposes, if we or our stockholders were to engage in transactions that result in a 50% or greater change by vote or value in the ownership of our stock during the period beginning two years before the date of the Distribution through two years after the date of the Distribution, unless it were established that such transactions and the Distribution were not part of a plan or series of related transactions giving effect to such a change in ownership. If the Distribution were taxable to CSC due to such a 50% or greater change in ownership of our stock, CSC would recognize gain in an amount up to the fair market value of our common stock held by it immediately before the Distribution, and we generally would be required to indemnify CSC for the tax on such gain and related expenses. Any such indemnification obligation could materially adversely affect our financial condition. See “Certain Relationships and Related Party Transactions—Agreements with CSC—Tax Matters Agreement.”
We intend to agree to numerous restrictions to preserve the tax-free treatment of the Distribution, which may reduce our strategic and operating flexibility.
We intend to agree in the Tax Matters Agreement to covenants and indemnification obligations that address compliance with Section 355(e) of the Code. These covenants and indemnification obligations may limit our ability to pursue strategic transactions or engage in new businesses or other transactions that may maximize the value of


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our business, and might discourage or delay a strategic transaction that our stockholders may consider favorable. See “Certain Relationships and Related Party Transactions—Agreements with CSC—Tax Matters Agreement.”
Our ability to expand our business beyond U.S. federal and certain state and local government customers may be constrained.
We intend to enter into agreements with CSC prior to the Distribution that will restrict our ability to use certain intellectual property to sell our services to customers other than our existing customer base (i.e., U.S. federal and certain state and local government customers) for a period after the Distribution. In addition, we expect to appoint CSC as our exclusive agent outside the U.S. with regard to certain non-U.S. customers, subject to some exceptions, for a period after the Distribution and to agree not to solicit certain shared state and local government customers for a period after the Distribution. While we have no current plans to expand our existing business in ways that would require us to engage in business beyond the scope of the rights to intellectual property we expect to have at the time of Distribution, we would be unable to engage in business activities outside the scope of that license after the Distribution until the expiration of those restrictions unless we develop or acquire new intellectual property. See “Certain Relationships and Related Party Transactions-Agreements with CSC” for more information.
We may be unable to achieve some or all of the benefits that we expect to achieve from the Spin-Off.
We believe that, as an independent publicly-traded company, we will be able to, among other things, better focus our financial and operational resources on our specific business, implement and maintain a capital structure designed to meet our specific needs, design and implement corporate strategies and policies that are targeted to our business, more effectively respond to industry dynamics and create effective incentives for our management and employees that are more closely tied to our business performance. However, by separating from CSC, we may be more susceptible to market fluctuations and other adverse events. In addition, we may be unable to achieve some or all of the benefits that we expect to achieve as an independent company in the time we expect, if at all. The completion of the Spin-Off will also require significant amounts of our management’s time and effort, which may divert management’s attention from operating and growing our business. If we fail to achieve some or all of the benefits that we expect to achieve as an independent company, or do not achieve them in the time we expect, our business, financial condition and results of operations could be adversely affected.
We may be unable to make, on a timely or cost-effective basis, the changes necessary to operate as an independent publicly-traded company, and we may experience increased costs after the Spin-Off.
We have historically operated as part of CSC’s corporate organization, and CSC has provided us with various corporate functions. Following the Spin-Off, CSC will have no obligation to provide us with assistance other than the transition services described under “Certain Relationships and Related Party Transactions—Agreements with CSC.” These services do not include every service that we have received from CSC in the past, and CSC is only obligated to provide these services for limited periods following completion of the Spin-Off. Accordingly, following the Spin-Off, we will need to provide internally or obtain from unaffiliated third parties the services we currently receive from CSC. These services include IT, tax administration, treasury activities, technical accounting, benefits administration, procurement, legal and ethics and compliance program administration, the effective and appropriate performance of which are critical to our operations. We may be unable to replace these services in a timely manner or on terms and conditions as favorable as those we receive from CSC. Because our business has historically operated as part of the wider CSC organization, we may be unable to successfully establish the infrastructure or implement the changes necessary to operate independently, or may incur additional costs that could adversely affect our business. As part of CSC, we have benefited from CSC’s size and purchasing power in procuring certain goods and services such as insurance and health care benefits, and technology such as computer software licenses. If we fail to obtain the quality of services necessary to operate effectively or incur greater costs in obtaining goods and services, our business, financial condition and results of operations may be adversely affected.


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We have no recent operating history as an independent publicly-traded company, and our historical financial information is not necessarily representative of the results we would have achieved as an independent publicly-traded company and may not be a reliable indicator of our future results.
We derived the historical financial information included in this Information Statement from CSC’s consolidated financial statements, and this information does not necessarily reflect the results of operations and financial position we would have achieved as an independent publicly-traded company during the periods presented, or those that we will achieve in the future. This is primarily because of the following factors:
Prior to the Spin-Off, we operated as part of CSC’s broader corporate organization and CSC performed various corporate functions for us, including IT, tax administration, treasury activities, technical accounting, benefits administration, procurement, legal and ethics and compliance program administration. Our historical financial information reflects allocations of corporate expenses from CSC for these and similar functions. These allocations may not reflect the costs we will incur for similar services in the future as an independent publicly-traded company.
We will enter into transactions with CSC that did not exist prior to the Spin-Off, such as CSC’s provision of transition services, which will cause us to incur new costs.
Our historical financial information does not reflect changes that we expect to experience in the future as a result of our separation from CSC, including changes in our cost structure, personnel needs, tax profile, financing and business operations. As part of CSC, we enjoyed certain benefits from CSC’s operating diversity, size, purchasing power, borrowing leverage and available capital for investments, and we will lose these benefits after the Spin-Off. As an independent entity, we may be unable to purchase goods, services and technologies, such as insurance and health care benefits and computer software licenses, or access capital markets on terms as favorable to us as those we obtained as part of CSC prior to the Spin-Off.
Following the Spin-Off, we will also be responsible for the additional costs associated with being an independent publicly-traded company, including costs related to corporate governance, investor and public relations and public reporting. Therefore, our financial statements may not be indicative of our future performance as an independent publicly-traded company. While we have been profitable as part of CSC, we cannot assure you that our profits will continue at a similar level when we are an independent publicly-traded company. For additional information about our past financial performance and the basis of presentation of our financial statements, see “Selected Historical Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical financial statements and the notes thereto included elsewhere in this Information Statement.
Some of the contracts to be transferred or assigned to us contain provisions requiring the consent of third parties in connection with the transactions contemplated by the Internal Reorganization and Distribution. If these consents are not obtained, we may be unable to enjoy the benefit of these contracts in the future.
Some of the contracts to be transferred or assigned to us in connection with the Internal Reorganization and Distribution contain provisions that require the consent of third parties to the Internal Reorganization, the Distribution or both. Failure to obtain such consents on commercially reasonable and satisfactory terms may impair our entitlement to the benefit of these contracts in the future.
We expect to enter into a Change of Name agreement with the U.S. federal government to effect the transfer of our federal contracts from CSC to one of our operating subsidiaries. We are in the process of completing the administrative tasks relating to completion of the change of name process for those contracts and contract vehicles. While we do not expect the completion of the process to delay payments to us in any material respect on contracts transferred to us by CSC, we may experience protest by competitors of new awards of contracts to us on grounds relating to the Spin-Off.


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We may have been able to receive better terms from unaffiliated third parties than the terms we receive in our agreements with CSC that are based on the costs historically allocated to us by CSC.
We will enter into agreements with CSC related to our separation from CSC, including the Master Separation and Distribution Agreement, Master Transition Services Agreement, Tax Matters Agreement, Employee Matters Agreement and any other agreements, while we are still part of CSC that are based on the costs historically allocated to us by CSC. Accordingly, these agreements may not reflect terms that would have resulted from arms-length negotiations among unaffiliated third parties. However, they will be consistent with our compliance requirements for allowable and allocable costs and purchasing. The terms of these agreements will relate to, among other things, allocations of assets, liabilities, rights, indemnifications and other obligations between CSC and us. We may have received better terms from third parties because third parties may have competed with each other to win our business. See “Certain Relationships and Related Party Transactions.”
Risks Relating to Our Common Stock and the Securities Market
No market for our common stock currently exists and an active trading market may not develop or be sustained after the Spin-Off. Following the Spin-Off our stock price may fluctuate significantly.
There is currently no public market for our common stock. We intend to apply to list our common stock on             . We anticipate that before the Distribution Date, trading of shares of our common stock will begin on a “when-issued” basis and this trading will continue up to and including the Distribution Date. However, an active trading market for our common stock may not develop as a result of the Spin-Off or may not be sustained in the future. The lack of an active market may make it more difficult for stockholders to sell our shares and could lead to our share price being depressed or volatile.
We cannot predict the prices at which our common stock may trade after the Spin-Off. The market price of our common stock may fluctuate widely, depending on many factors, some of which may be beyond our control, including:
actual or anticipated fluctuations in our operating results due to factors related to our business;
success or failure of our business strategies;
our quarterly or annual earnings, or those of other companies in our industry;
our ability to obtain financing as needed;
announcements by us or our competitors of significant acquisitions or dispositions;
changes in accounting standards, policies, guidance, interpretations or principles;
the failure of securities analysts to cover our common stock after the Spin-Off;
changes in earnings estimates by securities analysts or our ability to meet those estimates;
the operating and stock price performance of other comparable companies;
investor perception of our company and the IT services industry;
overall market fluctuations;
results from any material litigation or government investigation;
changes in laws and regulations (including tax laws and regulations) affecting our business;


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changes in capital gains taxes and taxes on dividends affecting stockholders; and
general economic conditions and other external factors.
Furthermore, our business profile and market capitalization may not fit the investment objectives of some CSC stockholders and, as a result, these CSC stockholders may sell their shares of our common stock after the Distribution. See “Substantial sales of our common stock may occur in connection with the Spin-Off, which could cause our stock price to decline.” Low trading volume for our stock, which may occur if an active trading market does not develop, among other reasons, would amplify the effect of the above factors on our stock price volatility.
Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations could adversely affect the trading price of our common stock.
Substantial sales of our common stock may occur in connection with the Spin-Off, which could cause our stock price to decline.
CSC stockholders receiving shares of our common stock in the Distribution generally may sell those shares immediately in the public market. Although we have no actual knowledge of any plan or intention of any significant stockholder to sell our common stock following the Spin-Off, it is likely that some CSC stockholders, possibly including some of its larger stockholders, will sell their shares of our common stock received in the Distribution if, for reasons such as our business profile or market capitalization as an independent company, we do not fit their investment objectives or, in the case of index funds, we are not a participant in the index in which they are investing. The sales of significant amounts of our common stock or the perception in the market that this will occur may decrease the market price of our common stock.
We cannot assure you that we will pay dividends on our common stock, and our indebtedness may limit our ability to pay dividends on our common stock.
Following the Spin-Off, the timing, declaration, amount and payment of future dividends to stockholders will fall within the discretion of our Board. Our Board’s decisions regarding the payment of future dividends will depend on many factors, including our financial condition, earnings, capital requirements of our business and covenants associated with debt obligations, as well as legal requirements, regulatory constraints, industry practice and other factors that our Board deems relevant. For more information, see “Dividend Policy.” There can be no assurance that we will pay a dividend in the future or continue to pay any dividend if we do commence paying dividends, and there can be no assurance that, in the future, the combined annual dividends paid on CSC common stock, if any, and our common stock, if any, after the Spin-Off will equal the annual dividends on CSC common stock prior to the Spin-Off.
Your percentage ownership in Computer Sciences GS may be diluted in the future.
Your percentage ownership in Computer Sciences GS may be diluted in the future because of equity awards that we expect to grant to our directors, officers and other employees. Prior to completion of the Spin-Off, we expect to approve an incentive plan that will provide for the grant of common stock-based equity awards to our directors, officers and other employees. In addition, we may issue equity as all or part of the consideration paid for acquisitions and strategic investments that we may make in the future or as necessary to finance our ongoing operations.


