x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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DXC TECHNOLOGY COMPANY
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(Exact name of Registrant as specified in its charter)
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Nevada
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61-1800317
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(State of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1775 Tysons Boulevard
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Tysons, Virginia
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22102
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(Address of principal executive offices)
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(zip code)
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Registrant's telephone number, including area code:
(703) 245-9675
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Item
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Page
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1.
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2.
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3.
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4.
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1.
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1A.
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2.
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3.
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4.
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5.
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6.
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Page
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Three Months Ended
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Six Months Ended
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||||||||||||
(in millions, except per-share amounts)
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September 30, 2018
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September 30, 2017
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September 30, 2018
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September 30, 2017
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||||||||
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||||||||
Revenues
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$
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5,013
|
|
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$
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5,453
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|
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$
|
10,295
|
|
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$
|
10,689
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|
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||||||||
Costs of services (excludes depreciation and amortization and restructuring costs)
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3,518
|
|
|
3,870
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|
7,385
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|
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8,179
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||||
Selling, general, and administrative (excludes depreciation and amortization and restructuring costs)
|
|
569
|
|
|
644
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1,009
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|
|
1,037
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||||
Depreciation and amortization
|
|
484
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|
|
482
|
|
|
955
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|
|
824
|
|
||||
Restructuring costs
|
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157
|
|
|
188
|
|
|
342
|
|
|
375
|
|
||||
Interest expense
|
|
83
|
|
|
73
|
|
|
168
|
|
|
147
|
|
||||
Interest income
|
|
(33
|
)
|
|
(16
|
)
|
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(65
|
)
|
|
(32
|
)
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||||
Other income, net
|
|
(97
|
)
|
|
(72
|
)
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|
(191
|
)
|
|
(216
|
)
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||||
Total costs and expenses
|
|
4,681
|
|
|
5,169
|
|
|
9,603
|
|
|
10,314
|
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||||
|
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations before income taxes
|
|
332
|
|
|
284
|
|
|
692
|
|
|
375
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||||
Income tax expense
|
|
73
|
|
|
79
|
|
|
202
|
|
|
62
|
|
||||
Income from continuing operations
|
|
259
|
|
|
205
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|
|
490
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|
|
313
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|
||||
Income from discontinued operations, net of taxes
|
|
—
|
|
|
60
|
|
|
35
|
|
|
125
|
|
||||
Net income
|
|
259
|
|
|
265
|
|
|
525
|
|
|
438
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||||
Less: net (loss) income attributable to non-controlling interest, net of tax
|
|
(3
|
)
|
|
9
|
|
|
4
|
|
|
23
|
|
||||
Net income attributable to DXC common stockholders
|
|
$
|
262
|
|
|
$
|
256
|
|
|
$
|
521
|
|
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$
|
415
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|