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Provisions in our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws and of Nevada law may prevent or delay an acquisition of our company, which could decrease the trading price of our common stock.
Several provisions of our Amended and Restated Articles of Incorporation, Amended and Restated Bylaws and Nevada law may discourage, delay or prevent a merger or acquisition that stockholders may consider favorable. These include provisions that:
permit us to issue blank check preferred stock as more fully described under “Description of Our Capital Stock—Antitakeover Effects of Various Provisions of Nevada Law and Our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws”;
preclude stockholders from calling special meetings except where such special meetings are requested by stockholders representing 75% of the capital stock entitled to vote. Our Amended and Restated Bylaws prevent stockholder action by written consent for the election of directors and require the written consent of 90% of the capital stock entitled to vote for any other stockholder actions by written consent; and
limit our ability to enter into business combination transactions with certain stockholders.
These and other provisions of our Amended and Restated Articles of Incorporation, Amended and Restated Bylaws and Nevada law may discourage, delay or prevent certain types of transactions involving an actual or a threatened acquisition or change in control of Computer Sciences GS, including unsolicited takeover attempts, even though the transaction may offer our stockholders the opportunity to sell their shares of our common stock at a price above the prevailing market price. See “Description of Our Capital Stock—Anti-Takeover Effects of Various Provisions of Nevada Law and Our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws” for more information.



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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
All statements and assumptions contained in this Information Statement and in the documents attached or incorporated by reference that do not directly and exclusively relate to historical facts constitute “forward-looking statements.” These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often include words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance in connection with discussions of future operating or financial performance. These statements represent our current expectations and beliefs, and no assurance can be given that the results described in such statements will be achieved.
Forward-looking information contained in these 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, many of which are outside of our control, which could cause actual results to differ materially from the results described in such statements. These factors include without limitation those set forth under “Risk Factors.”
Forward-looking statements in this Information Statement speak only as of the date of this Information Statement, and forward-looking statements in documents attached or incorporated by reference speak only as to the date of those documents. 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 Information Statement or to reflect the occurrence of unanticipated events, except as required by law.


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THE SPIN-OFF
Background
On May 19, 2015, CSC announced plans for the complete legal and structural separation of the Computer Sciences GS Business and certain related assets and liabilities from CSC. To effect the separation, CSC is undertaking the Internal Reorganization described under “Certain Relationships and Related Party Transactions—Agreements with CSC—Master Separation and Distribution Agreement.” After giving effect to the Internal Reorganization, Computer Sciences GS, CSC’s wholly-owned subsidiary, will hold the shares of the legal entities operating the Computer Sciences GS Business.
Following the Internal Reorganization, CSC will distribute all of its equity interest in us, consisting of all of the outstanding shares of our common stock, to CSC’s stockholders on a pro rata basis. We refer to the payment by us of approximately $1.5 billion in cash (or approximately $10.50 per share) concurrently with the Distribution to holders of CSC common stock on the record date as the “Special Dividend.”
Following the Spin-Off, CSC will not own any equity interest in us, and we will operate independently from CSC. No approval of CSC’s stockholders is required in connection with the Spin-Off, and CSC’s stockholders will not have any appraisal rights in connection with the Spin-Off.
Completion of the Spin-Off is subject to the satisfaction, or the CSC Board’s waiver, of a number of conditions. In addition, CSC has the right not to complete the Spin-Off if, at any time, the CSC Board determines, in its sole and absolute discretion, that the Spin-Off is not in the best interests of CSC or its stockholders or is otherwise not advisable. For a more detailed description, see “Conditions to the Spin-Off.”
Reasons for the Spin-Off
The CSC Board regularly conducts strategic reviews of its businesses. In reaching the decision to pursue the Spin-Off, the CSC Board considered a range of potential strategic alternatives for CSC. In evaluating these alternatives, the CSC Board considered a number of factors, including the strategic focus and flexibility for CSC and Computer Sciences GS after the Spin-Off, the ability of CSC and Computer Sciences GS to operate efficiently and effectively (including Computer Sciences GS’s ability to retain and attract management talent) after the Spin-Off, the financial profile of CSC and Computer Sciences GS, the potential reaction of customers, employees and investors and the probability of successful execution of the various strategic alternatives and the risks associated with those alternatives.
As a result of this evaluation, the CSC Board determined that proceeding with the Spin-Off would be in the best interests of CSC and its stockholders. The CSC Board considered the following potential benefits of this approach:
Strategic Focus and Flexibility. Following the Spin-Off, CSC and Computer Sciences GS will each have a more focused business and be better able to dedicate financial resources to pursue appropriate growth opportunities and execute strategic plans best suited to its respective business. The Spin-Off will also allow each of CSC and Computer Sciences GS to enhance its strategic flexibility to respond to industry dynamics.
Focused Management. The Spin-Off will allow the management of each of CSC and Computer Sciences GS to devote its time and attention to the development and implementation of corporate strategies and policies that are based primarily on the specific business characteristics of their respective companies.
Management Incentives. The Spin-Off will enable Computer Sciences GS to create incentives for its management and employees that are more closely tied to its business performance and stockholder expectations. Computer Sciences GS equity-based compensation arrangements will more closely align the interests of Computer Sciences GS’s management and employees with the interests of its stockholders and should increase Computer Sciences GS’s ability to attract and retain personnel.


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Capital Structure and Stockholder Flexibility. The segments in which CSC and Computer Sciences GS expect to operate have historically had different growth profiles and cash flow dynamics. The Spin-Off will allow CSC and Computer Sciences GS to separately manage their capital strategies and cost structures and will allow investors to make independent investment decisions with respect to CSC and Computer Sciences GS, including the ability for Computer Sciences GS to achieve alignment with a more natural stockholder base. Investment in one or the other company may appeal to investors with different goals, interests and concerns.
In determining whether to effect the Spin-Off, the CSC Board considered the costs and risks associated with the transaction, including the costs associated with preparing Computer Sciences GS to become an independent publicly-traded company, the risk of volatility in our stock price immediately following the Spin-Off due to sales by CSC’s stockholders whose investment objectives may not be met by our common stock, the time it may take for us to attract our optimal stockholder base, the possibility of disruptions in our business as a result of the Spin-Off, the risk that the combined trading prices of our common stock and CSC’s common stock after the Spin-Off may drop below the trading price of CSC’s common stock before the Spin-Off and the loss of synergies and scale from operating as one company. Notwithstanding these costs and risks, taking into account the factors discussed above, the CSC Board determined that the Spin-Off was the best alternative to achieve the above benefits and enhance stockholder value.
When and How You Will Receive Computer Sciences GS Shares
CSC will distribute to its stockholders, as a pro rata dividend, one share of our common stock for every one share of CSC common stock outstanding as of            , 2015, the Record Date of the Distribution.
Prior to the Spin-Off, CSC will deliver all of the issued and outstanding shares of our common stock to the distribution agent. Computershare Trust Company, N.A. will serve as distribution agent in connection with the Distribution and as transfer agent and registrar for our common stock.
If you own CSC common stock as of the close of business on          , 2015, the shares of our common stock that you are entitled to receive in the Distribution will be issued to your account as follows:
Registered stockholders. If you own your shares of CSC common stock directly through CSC’s transfer agent, Computershare, you are a registered stockholder. In this case, the distribution agent will credit the shares of our common stock you receive in the Distribution by way of direct registration in book-entry form to a new account with our transfer agent. Registration in book-entry form refers to a method of recording share ownership where no physical stock certificates are issued to stockholders, as is the case in the Distribution. You will be able to access information regarding your book-entry account holding the Computer Sciences GS shares at            .
Commencing on or shortly after the Distribution Date, the distribution agent will mail to you an account statement that indicates the number of shares of our common stock that have been registered in book-entry form in your name. We expect it will take the distribution agent up to two weeks after the Distribution Date to complete the distribution of the shares of our common stock and mail statements of holding to all registered stockholders. Trading of our common stock will not be affected by this delay in issuance by the distribution agent.
“Street name” or beneficial stockholders. Most CSC stockholders own their shares of CSC common stock beneficially through a bank, broker or other nominee. In these cases, the bank, broker or other nominee holds the shares in “street name” and records your ownership on its books. If you own your shares of CSC common stock through a bank, broker or other nominee, your bank, broker or other nominee will credit your account with the shares of our common stock that you receive in the Distribution on or shortly after the Distribution Date. We encourage you to contact your bank, broker or other nominee if you have any questions concerning the mechanics of having shares held in “street name.”


35


If you sell any of your shares of CSC common stock on or before the Distribution Date, the buyer of those shares may in some circumstances be entitled to receive the shares of our common stock to be distributed in respect of the CSC shares you sold. See “Trading Prior to the Distribution Date” for more information.
We are not asking CSC stockholders to take any action in connection with the Spin-Off. No stockholder approval of the Spin-Off is required. We are not asking you for a proxy and request that you not send us a proxy. We are also not asking you to make any payment or surrender or exchange any of your shares of CSC common stock for shares of our common stock. The number of outstanding shares of CSC common stock will not change as a result of the Spin-Off.
Number of Shares You Will Receive
On the Distribution Date, you will receive one share of our common stock for every one share of CSC common stock you owned as of the Record Date.
Material U.S. Federal Income Tax Consequences of the Spin-Off
Consequences to U.S. Holders of CSC Common Stock
The following is a summary of the material U.S. federal income tax consequences to holders of CSC common stock in connection with the Distribution. This summary is based on the Code, the Treasury Regulations promulgated under the Code and judicial and administrative interpretations of those laws, in each case as in effect and available as of the date of this Information Statement and all of which are subject to change at any time, possibly with retroactive effect. Any such change could affect the tax consequences described below.
This summary is limited to holders of CSC common stock that are U.S. Holders, as defined immediately below, that hold their CSC common stock as a capital asset. A “U.S. Holder” is a beneficial owner of CSC common stock that is, for U.S. federal income tax purposes:
an individual who is a citizen or a resident of the U.S.;
a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the U.S. or any state thereof or the District of Columbia;
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
a trust if (i) a court within the U.S. is able to exercise primary jurisdiction over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or (ii) in the case of a trust that was treated as a domestic trust under law in effect before 1997, a valid election is in place under applicable Treasury Regulations.
This summary does not discuss all tax considerations that may be relevant to stockholders in light of their particular circumstances, nor does it address the consequences to stockholders subject to special treatment under the U.S. federal income tax laws, such as:
dealers or traders in securities or currencies;
tax-exempt entities;
banks, financial institutions or insurance companies;
real estate investment trusts, regulated investment companies or grantor trusts;


36


persons who acquired CSC common stock pursuant to the exercise of employee stock options or otherwise as compensation;
stockholders who own, or are deemed to own, 10% or more, by voting power or value, of CSC equity;
stockholders owning CSC common stock as part of a position in a straddle or as part of a hedging, conversion or other risk reduction transaction for U.S. federal income tax purposes;
certain former citizens or long-term residents of the U.S.;
stockholders who are subject to the alternative minimum tax; or
persons who own CSC common stock through partnerships or other pass-through entities.
This summary does not address any U.S. state or local or foreign tax consequences or any estate, gift or other non-income tax consequences.
If a partnership, or any other entity treated as a partnership for U.S. federal income tax purposes, holds CSC common stock, the tax treatment of a partner in that partnership will generally depend on the status of the partner and the activities of the partnership. Such a partner or partnership should consult its own tax advisor as to its tax consequences.
YOU SHOULD CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO THE U.S. FEDERAL, STATE AND LOCAL AND FOREIGN TAX CONSEQUENCES OF THE DISTRIBUTION.
General
Subject to the qualifications and limitations set forth herein, Allen & Overy LLP, counsel to CSC, is of the opinion that for U.S. federal income tax purposes:
no gain or loss should be recognized by, or be includible in the income of, a U.S. Holder as a result of the Distribution;
the aggregate tax basis of the CSC common stock and our common stock held by each U.S. Holder immediately after the Distribution (and immediately prior to the Special Dividend) should be the same as the aggregate tax basis of the CSC common stock held by the U.S. Holder immediately before the Distribution, allocated between the CSC common stock and our common stock in proportion to their relative fair market values on the date of the Distribution; and
the holding period of our common stock received by each U.S. Holder should include the holding period of their CSC common stock, provided that such CSC common stock is held as a capital asset on the date of the Distribution.
U.S. Holders that have acquired different blocks of CSC common stock at different times or at different prices should consult their tax advisors regarding the allocation of their aggregate adjusted tax basis among, and the holding period of, shares of our common stock distributed with respect to such blocks of CSC common stock.
The opinion of counsel does not address any U.S. state or local or foreign tax consequences of the Spin-Off. The opinion assumes that the Spin-Off will be completed according to the terms of the Master Separation and Distribution Agreement and relies on the facts as stated in the Master Separation and Distribution Agreement, the Tax Matters Agreement, the other ancillary agreements, this Information Statement and a number of other documents. In addition, the opinion is based on certain representations as to factual matters from, and certain


37


covenants by, CSC and us. The opinion cannot be relied on if any of the assumptions, representations or covenants are incorrect, incomplete or inaccurate or are violated in any material respect.
The opinion of counsel is not binding on the IRS or the courts, and there can be no assurance that the IRS or a court will not take a contrary position. CSC has not requested, and does not intend to request, a ruling from the IRS regarding the U.S. federal income tax consequences of the Spin-Off.
If the Distribution were determined not to qualify for tax-free treatment, the above consequences would not apply and U.S. Holders could be subject to tax. In this case, each U.S. Holder who receives our common stock in the Distribution would generally be treated as receiving a distribution in an amount equal to the fair market value of our common stock received, which would generally result in:
a taxable dividend to the U.S. Holder to the extent of that U.S. Holder’s pro rata share of CSC’s current and accumulated earnings and profits;
a reduction in the U.S. Holder’s basis (but not below zero) in CSC common stock to the extent the amount received exceeds the stockholder’s share of CSC’s earnings and profits; and
a taxable gain from the exchange of CSC common stock to the extent the amount received exceeds the sum of the U.S. Holder’s share of CSC’s earnings and profits and the U.S. Holder’s basis in its CSC common stock.
Unlike the Distribution, we expect the Special Dividend, because it consists solely of cash, to be taxable to the recipient. U.S. Holders should consult their own tax advisors on the tax treatment of the Special Dividend.
Backup Withholding and Information Statement
Corporations will generally be exempt from backup withholding, but may be required to provide a certification to establish their entitlement to the exemption. Backup withholding is not an additional tax, and it may be refunded or credited against a U.S. Holder’s U.S. federal income tax liability if the required information is timely supplied to the IRS.
Treasury Regulations require each CSC stockholder that, immediately before the Distribution, owned 5% or more (by vote or value) of the total outstanding stock of CSC to attach to such stockholder’s U.S. federal income tax return for the year in which the Distribution occurs a statement setting forth certain information related to the Distribution.
Consequences to CSC
The following is a summary of the material U.S. federal income tax consequences to CSC in connection with the Spin-Off that may be relevant to holders of CSC common stock.
Subject to the qualifications and limitations set forth herein, Allen & Overy LLP, counsel to CSC, is of the opinion that for U.S. federal income tax purposes, the Distribution should qualify for tax-free treatment under Section 355 of the Code.
The opinion of counsel is subject to the same qualifications and limitations as are set forth above in relation to the opinion of counsel regarding consequences to U.S. Holders.
If the Distribution were determined not to qualify for tax-free treatment under Section 355 of the Code, then CSC would recognize gain in an amount up to the fair market value of our common stock held by it immediately before the Distribution.


38


Indemnification Obligation
If, due to any of our representations being untrue or our covenants being breached, it were determined that the Distribution did not qualify for tax-free treatment under Section 355 of the Code, we could be required to indemnify CSC for taxes resulting from the recognition of gain described above and related expenses. In addition, current tax law generally creates a presumption that the Distribution would be taxable to CSC, but not to holders, if we or our stockholders were to engage in transactions that result in a 50% or greater change by vote or value in the ownership of our stock during the four-year period beginning on the date that begins two years before the date of the Distribution, unless it were established that such transactions and the Distribution were not part of a plan or series of related transactions giving effect to such a change in ownership. If the Distribution were taxable to CSC due to such a 50% or greater change in ownership of our stock, CSC would recognize gain in an amount up to the fair market value of our common stock held by it immediately before the Distribution, and we generally would be required to indemnify CSC for the tax on such gain and related expenses.
Results of the Spin-Off
After the Spin-Off, we will be an independent publicly-traded company. Immediately following the Spin-Off, we expect to have approximately          holders of shares of our common stock and approximately           shares of our common stock outstanding, based on the number of CSC stockholders and shares of CSC common stock outstanding on          , 2015. The actual number of shares of our common stock CSC will distribute in the Spin-Off will depend on the actual number of shares of CSC common stock outstanding on the Record Date, which will reflect any issuance of new shares or exercises of outstanding options pursuant to CSC’s equity plans, and any repurchase of CSC shares by CSC under its common stock repurchase program, on or prior to the Record Date. The Spin-Off will not affect the number of outstanding shares of CSC common stock or any rights of CSC stockholders, although we expect the trading price of shares of CSC common stock immediately following the Distribution to be lower than immediately prior to the Distribution because the trading price of CSC common stock will no longer reflect the value of the Computer Sciences GS Business. Furthermore, until the market has fully analyzed the value of CSC without the Computer Sciences GS Business, the trading price of shares of CSC common stock may fluctuate.
Before our separation from CSC, we intend to enter into a Master Separation and Distribution Agreement and several other agreements with CSC related to the Spin-Off. These agreements will govern the relationship between Computer Sciences GS and CSC up to and after completion of the Spin-Off and allocate between Computer Sciences GS and CSC various assets, liabilities, rights and obligations, including employee benefits, intellectual property and tax-related assets and liabilities. We describe these arrangements in greater detail under “Certain Relationships and Related Party Transactions—Agreements with CSC.”
Listing and Trading of our Common Stock
As of the date of this Information Statement, we are a wholly-owned subsidiary of CSC. Accordingly, no public market for our common stock currently exists, although a “when-issued” market in our common stock may develop prior to the Distribution. See “Trading Prior to the Distribution Date” below for an explanation of a “when-issued” market. We intend to list our shares of common stock on              under the symbol “            .” Following the Spin-Off, CSC common stock will continue to trade on             under the symbol “CSC.”
Neither we nor CSC can assure you as to the trading price of CSC common stock or our common stock after the Spin-Off, or as to whether the combined trading prices of our common stock and CSC common stock after the Spin-Off will be less than, equal to or greater than the trading prices of CSC common stock prior to the Spin-Off. The trading price of our common stock may fluctuate significantly following the Spin-Off. See “Risk Factors—Risks Relating to Our Common Stock and the Securities Market” for more detail.
The shares of our common stock distributed to CSC stockholders will be freely transferable, except for shares received by individuals who are our affiliates. Individuals who may be considered our affiliates after the Spin-Off include individuals who control, are controlled by or are under common control with us, as those terms generally are


39


interpreted for federal securities law purposes. These individuals may include some or all of our directors and executive officers. Individuals who are our affiliates will be permitted to sell their shares of our common stock only pursuant to an effective registration statement under the Securities Act of 1933, or the “Securities Act,” or an exemption from the registration requirements of the Securities Act, such as those afforded by Section 4(1) of the Securities Act or Rule 144 thereunder.
Trading Prior to the Distribution Date
We expect a “when-issued” market in our common stock to develop as early as two trading days prior to the Record Date for the Distribution and continue up to and including the Distribution Date. “When-issued” trading refers to a sale or purchase made conditionally on or before the Distribution Date because the securities of the spun-off entity have not yet been distributed. If you own shares of CSC common stock at the close of business on the Record Date, you will be entitled to receive shares of our common stock in the Distribution. You may trade this entitlement to receive shares of our common stock, without the shares of CSC common stock you own, on the “when-issued” market. We expect “when-issued” trades of our common stock to settle within four trading days after the Distribution Date. On the first trading day following the Distribution Date, we expect that “when-issued” trading of our common stock will end and “regular-way” trading will begin.
We also anticipate that, as early as two trading days prior to the Record Date and continuing up to and including the Distribution Date, there will be two markets in CSC common stock: a “regular-way” market and an “ex-distribution” market. Shares of CSC common stock that trade on the “regular-way market” will trade with an entitlement to receive shares of our common stock in the Distribution. Shares that trade on the ex-distribution market will trade without an entitlement to receive shares of our common stock in the Distribution. Therefore, if you sell shares of CSC common stock in the “regular-way” market up to and including the Distribution Date, you will be selling your right to receive shares of our common stock in the Distribution. However, if you own shares of CSC common stock at the close of business on the Record Date and sell those shares on the ex-distribution market up to and including the Distribution Date, you will still receive the shares of our common stock that you would otherwise be entitled to receive in the Distribution.
Following the Distribution Date, we expect shares of our common stock to be listed on              under the trading symbol “            .” If “when-issued” trading occurs, the listing for our common stock is expected to be under a trading symbol different from our regular-way trading symbol. We will announce our “when-issued” trading symbol when and if it becomes available. If the Spin-Off does not occur, all “when-issued” trading will be null and void.
Conditions to the Spin-Off
We expect that the separation will be effective on the Distribution Date, provided that the following conditions shall have been satisfied or waived by CSC:
the CSC Board shall have authorized and approved the Internal Reorganization and Distribution and not withdrawn such authorization and approval, and shall have declared the dividend of Computer Sciences GS common stock to CSC stockholders;
the ancillary agreements contemplated by the Master Separation and Distribution Agreement shall have been executed by each party to those agreements;
the SEC shall have declared effective our Registration Statement on Form 10, of which this Information Statement is a part, under the Exchange Act, and no stop order suspending the effectiveness of the Registration Statement shall be in effect and no proceedings for that purpose shall be pending before or threatened by the SEC;
our common stock shall have been accepted for listing on              or another national securities exchange approved by CSC, subject to official notice of issuance;