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||||||||
Income per common share:
|
|
|
|
|
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||||||||
Basic:
|
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|
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|
|
|
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||||||||
Continuing operations
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$
|
0.93
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|
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$
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0.69
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$
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1.72
|
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$
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1.02
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Discontinued operations
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—
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|
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0.21
|
|
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0.12
|
|
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0.44
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||||
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$
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0.93
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|
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$
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0.90
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$
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1.84
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$
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1.46
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Diluted:
|
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|
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|
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||||||||
Continuing operations
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$
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0.92
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$
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0.67
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$
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1.69
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$
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1.00
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Discontinued operations
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—
|
|
|
0.21
|
|
|
0.12
|
|
|
0.43
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||||
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$
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0.92
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|
|
$
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0.88
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|
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$
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1.81
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|
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$
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1.43
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|
|
|
|
|
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||||||||
Cash dividend per common share
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$
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0.19
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|
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$
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0.18
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|
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$
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0.38
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$
|
0.36
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|
|
|
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Three Months Ended
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Six Months Ended
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||||||||||||
(in millions)
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September 30, 2018
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September 30, 2017
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September 30, 2018
|
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September 30, 2017
|
||||||||||
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||||||||
Net income
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$
|
259
|
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|
$
|
265
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$
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525
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$
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438
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|
||
Other comprehensive (loss) income, net of taxes:
|
|
|
|
|
|
|
|
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||||||||||
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Foreign currency translation adjustments, net of tax
(1)
|
|
(66
|
)
|
|
(45
|
)
|
|
(408
|
)
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109
|
|
|||||
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Cash flow hedges adjustments, net of tax
(2)