40


CSC shall have received the written opinion of Allen & Overy LLP, which shall remain in full force and effect, that, subject to the accuracy of and compliance with certain representations, warranties and covenants, the Distribution should qualify for tax-free treatment under Section 355 of the Code;
the Internal Reorganization (as described in “Certain Relationships and Related Party Transactions—Agreements with CSC—Master Separation and Distribution Agreement”) shall have been completed;
no order, injunction or decree issued by any governmental authority of competent jurisdiction or other legal restraint or prohibition preventing consummation of the Distribution shall be in effect, and no other event outside the control of CSC shall have occurred or failed to occur that prevents the consummation of the Distribution;
no other events or developments shall have occurred prior to the Distribution Date that, in the judgment of the CSC Board, would result in the Spin-Off having a material adverse effect on CSC or its stockholders;
prior to the Distribution Date, this Information Statement shall have been mailed to the holders of CSC common stock as of the Record Date;
CSC shall have duly elected the individuals to be listed as members of our post-Distribution Board in this Information Statement, and such individuals shall be the members of our Board immediately after the Distribution;
prior to the Distribution Date, CSC’s Board shall have obtained opinions from a nationally recognized valuation firm, in form and substance satisfactory to CSC, with respect to the capital adequacy and solvency of each of CSC and Computer Sciences GS after giving pro forma effect to the Distribution and the Special Dividend;
immediately prior to the Distribution Date, our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws, each in substantially the form filed as an exhibit to the Registration Statement on Form 10 of which this Information Statement is a part, shall be in effect; and
prior to the Distribution Date, CSC shall have transferred its U.S. federal government contracts and subcontracts to one or more wholly-owned subsidiaries of Computer Sciences GS and for its U.S. federal government prime contracts, it shall have finalized a Change of Name agreement with the DCMA.
The fulfillment of the above conditions will not create any obligation on CSC’s part to effect the Spin-Off. We are not aware of any material federal, foreign or state regulatory requirements with which we must comply, other than SEC rules and regulations, or any material approvals that we must obtain, other than the approval for listing of our common stock and the SEC’s declaration of the effectiveness of the Registration Statement, in connection with the Distribution. CSC has the right not to complete the Spin-Off if, at any time, the CSC Board determines, in its sole and absolute discretion, that the Spin-Off is not in the best interests of CSC or its stockholders or is otherwise not advisable.
Reasons for Furnishing this Information Statement
We are furnishing this Information Statement solely to provide information to CSC’s stockholders who will receive shares of our common stock in the Distribution. You should not construe this Information Statement as an inducement or encouragement to buy, hold or sell any of our securities or any securities of CSC. We believe that the information contained in this Information Statement is accurate as of the date set forth on the cover. Changes to the information contained in this Information Statement may occur after that date, and neither we nor CSC undertake any obligation to update the information except in the normal course of our and CSC’s public disclosure obligations and practices.


41


DIVIDEND POLICY

We currently anticipate paying quarterly cash dividends following the Spin-Off. The timing, declaration, amount and payment of any future dividends to our stockholders will fall within the discretion of our Board and will depend on many factors, including our financial condition, results of operations and capital requirements, legal requirements, regulatory constraints, industry practice and other business considerations that our Board deems relevant from time to time. In addition, the terms of the agreements governing our new debt or debt that we may incur in the future may restrict the payments of dividends. There can be no assurance that we will pay a dividend in the future or continue to pay any dividend if we do commence paying dividends. See also “Risk Factors—Risks Relating to Our Common Stock and the Securities Market—We cannot assure you that we will pay dividends on our common stock, and our indebtedness may limit our ability to pay dividends on our common stock.”


42


CAPITALIZATION
The following table sets forth the cash and capitalization as of April 3, 2015, on a historical basis and on an as-adjusted basis to give effect to the Spin-Off and the transactions of the Computer Sciences GS Business related to the Spin-Off, as if they occurred on April 3, 2015. You should review the following table in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the audited combined financial statements and accompanying notes included elsewhere in this Information Statement.
 
 
As of April 3, 2015
 
 
Historical

 
Pro Forma
 
 
 
(in millions)
 
Cash
$
5

 
 
Capitalization:
 
 
 
 
Liabilities
 
 
 
 
Term loan facility
 

 
 
Revolving line of credit
 

 
 
Senior secured notes
 

 
 
Current lease liability
 
21

 
 
Noncurrent lease liability
 
130

 
 
Total debt
$
151

 
 
 
 
 
 
 
Equity:
 
 
 
 
Common stock (par value $0.0001)
$

 
 
Additional paid in capital
 

 
 
Parent company investment
 
1,067

 
 
Accumulated other comprehensive income
 

 
 
Noncontrolling interests
 
28

 
 
Total equity
$
1,095

 
 
Total capitalization
$
1,246

 
 

We have not yet finalized our post-Spin-Off capitalization. We intend to update this Information Statement to reflect our post-Spin-Off capitalization.



43


SELECTED HISTORICAL COMBINED FINANCIAL DATA
The following table presents our selected historical combined financial data. The selected historical combined financial data as of and for the twelve months ended April 3, 2015 and March 28, 2014 and for the twelve months ended March 29, 2013 are derived from audited information contained in our annual Combined Financial Statements included elsewhere in this Information Statement. The selected historical combined financial data as of March 29, 2013 and as of and for the twelve months ended March 30, 2012 and April 1, 2011 are derived from our unaudited annual combined financial statements that are not included in this Information Statement.
The selected historical combined financial data include certain expenses of CSC that were allocated to us for certain corporate functions including IT, research and development, finance, legal, insurance, compliance and human resources activities. These costs may not be representative of the future costs we will incur as an independent, publicly-traded company. In addition, our historical financial information does not reflect changes that we expect to experience in the future as a result of our separation and distribution from CSC, including changes in our cost structure, personnel needs, tax profile, capital structure, financing and business operations. Our Combined Financial Statements also do not reflect the assignment of certain assets and liabilities between us and CSC as reflected under “Unaudited Pro Forma Combined Financial Statements” included elsewhere in this Information Statement. Consequently, the financial information included here may not necessarily reflect what our financial position, results of operations and cash flows would have been had we been an independent, publicly-traded company during the periods presented. Accordingly, these historical results should not be relied upon as an indicator of our future performance.
For a better understanding, this section should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the “Unaudited Pro Forma Combined Financial Statements” and accompanying notes and Combined Financial Statements and accompanying notes included elsewhere in this Information Statement.

 
 
As of
Dollars in millions
 
April 3, 2015

 
March 28, 2014

 
March 29, 2013

 
March 30, 2012

 
April 1, 2011

Total assets
$
2,161

$
2,216

$
2,513

$
2,750

$
3,394

Debt
 
 
 
 
 
 
 
 
 
 
     Capital lease liability, long-term
 
130

 
139

 
129

 
153

 
168

     Capital lease liability, current
 
21

 
30

 
40

 
45

 
39

          Total
 
151

 
169

 
169

 
198

 
207

Parent equity
 
1,095

 
1,159

 
1,408

 
1,510

 
2,196

Debt to total capitalization
 
12.1
%
 
12.7
%
 
10.7
%
 
11.6
%
 
8.6
%



44



 
 
Twelve Months Ended
Dollars in millions
 
April 3, 2015
 
March 28, 2014
 
March 29, 2013
 
March 30, 2012
 
April 1, 2011
Revenues
$
4,070

$
4,103

$
4,676

$
4,878

$
5,046

Costs of services (excludes depreciation and amortization, and settlement charge)
 
3,282

 
3,347

 
3,866

 
4,201

 
4,242

Costs of services—settlement charge (excludes amount charged to revenue $42)(a)
 

 

 

 
227

 

Income from continuing operations before taxes
 
429

 
401

 
431

 
41

 
399

Taxes on income
 
161

 
147

 
162

 
15

 
150

Income from continuing operations, net of taxes
 
268

 
254

 
269

 
26

 
249

(Loss) income from discontinued operations, net of taxes
 
(2
)
 
65

 
30

 
25

 
39

Net income attributable to Parent
 
252

 
296

 
281

 
35

 
268


(a)
Fiscal 2012 settlement charge related to the contract settlement with the U.S. federal government.



45


UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Combined Statement of Operations and Combined Balance Sheet are derived from our historical combined financial statements prepared in accordance with GAAP, which are included elsewhere in this Information Statement.
The following Unaudited Pro Forma Combined Statement of Operations and Combined Balance Sheet give effect to the separation, including:
$1.5 billion of debt at an expected weighted-average interest rate of         %;
the pro rata distribution of approximately         million shares of the Computer Sciences GS common stock to CSC stockholders;
net pension obligations related to substantially all of CSC’s material U.S. domestic defined benefit pension and other postretirement plans that we expect to assume prior to the Spin-Off; these were not included in the Computer Sciences GS Business’s historical Combined Financial Statements included elsewhere in this Information Statement; and
the impact of the Master Separation and Distribution Agreement, Master Transition Services Agreement, Intellectual Property Matters Agreement, Tax Matters Agreement, Employee Matters Agreement and other commercial agreements between Computer Sciences GS and CSC.
The Unaudited Pro Forma Combined Statement of Operations for the twelve months ended April 3, 2015 assumes the separation occurred on the first day of the period indicated. The Unaudited Pro Forma Combined Balance Sheet as of April 3, 2015 assumes the separation occurred on that date. The pro forma adjustments are based on currently available information and assumptions we believe are reasonable, factually supportable and directly attributable to our separation from CSC and, for the purposes of the Combined Statements of Operations and Comprehensive Income, are expected to have a continuing impact on us.
The historical Combined Statements of Operations and Combined Statements of Comprehensive Income include allocations of general corporate expenses from CSC, including, but not limited to, corporate functions including senior management, legal, human resources, finance, IT and other shared services. We may incur certain incremental costs as a standalone public company as compared to the costs historically allocated to us by CSC.
Our historical combined financial statements included elsewhere in this Information Statement include intercompany charges for corporate shared services. After the separation and the distribution, certain transition services will continue to be provided by CSC, as described more fully under “Certain Relationships and Related Party Transactions—Agreements with CSC” included elsewhere in this Information Statement. The annual charges under these agreements will be comparable to the intercompany amounts currently charged by CSC. Therefore, no pro forma adjustments have been made related to these agreements.
The Unaudited Pro Forma Combined Statement of Operations does not reflect all of the costs of operating as a standalone company, including possible higher IT, tax, accounting, treasury, legal and other similar expenses associated with operating as a standalone public company. Only costs that management has determined to be factually supportable and recurring are included as pro forma adjustments.
After the separation, subject to the terms of the Master Separation and Distribution Agreement, all costs and expenses related to ongoing support of a standalone company, including certain one-time separation costs incurred after the Distribution Date, will be our responsibility.


46


Computer Sciences GS Business
Unaudited Pro Forma Combined Statement of Operations
Twelve months ended April 3, 2015
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Historical
 
Financing Adjustment
 
Notes
 
Other Pro Forma Adjustment
 
Notes
 
Pro Forma
Total revenue 
$
4,070

$
 
 
 
$
 
 
 
$
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total cost of services (excludes depreciation and amortization)
 
3,282

 
 
 
C
 
 
 
C
 
 
Selling, general and administrative expenses
 
194

 
 
 
C
 
 
 
C
 
 
Depreciation and amortization
 
137

 
 
 
 
 
 
 
 
 
 
Interest expense, net
 
22

 
 
 
A
 
 
 
A
 
 
Other expense, net
 
6

 
 
 
 
 
 
 
 
 
 
Total costs and expenses
 
3,641

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations before taxes
 
429

 
 
 
 
 
 
 
 
 
 
Taxes on income
 
161

 
 
 
F
 
 
 
F
 
 
Income from continuing operations
 
268

 
 
 
 
 
 
 
 
 
 
(Loss) income from discontinued operations, net of taxes
 
(2
)
 
 
 
 
 
 
 
 
 
 
Net income
 
266

 
 
 
 
 
 
 
 
 
 
       Less: noncontrolling  interests
 
14

 
 
 
 
 
 
 
 
 
 
Net income attributable to Parent
$
252

$
 
 
 
$
 
 
 
$
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic earnings per share:
 
 
 
 
 
 
 
 
 
 
 
 
Diluted earnings per share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average number of shares outstanding:
 
 
 
 
 
 
 
 
 
 
Basic
 
 
 
 
 
D
 
 
 
 
 
 
Diluted
 
 
 
 
 
D
 
 
 
 
 
 


47


Computer Sciences GS Business
Unaudited Pro Forma Combined Balance Sheet
As of April 3, 2015
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
Historical
 
Financing Adjustment
 
Notes
 
Other Pro Forma Adjustment
 
Notes
 
Pro Forma
Current assets
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
5

$
 
 
E
$
 
 
E
$
 
Receivables, net of allowance for doubtful accounts of $15
 
697

 
 
 
 
 
 
 
 
 
 
Prepaid expenses and other current assets
 
92

 
 
 
 
 
 
 
 
 
 
Total current assets
 
794

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Intangible and other assets
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill
 
803

 
 
 
 
 
 
 
 
 
 
Customer-related and other intangible assets, net of accumulated amortization of $150
 
33

 
 
 
 
 
 
 
 
 
 
Software, net of accumulated amortization of $76
 
35

 
 
 
 
 
 
 
 
 
 
Other assets
 
59

 
 
 
 
 
 
 
 
 
 
Noncurrent income taxes receivable and deferred tax assets
 

 
 
 
 
 
 
 
 
 
 
Total intangible and other assets
 
930

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property and equipment, net of accumulated depreciation of $697
 
437

 
 
 
 
 
 
 
 
 
 
Total assets
$
2,161

$
 
 
 
 
 
 
 
$
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Parent Equity
 
 
 
 
 
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Accounts payable
$
130

$
 
 
 
 
 
 
 
$
 
Accrued payroll and related costs
 
109

 
 
 
 
 
 
 
C
 
 
Accrued expenses and other current liabilities
 
441

 
 
 
C
 
 
 
 
 
 
Current capital lease liability
 
21

 
 
 
 
 
 
 
 
 
 
Current income taxes payable and deferred tax liabilities
 
90

 
 
 
F
 
 
 
F
 
 
Total current liabilities
 
791

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Long-term debt
 
-

 
 
 
B
 
 
 
 
 
 
Noncurrent capital lease liability
 
130

 
 
 
 
 
 
 
 
 
 
Noncurrent deferred income tax
 
64

 
 
 
F
 
 
 
F
 
 
Other long-term liabilities
 
81

 
 
 
C
 
 
 
C
 
 
Total long-term liabilities
 
275

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Parent equity
 
 
 
 
 
 
 
 
 
 
 
 
     Net Parent investment
 
1,067

 
 
 
G
 
 
 
G
 
 
     Accumulated other comprehensive income (loss)
 

 
 
 
 
 
 
 
 
 
 
     Noncontrolling interests
 
28

 
 
 
 
 
 
 
 
 
 
Total Parent equity
 
1,095

 
 
 
 
 
 
 
 
 
 
Total liabilities and Parent equity
$
2,161

$
 
 
 
$
 
 
 
$
 



48


COMPUTER SCIENCES GS BUSINESS

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

(A)
The adjustment to our historical interest expense to give effect to the $         million of indebtedness in connection with the separation is presented below.
The adjustments for borrowings are based on an interest rate of         % as the initial variable interest rate on the term loan facility and         % as the interest on the senior secure notes. For each % change in the applicable interest rates in excess of the London Interbank Offered Rate (“LIBOR”) floor (which is approximately         points higher than current LIBOR), pro forma interest expense would change by approximately $         million on an annual basis.
(B)
Reflects indebtedness totaling $         billion incurred by Computer Sciences GS on              , in conjunction with the separation, consisting of $         billion in aggregate principal amount of borrowings under a senior secured term loan facility, net of debt issuance costs of $         and $         billion in senior secured notes.
(C)
Reflects the addition of net benefit plan liabilities that will be transferred to Computer Sciences GS by CSC as part of the separation. This adjustment includes a $         million adjustment to cost of services, a $         million adjustment to selling, general, and administrative expenses, a $         million adjustment to other accrued liabilities, a $         million adjustment to other long-term liabilities, and a $         million adjustment to related deferred tax assets. These net benefit plan liabilities are excluded from the Computer Sciences GS’s historical Combined Balance Sheet, which has been presented using the multi-employer approach under GAAP. The benefit plan service cost expense associated with these liabilities is included in the Computer Sciences GS’s historical Combined Statement of Operations, consistent with the multi-employer approach.
(D)
The number of shares of Computer Sciences GS common stock used to compute the unaudited pro forma basic earnings per common share is based on the weighted-average CSC basic shares outstanding for the year ended         , adjusted for the distribution ratio of one share of Computer Sciences GS common stock for every one share of CSC common stock. The unaudited pro forma diluted earnings per common share and pro forma weighted-average diluted shares outstanding give effect to the potential dilution from common shares related to stock-based awards granted to our employees under CSC’s stock-based compensation programs. While the actual impact on a go forward basis will depend on a variety of factors, including employees who may change employment between Computer Sciences GS and CSC, we believe this provides a reasonable approximation of the future dilutive impact of new Computer Sciences GS equity plans.
(E)
Reflects the establishment of the cash and cash equivalents reference level of $         million as defined in the Master Separation and Distribution Agreement.
(F)
Reflects the tax effects of the pro forma adjustments at the applicable statutory income tax rates in the respective jurisdictions. The effective tax rate of Computer Sciences GS could be different (either higher or lower) depending on activities subsequent to the distribution. The impact of the pro forma adjustment on long-term deferred tax assets and liabilities was offset against existing long-term deferred tax assets and liabilities reflected in the Computer Sciences GS’s historical Combined Balance Sheet based on jurisdiction.


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(G)
Reflects the pro forma recapitalization of our equity. As of the Distribution Date, Parent Net Investment in our business will be exchanged to reflect the distribution of our shares of common stock to CSC stockholders, at a distribution ratio of one share of Computer Sciences GS common stock for every one share of CSC common stock.


50


BUSINESS
Overview
We deliver IT, mission- and operations-related services across the U.S. federal government to DoD, Intelligence Community, homeland security, civil and healthcare agencies, as well as to certain state and local government agencies. We leverage deep domain-based customer intimacy and decades of experience in helping customers execute their mission with a fundamental understanding of their IT environment that has earned us the ability to introduce next-generation technologies. We bring scalable and cost-effective IT solutions to government agencies that are seeking to improve mission-critical effectiveness and efficiency through innovation. This approach is designed to yield lower implementation and operational costs as well as a higher standard of delivery excellence. Demand for our U.S. public sector offerings is driven by evolving government priorities such as: (1) migration to next-generation IT solutions, such as hybrid cloud infrastructure, application modernization, and as-a-service delivery, (2) big data solutions, (3) health IT and informatics, (4) cyber security and (5) mobility.
Headquartered in Falls Church, Virginia, and with approximately 14,000 employees, we deliver comprehensive offerings from concept through sustainment. We manage our business with a matrix model composed of industry verticals which are customer-facing and have deep knowledge of our customers’ missions, and horizontal delivery organizations with a depth of technical expertise that is delivered across industries. As a new public company, we will operate in two industry verticals: (1) Defense and Intelligence and (2) Civil. Our two horizontal delivery organizations that provide capabilities and solutions across our customer base are: (1) Mission Services and (2) Enterprise Services. We believe we differentiate ourselves by combining our technical expertise in applications and IT infrastructure solutions with our deep public sector mission knowledge and experience in order to engage our customers at the highest levels with thought leadership that drives change.
The success of our business will depend on our ability to deliver solutions that generate real and measurable business results in terms of mission value and cost efficiency. Targeting specific growth areas in the government and rapidly adapting next-generation solutions and best practices tailored to the public sector environment will be key. We expect to continue to work in concert with our next-generation IT partners to create, position and deliver innovative solutions from across our delivery capabilities to support our customers’ mission success which will be critical to our efforts to sustain our position.
We are one of the largest independent providers of IT services to the U.S. public sector, with approximately $4 billion in FY15 revenue. We are currently executing on more than 1,000 projects on over 100 contracts and leverage relationships with numerous global alliance and industry partners. We work to help modernize and streamline technology systems, equip the 21st century workforce, transform decision-making and enable agencies to become more responsive in the face of massive amounts of data.
We compete in a highly regulated environment controlled by FAR rules and federal contract audit oversight, which drive competitive cost structures. We have a broad base of contracts across government with an average life of three to five years. This broad base provides a degree of predictability to our revenues but requires substantial investment during long lead-time sales cycles, which average 18 months, and sufficient scale in regularly bidding hundreds of opportunities.
History and Development
Computer Sciences Government Services Inc. was incorporated in Nevada on June 16, 2015. Our parent company, CSC, was founded in 1959, and our business has been focused on the public sector for more than 55 years, with our first government contract awarded in 1961. Some of our significant long-standing engagements include:
    supporting the IT infrastructure of a major agency of the U.S. Intelligence Community;
    modernizing the Army’s logistics support system; and