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2
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(2
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)
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(30
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)
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(5
|
)
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|||||
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Available-for-sale securities, net of tax
|
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—
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—
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(1
|
)
|
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—
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|||||
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Pension and other post-retirement benefit plans, net of tax:
|
|
|
|
|
|
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|||||||||
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Amortization of prior service cost, net of tax
(3)
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(5
|
)
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(3
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)
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(6
|
)
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(7
|
)
|
||||
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Pension and other post-retirement benefit plans, net of tax
|
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(5
|
)
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(3
|
)
|
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(6
|
)
|
|
(7
|
)
|
|||||
Other comprehensive (loss) income, net of taxes
|
|
(69
|
)
|
|
(50
|
)
|
|
(445
|
)
|
|
97
|
|
||||||
Comprehensive income
|
|
190
|
|
|
215
|
|
|
80
|
|
|
535
|
|
||||||
|
Less: comprehensive (loss) income attributable to non-controlling interest
|
|
(2
|
)
|
|
36
|
|
|
(1
|
)
|
|
28
|
|
|||||
Comprehensive income attributable to DXC common stockholders
|
|
$
|
192
|
|
|
$
|
179
|
|
|
$
|
81
|
|
|
$
|
507
|
|
|
|
As of
|
||||||
(in millions, except per-share and share amounts)
|
|
September 30, 2018
|
|
March 31, 2018
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
2,780
|
|
|
$
|
2,593
|
|
Receivables and contract assets, net of allowance for doubtful accounts of $62 and $40
|
|
4,928
|
|
|
5,481
|
|
||
Prepaid expenses
|
|
630
|
|
|
496
|
|
||
Other current assets
|
|
477
|
|
|
469
|
|
||
Assets of discontinued operations
|
|
—
|
|
|
581
|
|
||
Total current assets
|
|
8,815
|
|
|
9,620
|
|
||
|
|
|
|
|
||||
Intangible assets, net of accumulated amortization of $3,788 and $3,369
|
|
6,602
|
|
|
7,179
|
|
||
Goodwill
|
|
7,417
|
|
|
7,619
|
|
||
Deferred income taxes, net
|
|
326
|
|
|
373
|
|
||
Property and equipment, net of accumulated depreciation of $3,615 and $3,686
|
|
3,281
|
|
|
3,363
|
|
||
Other assets
|
|
2,441
|
|
|
2,404
|
|
||
Assets of discontinued operations - non-current
|
|
—
|
|
|
3,363
|
|
||
Total Assets
|
|
$
|
28,882
|
|
|
$
|
33,921
|
|
|
|
|
|
|
||||
LIABILITIES and EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Short-term debt and current maturities of long-term debt
|
|
$
|
1,618
|
|
|
$
|
1,918
|
|
Accounts payable
|
|
1,358
|
|
|
1,513
|
|
||
Accrued payroll and related costs
|
|
734
|
|
|
744
|
|
||
Accrued expenses and other current liabilities
|
|
3,268
|
|
|
3,120
|
|
||
Deferred revenue and advance contract payments
|
|
1,442
|
|
|
1,641
|
|
||
Income taxes payable
|
|
94
|
|
|
127
|
|
||
Liabilities of discontinued operations
|
|
—
|
|
|
789
|
|
||
Total current liabilities
|
|
8,514
|
|
|
9,852
|
|
||
|
|
|
|
|
||||
Long-term debt, net of current maturities
|
|
5,409
|
|
|
6,092
|
|
||
Non-current deferred revenue
|
|
301
|
|
|
795
|
|
||
Non-current income tax liabilities and deferred tax liabilities
|
|
1,219
|
|
|
1,166
|
|
||
Other long-term liabilities
|
|
1,602
|
|
|
1,723
|
|
||
Liabilities of discontinued operations - long-term
|
|
—
|
|
|
456
|
|
||
Total Liabilities
|
|
17,045
|
|
|
20,084
|
|
||
|
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
|
||
|
|
|
|
|
||||
DXC stockholders’ equity:
|
|
|
|
|
||||
Preferred stock, par value $.01 per share, authorized 1,000,000 shares, none issued as of September 30, 2018 and March 31, 2018
|
|
—
|
|
|
—
|
|
||
Common stock, par value $.01 per share, authorized 750,000,000 shares, issued 282,519,184 as of September 30, 2018 and 286,393,147 as of March 31, 2018
|
|
3
|
|
|
3
|
|
||
Additional paid-in capital
|
|
11,848
|
|
|
12,210
|
|
||
Retained earnings
|
|
136
|
|
|
1,301
|
|
||
Accumulated other comprehensive (loss) income
|
|
(382
|
)
|
|
58
|
|
||
Treasury stock, at cost, 1,241,024 and 1,016,947 shares as of September 30, 2018 and March 31, 2018
|
|
(105
|
)
|
|
(85
|
)
|
||
Total DXC stockholders’ equity
|
|
11,500
|
|
|
13,487
|
|
||
Non-controlling interest in subsidiaries
|
|
337
|
|
|
350
|
|
||
Total Equity
|
|
11,837
|
|
|
13,837
|
|
||
Total Liabilities and Equity
|
|
$
|
28,882
|
|
|
$
|
33,921
|
|
|
|
Six Months Ended
|
||||||
(in millions)
|
|
September 30, 2018
|
|
September 30, 2017
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
525
|
|
|
$
|
438
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
1,002
|
|
|
904
|
|
||
Share-based compensation
|
|
41
|
|
|
58
|
|
||
Gain on dispositions
|
|
(65
|
)
|
|
—
|
|
||
Unrealized foreign currency exchange (gains) losses
|
|
(12
|
)
|
|
4
|
|
||
Other non-cash charges, net
|
|
(18
|
)
|
|
15
|
|
||
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
|
|
|
|
|
||||
(Increase) decrease in assets
|
|
(447
|
)
|
|
45
|
|
||
(Decrease) increase in liabilities
|
|
(141
|
)
|
|
46
|
|
||
Net cash provided by operating activities
|
|
885
|
|
|
1,510
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
||||
Purchases of property and equipment
|
|
(133
|
)
|
|
(123
|
)
|
||
Payments for transition and transformation contract costs
|
|
(183
|
)
|
|
(176
|
)
|
||
Software purchased and developed
|
|
(125
|
)
|
|
(86
|
)
|
||
Cash acquired through Merger
|
|
—
|
|
|
974
|
|
||
Payments for acquisitions, net of cash acquired
|
|
(43
|
)
|
|
(152
|
)
|
||
Business dispositions
|
|
(65
|
)
|
|
—
|
|
||
Deferred purchase price receivable
|
|
409
|
|
|
33
|
|
||
Proceeds from sale of assets
|
|
57
|
|
|
20
|
|
||
Other investing activities, net
|
|
(1
|
)
|
|
6
|
|
||
Net cash (used in) provided by investing activities
|
|
(84
|
)
|
|
496
|
|
||
|
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
||||
Borrowings of commercial paper
|
|
1,158
|
|
|
1,182
|
|
||
Repayments of commercial paper
|
|
(1,158
|
)
|
|
(1,067
|
)
|
||
Repayment of borrowings under lines of credit
|
|
—
|
|
|
(335
|
)
|
||
Borrowings on long-term debt, net of discount
|
|
483
|
|
|
615
|
|
||
Principal payments on long-term debt
|
|
(2,036
|
)
|
|
(1,109
|
)
|
||
Payments on capital leases and borrowings for asset financing
|
|
(475
|
)
|
|
(443
|
)
|
||
Borrowings for USPS spin transaction
|
|
1,114
|
|
|
—
|
|
||
Proceeds from bond issuance
|
|
753
|
|
|
647
|
|
||
Proceeds from stock options and other common stock transactions
|
|
36
|
|
|
92
|
|
||
Taxes paid related to net share settlements of share-based compensation awards
|
|
(20
|
)
|
|
(66
|
)
|
||
Repurchase of common stock
|
|
(447
|
)
|
|
(66
|
)
|
||
Dividend payments
|
|
(105
|
)
|
|
(72
|
)
|
||
Other financing activities, net
|
|
11
|
|
|
1
|
|
||
Net cash used in financing activities
|
|
(686
|
)
|
|
(621
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
(64
|
)
|
|
49
|
|
||
Net increase in cash and cash equivalents
|
|
51
|
|
|
1,434
|
|
||
Cash and cash equivalents at beginning of year
|
|
2,729
|
|
|
1,268
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
2,780
|
|
|
$
|
2,702
|
|
(in millions, except shares in thousands)
|
Common Stock
|
Additional
Paid-in Capital
|
Retained Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Treasury Stock
(2)
|
Total
DXC Equity
|
Non-
Controlling Interest
|
Total Equity
|
|||||||||||||||||||
Shares
|
|
Amount
|
|||||||||||||||||||||||||
Balance at March 31, 2018
|
286,393
|
|
|
$
|
3
|
|
$
|
12,210
|
|
$
|
1,301
|
|
$
|
58
|
|
$
|
(85
|
)
|
$
|
13,487
|
|
$
|
350
|
|
$
|
13,837
|
|
Cumulative effect of adopting the new revenue standard
|
|
|
|
|
|
|
|
114
|
|
|
|
|
|
114
|
|
|
|
114
|
|
||||||||
Net Income
|
|
|
|
|
521
|
|
|
|
521
|
|
4
|
|
525
|
|
|||||||||||||
Other comprehensive loss
|
|
|
|
|
|
(440
|
)
|
|
(440
|
)
|
(5
|
)
|
(445
|
)
|
|||||||||||||
Share-based compensation expense
|
|
|
|
40
|
|
|
|
|
40
|
|
|
40
|
|
||||||||||||||
Acquisition of treasury stock
|
|
|
|
|
|
|
(20
|
)
|
(20
|
)
|
|
(20
|
)
|
||||||||||||||
Share repurchase program
|
(5,228
|
)
|
|
|
|
(251
|
)
|
(200
|
)
|
|
|
(451
|
)
|
|
(451
|
)
|
|||||||||||
Stock option exercises and other common stock transactions
|
1,354
|
|
|
|
|
26
|
|
|
|
|
26
|
|
|
26
|
|
||||||||||||
Dividends declared
|
|
|
|
|
(109
|
)
|
|
|
(109
|
)
|
|
(109
|
)
|
||||||||||||||
Non-controlling interest distributions and other
|
|
|
|
|
|
|
|
|
—
|
|
(12
|
)
|
(12
|
)
|
|||||||||||||
Divestiture of USPS
|
|
|
|
(177
|
)
|
(1,491
|
)
|
|
|
|
(1,668
|
)
|
|
|
(1,668
|
)
|
|||||||||||
Balance at September 30, 2018
|
282,519
|
|
|
$
|
3
|
|
$
|
11,848
|
|
$
|
136
|
|
$
|
(382
|
)
|
$
|
(105
|
)
|
$
|
11,500
|
|
$
|
337
|
|
$
|
11,837
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
(in millions, except shares in thousands)
|
Common Stock
|
Additional
Paid-in Capital
|
(Accumulated Deficit) Retained Earnings
|
Accumulated
Other
Comprehensive
Loss
|
Treasury Stock
|
Total
DXC Equity
|
Non-
Controlling Interest
|
Total Equity
|
|||||||||||||||||||
Shares
|
|
Amount
|
|||||||||||||||||||||||||
Balance at March 31, 2017
|
141,299
|
|
|
$
|
1
|
|
$
|
2,219
|
|
$
|
(170
|
)
|
$
|
(162
|
)
|
$
|
—
|
|
$
|
1,888
|
|
$
|
278
|
|
$
|
2,166
|
|
Business acquired in purchase, net of issuance costs
(1)
|
141,741
|
|
|
2
|
|
9,848
|
|
|
|
|
9,850
|
|
61
|
|
9,911
|
|
|||||||||||
Net income
|
|
|
|
|
415
|
|
|
|
415
|
|
23
|
|
438
|
|
|||||||||||||
Other comprehensive income
|
|
|
|
|
|
92
|
|
|
92
|
|
5
|
|
97
|
|
|||||||||||||
Share-based compensation expense
|
|
|
|
57
|
|
|
|
|
57
|
|
|
57
|
|
||||||||||||||
Acquisition of treasury stock
|
|
|
|
|
|
|
(61
|
)
|
(61
|
)
|
|
(61
|
)
|
||||||||||||||
Share repurchase program
|
(842
|
)
|
|
|
|
(36
|
)
|
(30
|
)
|
|
|
(66
|
)
|
|
(66
|
)
|
|||||||||||
Stock option exercises and other common stock transactions
|
3,745
|
|
|
|
|
70
|
|
|
|
|
70
|
|
|
70
|
|
||||||||||||
Dividends declared
|
|
|
|
|
(105
|
)
|
|
|
(105
|
)
|
|
(105
|
)
|
||||||||||||||
Balance at September 30, 2017
|
285,943
|
|
|
$
|
3
|
|
$
|
12,158
|
|
$
|
110
|
|
$
|
(70
|
)
|
$
|
(61
|
)
|
$
|
12,140
|
|
$
|
367
|
|
$
|
12,507
|
|
•
|
Identification of the contract, or contracts, with a customer
|
•
|