51


    administering the New York State Medicaid payment system.
Business Environment and Competitive Landscape
Market Overview
Flat Top Line Federal Budgets. We compete in an environment driven by federal budget constraints. The impact of flat top line discretionary budgets drives agencies to reduce expenditures on IT services and related vendor support services in favor of salaries, employee benefits, and other internal expenditures. A Deltek survey indicated that most government agency chief information officers (“CIOs”) expect flat IT budgets over the next few years with the primary reductions expected in hardware spending due to virtualization and cloud initiatives. While Gartner predicts a transition from decline to low single-digit growth in government spending over the next few years, there can be no assurances that any such growth will occur.
We expect DoD mission expenditures to continue to face headwinds as defense agencies continue to reduce program expenditures related to overseas contingency operations and equipment support. Within the market, we expect continued vendor oversupply to drive extremely competitive bidding on sustainment-related opportunities.
We see potential for positive developments in GFY 2016. Budget request figures released by the Office of Management and Budget in June 2014 projected IT expenditures for Civil agencies and the DoD to increase by 2% in GFY 2016, from $47.7 billion to $48.6 billion and from $30.4 billion to $30.9 billion, respectively. Budget request figures released by the Office of the Director of National Intelligence in February 2015 projected overall expenditures for Intelligence Community agencies to increase by 15% in GFY 2016, from $62.7 billion to $71.8 billion. We are also experiencing an increased number of requests to extend the period of performance for our large and most complex IT contracts, are observing increased procurement activity across the U.S. federal government and expect to see adjudications increase.
The GFY 2016 budget request, coupled with congressional additions through budget resolutions, will likely continue the trend of the last two years to negotiate sequester relief—first for defense spending and then for non-defense domestic discretionary spending. We expect another threatened government shut down by Congress and the passage of a series of continuing resolutions to keep the U.S. federal government funded, with the possibility that Congress will ultimately pass a full year continuing resolution. In the event Congress passes a full year continuing resolution, we would expect this to support our initiative to extend the period of performance for our largest and most complex IT contracts.
Market Shift to Applications Modernization. Since 2011, the government has delayed application enhancements and new application program starts in favor of data consolidation and IT efficiency initiatives. Consequently, the current market for IT services has been driven by infrastructure and cloud support opportunities, with a government focus on cost savings and new hybrid cloud approaches. The infrastructure services market is expected to remain strong, driven by customer demand for data center consolidation activities and active engagement in new hybrid cloud-based initiatives. However, in a change from the past, the market for application support services is expected to begin to increase due to pent-up demand for application transformation and modernization. Based upon surveys conducted with government agency CIOs, Gartner believes there is a significant emerging demand for application modernization to meet future civilian and military requirements. Cloud, mobile and as-a-service solutions approved by the Federal Risk and Authorization Management Program (“FedRAMP”), a government assessment process for certifying cloud-based services and applications, are fostering new alternative approaches with which CIOs are beginning to engage.
Competitive Landscape
Increasing Competition. We compete against a broad range of companies including large defense contractors; diversified consulting, technology and outsourcing service providers; companies focused principally on the provision of services to the U.S. federal government; and small businesses that participate in the U.S. federal government market. We provide full-spectrum professional IT services to the U.S. federal government as well as


52


state and local agencies and therefore team with, and compete against, companies across this entire competitive landscape.
Large defense contractors are those companies capable of competing across our entire market space, possessing the reputation and ability to compete on large deals with any U.S. federal government agency and having the financial strength to manage and execute large-scale programs. Some of the large defense contractors we regularly compete with include Lockheed Martin, Northrop Grumman, Raytheon, Boeing, General Dynamics, SAIC and Leidos.
We compete against certain diversified consulting, technology and outsourcing service providers that participate in the public sector market. These are companies that, while lacking the breadth of public sector offerings and presence to compete broadly across the public sector market, are highly regarded and successful in the areas in which they do compete. Some of our competitors in this category include IBM, AT&T, Verizon, HP Enterprise Services, Dell, Accenture and CGI.
We also compete against companies that are focused principally on providing services to the U.S. federal government. These are companies that are highly specialized firms that have exceptional mission knowledge, customer intimacy or specific intellectual property that can make them major competitors in the markets that they serve. Some of our competitors in this category include CACI, Booz Allen, ManTech, SRA and ICF.
Emergence of Disruptive Players. There is a new set of disruptive players and service offerings that have recently emerged in the government market, led by Amazon Web Services, Microsoft Azure, Google, ServiceNow and other cloud providers. Salesforce recently received its FedRAMP approval which generated an immediate increase in government interest. Microsoft has implemented unique clouds tailored for specific segments of our market, which will include not only Office365, but the complete Azure offering. Amazon Web Services added hundreds of new features and services to their offering last year, with many of these improving security and compliance, and they are on track to make even more improvements this year. We plan to partner with the leading disruptive players, incorporating their offerings into our hybrid cloud business model to meet customer mission demand and their very specific and unique requirements, culture and rate of adoption.
Small Business. Finally, the federal market supports many small businesses through requirements and incentive programs to create entrepreneurial opportunities for small business owners. In order to support our customers’ use of these small business set-asides, we are implementing a “preferred” small business partner program to more effectively team and compete in this segment of the market.
Strategic Vision: Leadership and Growth Strategy
To address the market trends within our competitive environment, we have developed a strategy that comprises three elements, Get Fit, Grow, and Lead:
1.    Get Fit: Continue with disciplined management of our overhead costs and general and administrative (“G&A”) expenses, as well as shift to performance-based contracts to improve operating income on existing programs, allowing us to reinvest in our business and improve our ability to compete in a “Lowest Price Technically Acceptable” environment. Implicit within our Get Fit strategy is the priority of driving excellence in executing programs, demand generation, proposals and capture.
2.    Grow: Despite the negative trends in overall IT spending by our customers and our own declining revenues over the past few years, we aim to capitalize on growth aligned with government priorities in hybrid cloud infrastructure, citizen benefit services, cloud-based analytics and health. We aim to continue to leverage our deep domain knowledge of our customers’ core missions and our intimacy with their data and critical work packages and grow our customer relationships through tailored offerings and mission-critical employees.
3.    Lead: Pursue the hybrid cloud migration market, driving policy- and governance-based integration of solutions in as-a-service and next-generation offerings in cloud, big data, software-as-a-service implementation and


53


mobile computing. We expect the migration to the hybrid cloud will be enabled by an ecosystem of federally compliant partners. We also plan to invest internally on program management and delivery processes.
In the context of this strategy, we frame our priorities in terms of (1) the critical mission priorities of government agencies, (2) the government-wide mandate to improve efficiency and reduce cost and (3) the government’s long-term shift from buying expertise and platforms to purchasing hybrid cloud capabilities, mobile enablement, and as-a-service business outcomes.
The success of our business will depend on our ability to deliver solutions that generate real and measurable business results in terms of mission value and cost efficiency. Targeting specific growth areas in the government and rapidly adapting new next-generation solutions tailored to the public sector environment will be key. We expect to continue to work in concert with our next-generation IT partners to create, position and deliver innovative next-generation solutions from across our delivery capabilities to support our customers’ mission success which will be critical to our efforts to sustain and improve our market position.
We bring several key competitive strengths:
History of public sector delivery. We have 50+ years of public sector experience that combines an in-depth customer knowledge with our proven, next-generation IT and mission expertise.
Our People. Passionate employees with a commitment to our customers’ mission blend business process, design, and technical capabilities.
Offering Brands. Our brands are a proven holistic approach to solving customer business challenges, drawing on best practices and technical expertise.
Next Generation. We are driving innovation through next-generation technology and solutions in cloud, big data, mobility and application solutions and services.
Alliance Partners. We have enhanced our technical and domain expertise with strategic partnerships that deliver innovative end-to-end solutions.
Technology Independence. Our flexible and informed point of view optimizes customers’ technology choices.
Matrix Operating Model: Industries and Offering Solutions
Our strategy depends on executing an operating model that combines customer and mission intimacy with the ability to adapt and apply our offerings within the contractual frameworks required in the public sector. As a new public company, we will organize our public sector work into two customer-focused vertical industry organizations: (1) Defense and Intelligence ($2.1 billion) and (2) Civil ($1.9 billion). These verticals are supported by our two horizontal delivery organizations: (1) Enterprise Services (IT and next-generation solutions) and (2) Mission Services (science, DoD engineering and training). Through this matrix operating model, we bring scalable and cost-effective solutions to government customers seeking to improve mission-critical effectiveness and efficiency through innovation. This approach is designed to yield lower implementation and operational costs while achieving a higher standard of delivery excellence.
Long-Standing Relationships with Industry Customers
It is our deep industry expertise and customer intimacy that allows us to truly unlock the value of our technical solutions for our customers. We believe we have strong and long-standing relationships with a diverse group of customers at all levels of the U.S. federal government. In support of our diverse customers, we have focused industry teams which provide in-depth knowledge and deep domain expertise to better serve our customers in our two verticals: (1) Defense and Intelligence and (2) Civil.


54



Defense and Intelligence Agencies

The DoD is our largest customer, for which we provide the full spectrum of our services and offerings. Our industry teams work closely with all services and agencies to identify requirements for which we can bring our differentiated solutions.

Through our work on the Army’s Logistics Modernization Program, we have modernized the Army’s global supply chain and streamlined military logistics and support with one of the world’s largest fully integrated supply chain solutions for maintenance, repair and overhaul planning and execution. We also manage and operate the largest helicopter training facility in the world through the Flight School XXI program at the U.S. Army Aviation Center in Fort Rucker, Alabama, where we employ leading-edge flight simulators to provide helicopter flight simulation training to the Army’s rotary wing aviators.

We support Navy and Marine Corps forces worldwide through network and connectivity operations under the ONE-Net and Information Technology Support Services programs as well as provide software development and sustainment for the Marine Corps’ pay and personnel organization. We are also the leading supplier of ship design and engineering services for the Naval Sea Systems Command, providing acquisition and engineering support for numerous Navy ship acquisition programs.

We provide the full range of IT services to U.S. Strategic Command, including network support, data center operations, applications modernization and help desk services. At Scott Air Force Base in Illinois, our personnel develop software and manage systems for the U.S. Transportation Command and Air Mobility Command. We also support the network defense and cybersecurity of all Air Force networks.

We support the Intelligence Community’s Information Technology Enterprise strategy with seamless, secure solutions for its applications and data analytics. One of our key programs outsources the IT infrastructure of a major agency of the U.S. Intelligence Community to a joint venture led by our team. The most advanced use in the U.S. federal government of next-generation best practices for infrastructure, this contractor-owned and operated effort uses service-level agreements and transactional pricing. Since the program’s inception in 2003, we have been able to reduce both network and server outages while also reducing overall staffing needs, despite a significant increase in the number of network devices employed under the program. Users under this program are now being migrated to virtual desktop infrastructure.

Civil Agencies

In our Civil vertical, we provide services to numerous federal Civil agencies including the Departments of Homeland Security and State, as well as to various U.S. federal, state and local health departments.
We help transform government by delivering mission information systems and associated technical support services. We leverage systems integration disciplines to modernize strategic planning for the Federal Aviation Administration (“FAA”) National Airspace System and have developed enhanced simulation software to help train the next generation of air traffic controllers.
We provide IT infrastructure and systems integration services to agencies with missions ranging from patent and trademark management to counterterrorism. We support IRS efforts to enhance functional processes and legacy applications, improving accountability and service to the taxpayer. At U.S. Citizenship and Immigration Services in the Department of Homeland Security (“DHS”), we provide technical and operations and maintenance support for nearly every legacy system required to process immigrant applications. We are teaming with ServiceNow to deliver IT service management using an as-a-service, consumption-based model for the National Aeronautics and Space Administration (“NASA”). Through this as-a-service model, we provide administrative, financial, human resources and procurement services to NASA employees, applicants, contractors, and university partners. We also assist the U.S. Department of Energy in managing and operating several major facilities, such as the Thomas Jefferson National Accelerator Facility, which we manage through a partnership with Southeastern Universities Research


55


Association.
We deliver visa processing services for the State Department under the Global Support Strategy contract. This is performed around the globe at 75 posts in 48 countries, including through 24 off-site facilitation centers in Mexico, Argentina, Colombia and Brazil. We currently process an average of over five million applications per year, roughly half of the total U.S. visa application volume worldwide. Support is facilitated by our Yatri system, which provides visa appointment booking services, fee collections, document management and delivery services, call center and online support, all with a mobile application. It has been enhanced with our latest innovation for Canada with a tablet solution for the country’s embassy and consulates that automates applicant entry and documentation processes, improves tracking of applicant information, and reduces visa processing times.
We transform healthcare with better information for better decisions, leveraging healthcare IT in the public sector. We built and currently maintain the Medicaid Management Information Systems (“MMIS”) for the States of New York and North Carolina. New York has, by spend, the largest Medicaid system in the U.S., serving over five million residents and processing Medicaid payments of approximately $50 billion a year. The North Carolina system, NCTracks, is the first “multi-payer” MMIS in the U.S. We built and continue to maintain the New York health benefit exchange, the New York State of Health. Built in accordance with the Affordable Care Act, the New York State of Health exchange has operated smoothly since inception and we believe it is considered one of the most successful in the nation.
We build, maintain, and analyze huge claims databases for Medicare and are moving quality reporting for the Centers for Medicare and Medicaid Services to modern service-oriented architecture. We installed and run electronic health records and analytics for clinical care at the National Institutes of Health. Our Patient in Your Pocket tool puts electronic health records on mobile devices.
Solution Capabilities
To support our industry representatives in delivering to our government customers, we have two horizontal delivery organizations: (1) Mission Services and (2) Enterprise Services. Our Mission Services organization directly supports our customers’ operational missions, while our Enterprise Services organization delivers both enterprise services IT and next-generation technology. Through these offering organizations, we deliver over 150 offerings, grouped into eleven “brands” that align with customer needs and purchasing trends. The brands are designed to differentiate us from competitors and represent our go-to-market strategy. In leveraging the brands, our goal is to approach challenges and needs holistically from the customer’s perspective. We have supplemented this technical and domain expertise with the power of strategic partnerships, including with Salesforce.com, Amazon, Oracle, ServiceNow and Microsoft.
Mission Services
Through our Mission Services organization we deliver a broad range of mission-related and science and threat reduction solutions to our customers. We help to solve a broad spectrum of problems so our customer can focus on its mission of supporting civilians and deployed troops around the world, protecting the homeland and serving the public. Our Mission Services offering organization delivers these specialized solutions to our customers through two offering brands: Mission Services Solutions and Science and Threat Reduction Solutions.
Mission Services Solutions. We provide government agencies with mission-related solutions and services, including system engineering, logistics, administration, acquisition and both live and virtual training. We consistently deliver intelligent systems and services that help to improve mission performance and reduce operating costs by leveraging existing resources and improving delivery efficiency. Our 3,600 Mission Services personnel work side by side with our customers—often on-site and as a part of the team—to develop solutions that meet mission requirements and often afford us the opportunity to bring in our IT solutions in support of their missions. For instance, we provide high-fidelity, low-cost training simulations with the operation of a suite of virtual flight simulators for helicopter flight training under the Army’s Flight School XXI program at the U.S. Army Aviation Center in Fort Rucker, Alabama. We also provide program management, engineering and life-cycle support to the


56


Navy’s surface ship and aircraft carrier programs.
Science and Threat Reduction Solutions. Our nationally recognized scientific, emergency management and national security experts provide a broad spectrum of support capabilities, from medical product development to independent oversight of laboratory programs to emergency preparedness and disaster recovery. We combine established systems and best practices—proven across multiple programs—with the expertise of more than 400 scientific, engineering and emergency management staff. The results are efficient, effective solutions that help our customers achieve mission goals. In an era of limited federal dollars and competing priorities, we enable U.S. federal government agencies to:
automate manual laboratory data review procedures, achieve economy of scale efficiencies, and free government staff to focus on critical decision-making;
generate regulation-quality laboratory data that can withstand legal scrutiny;
integrate management of every aspect of medical product development programs and laboratory studies; and
ensure that government staff are prepared for intentional incidents and natural disasters.
Enterprise Services IT
Our Enterprise Services offering organization supports our customers with offerings in two major areas: Enterprise Services IT and Next Generation Technology.
Our offering brands within Enterprise Services IT address our ability to deliver a wide range of technology-enabled solutions and services to our customers that are effective and efficient, reducing waste and improving our customers’ ability to execute on their missions. The Enterprise Services IT brands include: Citizen Services Enablement; Classical Services; Converged Infrastructure; Applications Modernization and Optimization, as well as Applications Innovations Services.
Citizen Service Enablement. Our public sector customers rely on a range of business processes to deliver services to the public. Citizen service is a top priority for the U.S. federal government, and technology is a critical component. We apply our IT knowledge to business processes and functions, enabling our customers to deliver more efficient and effective customer services. We also help agencies provide citizens with a unified, consistent and user-friendly experience via their communication channel of choice. One way we do this is by moving from traditional face-to-face or telephone-based service delivery to providing 24/7 self-service options via web, mobile devices, speech recognition and interactive video. For example, we currently provide administrative, financial, human resources and procurement support services to NASA employees, applicants, contractors and university partners. We also handle more than six million contacts per year for the Federal Bureau of Investigation Criminal Instant Background check program.
Classical Services. Our Classical Services focus on our ability to provide on-demand labor and to support legacy offerings on which our customers continue to rely. We provide IT competency support to customers who own and maintain their IT environments and are looking for a specific IT skill set or need to augment IT staff. Classical Services offers on-demand labor and staff augmentation that is scalable to meet standard and surge IT staffing needs. Our subject matter experts cover the areas of architecture, engineering, development projects, service operations and management. As new technologies emerge, we provide fresh talent to meet IT environment requirements. The focal point of our delivery approach is effective resource demand management with the defined, proven processes and tools to find the right talent for our customers. Benefits of this approach include reduced IT cost and risk, as well as improved response, compliance and performance. For example, under the Transportation Security Administration (“TSA”) Information Technology Infrastructure Program, we have approximately 300 personnel providing infrastructure, security, web application and help desk support for TSA users.


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Converged Infrastructures. We deliver efficient and on-demand managed services anywhere—whether on the customer’s premises, at a partner data center or within one of our own data centers. We handle everything inside a data center, from power, space and cooling to management of the systems and processes. We form the process, security and technology-bridge between the stove piped legacy infrastructure and near-cloud-ready environments. Our specific range of services includes data center best practices, co-location, network, storage, compute, cyber, desktops, unified communications, enterprise service management and mobile. Through our on-demand services we are able to find innovative ways to address problems our customers encounter. For example, we partnered with the State of Louisiana to create the Integrated Technology Center in Bossier City, Louisiana, a delivery center possessing the highest level of security accreditation under the Federal Information Security Management Act which is being coupled with our coordinated technical curricula at Louisiana universities. The result is a secure government-focused, managed services center that supports all classification levels, is managed by custom trained employees and all at low cost. We also act as the managed services provider for the DHS’s Data Center, where we help migrate and consolidate its data center operations and introduce new technologies to cut costs and improve security and performance. All of our data centers are designed to host systems accredited by FedRAMP. FedRAMP assures that our data centers meet the standardized approach to security assessment, authorization, and continuous monitoring as specified by the National Institute of Standards and Technology. The certification also allows us to expand our addressable market and be able to integrate our data centers with other offerings while meeting regulatory requirements.
Application Modernization and Optimization. We help the U.S. federal, state and local governments modernize or transform existing, aging applications (both custom and commercial-off-the-shelf) and to map the transition to mobile and cloud solutions. Application modernization and optimization encompasses a broad range of offerings focused around application portfolio migration, transformation and modernization, including basic operations and maintenance support, migration to cloud platforms, consolidation, version upgrades and mobile enablement. Coupled with over 50 years of domain expertise in the areas of immigration, border, air transportation and military and civilian health, the benefits of our application modernization and optimization solutions include reduced cost and risk, along with increased agility and responsiveness to mission needs. For example, we employ our application modernization and optimization solutions to consolidate systems and modernize critical applications at both the U.S. Citizenship and Immigration Services and the Centers for Medicare and Medicaid Services.
Application Innovation Services. We build custom applications that help the U.S. federal government provide services to citizens, such as air safety for travelers and health coverage for the uninsured. We combine mature processes and relationships with key partners to deliver innovative applications built with leading edge and emerging technologies. Our application development services are powered by product offerings that enable faster time to mission, higher quality and cloud-independent applications. Some of these offerings include: FutureEdge, a suite of application modernization tools; AppWorks, a pre-configured agile application management platform; and Agility, a hybrid cloud management platform. With deep mission domain expertise, we serve as a trusted business advisor to help federal customers deliver services to the public more efficiently and effectively. Through our application innovation services, we built a single system for processing claims and payments for Medicaid and other programs for the North Carolina Department of Health and Human Services. This program, NCTracks, is the largest, most complex IT project in North Carolina history and the first public multi-payer system in the U.S. Working closely with the North Carolina Department of Health and Human Services on its existing 35-year-old system, we consolidated and streamlined several IT systems into one that is accessed through a single sign-on portal for a near real-time view of claims. In its first year, NCTracks processed 200 million claims and paid $10.3 billion to healthcare providers. The system delivers savings of $3 million per month to the state and pays nearly 100,000 providers faster and more often.
Next Generation Technology

Delivered out of our Enterprise Services offering organization, our Next Generation Technology offering brands address our ability to deliver cutting edge solutions to our customer’s most challenging problems leveraging innovations in cloud infrastructure, big data analytics, cyber security, and mobility. Our Next Generation Technology brands include: Custom Platform Services; Cloud Powered Commercial Solutions; Cloud Brokered Services and Big Data Science.