Identification of the performance obligations in the contract
|
•
|
Determination of the transaction price
|
•
|
Allocation of the transaction price to the performance obligations in the contract
|
•
|
Recognition of revenue when, or as, the Company satisfies a performance obligation
|
Date Issued and ASU
|
Date Adopted and Method
|
Description
|
Impact
|
May 2014
ASU 2014-09 “Revenue from Contracts with Customers (Topic 606)"
|
April 1, 2018 Modified-retrospective
|
The core principle of this update, and the subsequent amendments, is that revenue is recognized when the transfer of goods or services to customers occurs in an amount that reflects the consideration to which DXC expects to be entitled in exchange for those goods or services. The guidance also addresses the timing of recognition of certain costs incurred to obtain or fulfill a customer contract. Further, it requires the disclosure of sufficient information to enable readers of DXC’s financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, and information regarding significant judgments and changes in judgments made. This update provides two methods of adoption: full retrospective and modified retrospective. Under the full retrospective method, the standard would be applied to all periods presented with previously disclosed periods restated under the new guidance. Under the modified retrospective method, prior periods would not be restated but rather a cumulative catch-up adjustment would be recorded on the adoption date.
|
The Company adopted this standard using the modified retrospective method. The Company has applied the standard to only those contracts that were not completed at the adoption date. The adoption resulted in the following impacts.
The Company recorded a net increase to opening retained earnings, net of income taxes, of approximately $114 million as of April 1, 2018 due to the cumulative impact of adopting Topic 606, with the impact primarily related to the capitalization of certain sales commissions of approximately $158 million offset by a reduction in income tax assets and liabilities of approximately $40 million. In addition, the Company has recorded a reduction in contract liabilities of approximately $381 million and other current assets and other assets of $385 million, primarily related to the net down of certain long-term contract asset and contract liability balances and the change in timing of revenue and costs recognized related to our software contracts.
Refer to Note 12 - “Revenue” for further discussion of the impact of adoption and other required disclosures.
|
March 2017
ASU 2017-07 “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost"
|
April 1, 2018 Retrospective
|
This update is intended to improve the presentation of net periodic pension cost and net periodic post-retirement benefit cost in an entity's financial statements by requiring the service cost component be disaggregated from other components of net benefit costs and presented in the same line item or items as other compensation costs for the employees. Additionally, only the service cost component of net benefit cost is eligible for capitalization when applicable. This update must be applied retrospectively.
|
DXC reclassified non-service cost components of net periodic pension (income) expense from "costs of services" and "selling, general and administrative" to "other income, net" in the statements of operations for the three and six months ended September 30, 2017. The aggregate service cost component of net periodic pension income remaining in "costs of services" and "selling, general and administrative" is $34 million and $66 million, for the three and six months ended September 30, 2017, respectively.
|
August 2016
ASU 2016-15 “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments"
|
April 1, 2018 Retrospective
|
This update addressed eight cash flow classification issues that have created diversity in practice, providing definitive guidance on classification of certain cash receipts and payments. This update must be adopted retrospectively for all periods presented but may be applied prospectively if retrospective application would be impracticable
|
ASU 2016-15 requires the company to classify cash receipts related to its beneficial interests in securitization transactions, which is the deferred purchase price (the “DPP”) recorded in connection with the Company's Receivables Securitization Facility, within investing activities in its statements of cash flows. The Company adopted ASU 2016-15 effective April 1, 2018, and retrospectively adjusted prior fiscal periods, using each month’s transactional activity as the unit of account in determining the portions of transferred trade receivables as operating activities and investing activities. The Company is evaluating whether a change is necessary in the unit of account used in determining the portions of transferred trade receivables pertaining to operating activities and investing activities to approximate each day’s transactional activity. The Company is unable to estimate the impact of such change for the current period and may revise its presentation of cash receipts related to the DPP in its next Quarterly Report and reflect the change on a retrospective basis to all periods presented, if practicable. See Note 6 - "Sale of Receivables" for more information about the Receivables Securitization Facility.