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Custom Platform Services. We design, build, test, deploy and package secure mobile, web and traditional applications. Using an Agile (iterative and incremental) approach to system development, we deliver software releases more quickly without sacrificing quality, system integrity or system vulnerabilities. At the nexus between applications and infrastructure, our Custom Platform Services is a toolkit we offer to build and run mobile and cloud-native applications. We provide a full spectrum of services ranging from consulting and application development to deploying and operating mobile applications and specialized mobile infrastructure. To enable our customers to adapt to a more efficient “agile” culture, we bring lessons learned, experience, methodological leadership, and unique talent to help customers embrace incremental application development processes at scale and make the necessary changes to their governance, systems development life cycle, and security processes. We have led the migration from traditional “waterfall” approaches to development to agile practices at some of the larger applications programs in the U.S. federal government. Our integrated framework, AppWorks, allows for the collaboration of agile development teams to manage, design, develop, build, test and deploy their applications. By integrating AppWorks with our Agility Platform, application teams can achieve one-click deployment processes in which software is packaged, tested, and deployed onto a hybrid cloud along with all required supporting infrastructure and middleware. We offer access to next generation platform-as-a-service, enterprise class middleware, database technologies and performance monitoring tools that allow teams to predict and tune application performance prior to full deployment. At the U.S. Patent and Trademark Office, Environmental Protection Agency and in the Intelligence Community, multiple teams use our development and operations (“DevOps”) tools to increase efficiency and improve quality. For Intelligence Community customers, we have developed industry-leading big data application deployment platforms that support the acceleration of provisioning secure and scalable application environments. We have won multiple awards for agile development excellence based on our migration to agile development processes and adoptions of build automation, test automation, and deployment automation.

Cloud-Powered Commercial Solutions. We work with agencies to determine the best approach to migrating IT workloads to third-party, FedRAMP-certified cloud services, while meeting the government’s mission and security requirements. In recent years, adoption of a cloud-delivered solution model—or software-as-a-service—has accelerated across U.S. civil and defense agencies, as well as at the state level. We build and integrate software-as-a-service solutions, such as email and collaboration, customer relationship management, IT service desk, human resource management and enterprise content management. We provide agencies with a complete approach to implement software-as-a-service solutions, providing change management, training, support, communications, project management, architecture, transition and migration to support the customer’s transformation to software-as-a-service solutions. We work hand-in-hand with cloud providers to bring innovative cloud offerings and solutions such as Microsoft (Microsoft Office 365, CRM Online, SharePoint Online) and Salesforce (Customer Relationship Management or Service Cloud). For instance, we implemented a cloud software-as-a-service email and collaboration solution for over 55,000 FAA users across multiple email systems.  This was accomplished with an extremely low error rate.  Overall, our software-as-a-service solutions help customers:

increase agility;

reduce IT costs;

modernize applications;

improve capabilities, e.g., by adding mobility;

enhance business process efficiencies; and

support dynamic provisioning and scalability.

Cloud Broker Services. We provide a channel for U.S. federal agencies to buy, manage, and use FedRAMP- and DoD-approved hybrid cloud services with a single point of control via our Agility Platform. This scalable, on-demand, pay-for-what-you-use model allows customers to buy just the right amount to meet their needs. Agility


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enables a self-service, on-demand IT operating model with an easy-to-use, one-click cloud service deployment. As vendor-neutral, we are able to provide an independent assessment for customers, while our strategic partnerships with third-party cloud providers afford us the freedom to craft custom solutions based on the customer's specific requirements. We work with multiple third-party providers of cloud services from Amazon to Microsoft Azure, and offer our own cloud stacks. Cloud Broker, an offering in our Cloud Broker Services portfolio, is designed to enable our customers to define and enforce a set of extensible policies that can be used for workload placement, security compliance, access and workflow management and to achieve compliance with regulations in a systematic and effective manner. We have worked closely with several customers on their move to the cloud, including DHS, the Department of Health and Human Services and several intelligence agencies.

Big Data Science Solutions. We help customers derive value out of big data analytics. Specifically, we provide offerings using best-of-breed technologies including open source and traditional platforms to help government agencies derive mission value from big data. We design systems to enhance and maximize the user experience with data through intensive visualization. As an example, for the Army we created the Coral Reef application, an information system for visualizing complex data and links between data. We have also developed web-based tools to help decision makers in the defense and intelligence communities get information quickly, and specifically for their needs, from various data. For organizations that are considering whether and how to extract more value from big data, we help chart a path based on the customer’s specific mission.

Our People and Culture

People. Our success as a 50+ year strong IT, mission- and operations-related services provider is highly dependent on the excellent technical capabilities, high standards and ethics and the dedication of our people. As of June 2015, we employed approximately 14,000 employees, many of whom are deployed at customer sites throughout the U.S. Our headquarters are located in Falls Church, Virginia with major locations in Washington D.C., Virginia, Maryland, Kentucky, Alabama, North Carolina, New Jersey, New York and Louisiana. In Bossier City, Louisiana, we are in the process of deploying the Integrated Technology Center, our low-cost integrated delivery center, which we expect when fully functional will be supported by over 800 IT employees serving our customers across the business.

CLEAR Corporate Values. Our Corporate Values are CLEAR: Client-Focused, Leadership, Execution Excellence, Aspiration and Results. The CLEAR values give unifying focus and purpose to each of our 14,000 employees. No matter the industry, offering, region, or work site, our CLEAR values work to harmonize our culture and our approach to customer service. In today’s fast-paced, diverse workplace, our Values inform our instincts and represent common standards in an increasingly virtual enterprise. The uniformity of our Values aligns us as teammates from all layers and levels, and normalizes our interactions with customers, suppliers, alliance partners and respected competitors.

Ethics and Compliance. Our business’s commitment to ethics is unwavering, and our ethics and compliance program is designed to meet general governance and specific industry and regulatory requirements with a strategic focus on values, culture and performance with integrity. We know that strong risk management processes and effective internal controls—policies, procedures, training, audit and monitoring programs—are key components of well-run ethics and compliance organizations. Beyond these, however, we believe culture and values are intangible ingredients that make all the difference and so these are areas in which our executives and the program’s leadership are heavily invested.

Our code of business conduct makes clear our expectations for ethical leadership, performance with integrity, and compliance with company policies and the law. Our code makes clear the obligation we all have to report known or suspected misconduct; equally clear is our zero tolerance position on retaliatory behavior toward those who make such reports in good faith. We train employees annually on the principles of our Program and the contents of our code, which applies equally to all directors, officers, executives and employees of Computer Sciences GS worldwide.

Security. Security is critically important to our customers and their mission and it is fundamental to business and


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a commitment to improving security is a core part of our corporate culture. We commit to performing our jobs with a measure of knowledge, experience and accountability. Equally as important as the skill and knowledge with which we perform our daily tasks is our commitment to honesty in our dealings with others and the integrity of the deliverables for which we are responsible. We show respect to one another, embrace our rich diversity and always lead by example. Our culture and business are strengthened and unified when we perform with integrity. This culture of ethics and performance with integrity is what we strive to promote and sustain every day.

Outstanding Talent Community. We have a longstanding culture, rich in mission and IT experience, which provides a foundation that is deep in customer domain knowledge and trust. Over 90% of our employees hold secret, top secret or top secret/sensitive compartmented information clearances and access. The majority of the workforce is technical in nature with over 70% having a bachelor’s degree or higher. Employees’ skills and talents range from entry level technologist to expert level professionals in software design and development, DevOps, network engineering, systems administration, programmer analyst, systems engineering, training, logistics, consulting, product development, customer support, scientist and next-generation IT including agile, cyber, cloud and mobility. We have thousands of employees doing every aspect of software and data engineering, half of which are engaged on Agile teams. We cover many development languages including .NET, C#, Java, Ruby, Groovy, Drupal and Python. Many use Open Source tools as their primary environment in both public and private clouds.
Our workforce is led by talented and experienced leaders that have cross-industry, technical and broad experience and the knowledge and experience to bring the best solutions to our customers’ most complex missions. Our executive leadership leverages extensive industry experience, across our defense, intelligence, health and civil markets, are recognized as leaders in their respective markets by our customers and partners, and have proven successful track records for performance and growth. Our strong succession planning and development means we have a deep bench of leaders coming up through the organization.
We invest heavily in our talent acquisition and staffing capabilities to ensure we are able to find and hire the most qualified candidates. We recruit excellent talent into the organization, with a key emphasis on our university relations and recruiting strategy, in order to build the emerging leaders and technologists of our future. Each year, we typically receive more than 100,000 applications, conduct more than 6,500 interviews and hire over 2,900 new personnel. In addition, we partner to hire those exiting the military through programs focused on wounded veterans and those with disabilities. We have over 3,500 self-identified veterans in our workforce today, one third of whom self-identified as having a disability. In 2015 we were recognized for being one of the best companies for veterans based on our population base as well as our practices, policies and culture.
Talent Development. We focus on continued development in four key areas: leadership, sales, program management and technical. We offer online and community-based educational opportunities, in addition to trainings offered by our partners in their respective areas. We promote an environment of continuous learning with strong educational assistance and certification benefits, along with individual development plans aligned with our growth strategy.
Intellectual Property
Our technical services and products are not generally dependent upon patent protection, although we do selectively seek patent protection. Our intellectual property portfolio covers products, technical services, consulting, methodologies and know-how and is protected by non-disclosure agreements, contractual arrangements and in the form of one or more of the following: trade secret, patent, copyright or trademark. Some of the intellectual property contains licensed third-party and open source components.
For our work under U.S. federal government funded contracts and subcontracts, the U.S. federal government obtains certain rights to data, software and related information developed under such contracts or subcontracts. These rights may allow the U.S. federal government to disclose such data, software and related information to third parties which may in some instances include competitors. In the case of our work as a subcontractor, our prime contractors may also have certain rights to data, information and products that we develop under the subcontract.


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In connection with the Spin-Off, we expect to hold a limited portfolio of licensed intellectual property from CSC. The use of the intellectual property that we will hold will be limited to certain purposes and to certain U.S. governmental customers. As a result of the scope limitation in our rights to use our intellectual property, our ability to effectively bid for or perform contracts for customers other than the U.S. federal government and certain U.S. state and local governments will be extremely limited unless we acquire or independently develop intellectual property that would permit us to do so.