|
November 2016
ASU 2016-18 “Statement of Cash Flows (Topic 230): Restricted Cash (A Consensus of the FASB Emerging Issues Task Force")
|
April 1, 2018 Retrospective
|
This update requires that amounts described as restricted cash or restricted cash equivalents must be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This update must be applied retrospectively.
|
DXC reclassified restricted cash to beginning-of-period and end-of-period cash and cash equivalents on the statement of cash flows.
|
Date Issued and ASU
|
DXC Effective Date
|
Description
|
Impact
|
February 2016
ASU 2016-02 "Leases (Topic 842)"
|
Fiscal 2020
|
This update is intended to increase transparency and comparability among organizations by recognizing virtually all lease assets and lease liabilities on the balance sheet and disclosing key information about lease arrangements. Early adoption of this update is permitted. This update must be adopted using a modified retrospective transition at the beginning of the earliest period presented or at the adoption date recognizing a cumulative adjustment to the opening balance of retained earnings in the period of adoption and provides for certain practical expedients.
|
DXC is currently evaluating the effect the adoption of this standard will have on its existing accounting policies and the financial statements in future reporting periods. The Company expects there will be a material increase in assets and liabilities on its balance sheets at adoption due to the recording of right-of-use assets and corresponding lease liabilities for lease obligations that are currently classified as operating leases. The Company is in the process of implementing changes to its systems, processes and controls, including the implementation of a lease accounting software solution to comply with the new standard.
DXC expects to adopt certain transition expedients permitted under Topic 842, as follows:
DXC expects to adopt this standard on a modified retrospective basis beginning on the adoption date, with comparative period disclosures following ASC 840 requirements. DXC does not expect to reassess lease determination, lease classification or indirect cost capitalization for leases that commenced prior to the adoption date. DXC does not expect to recognize on the balance sheet leases that both (a) have a ‘lease term’ of 12 months or less and (b) do not contain a ‘reasonably certain’ purchase option.
|
(in millions)
|
|
Amount
|
||
Fair value of purchase consideration received by HPE stockholders
(1)
|
|
$
|
9,782
|
|
Fair value of HPES options assumed by CSC
(2)
|
|
68
|
|
|
Total consideration transferred
|
|
$
|
9,850
|
|
(1)
|
Represents the fair value of consideration received by HPE stockholders to give them
50.1%
ownership in the combined company. The fair value of the purchase consideration transferred was based on a total of
141,865,656
shares of DXC common stock distributed to HPE stockholders as of the close of business on the record date (
141,741,712
after the effect of
123,944
cancelled shares) at CSC's closing price of
$69.01
per share on March 31, 2017.
|
(2)
|
Represents the fair value of certain stock-based awards of HPES employees that were unexercised on March 31, 2017, which were converted to DXC stock-based awards.
|
(in millions)
|
|
Fair Value
|
||
Cash and cash equivalents
|
|
$
|
938
|
|
Accounts receivable
(1)
|
|
4,102
|
|
|
Other current assets
|
|
530
|
|
|
Total current assets
|
|
5,570
|
|
|
Property and equipment
|
|
2,581
|
|
|
Intangible assets
|
|
6,384
|
|
|
Other assets
|
|
1,571
|
|
|
Total assets acquired
|
|
16,106
|
|
|
Accounts payable, accrued payroll, accrued expenses, and other current liabilities
|
|
(4,605
|
)
|
|
Deferred revenue
|
|
(1,315
|
)
|
|
Long-term debt, net of current maturities
|
|
(4,806
|
)
|
|
Long-term deferred tax liabilities and income tax payable
|
|
(1,550
|
)
|
|
Other liabilities
|
|
(1,322
|
)
|
|
Total liabilities assumed
|
|
(13,598
|
)
|
|
Net identifiable assets acquired
|
|
2,508
|
|
|
Add: Fair value of non-controlling interests
|
|
(50
|
)
|
|
Goodwill
|
|
7,392
|
|
|
Total estimated consideration transferred
|
|
$
|
9,850
|
|
•
|
a Separation and Distribution Agreement;
|
•
|
an Employee Matters Agreement;
|
•
|
a Tax Matters Agreement;
|
•
|
an Intellectual Property Matters Agreement;
|
•
|
a Transition Services Agreement;
|
•
|
a Real Estate Matters Agreement; and,
|
•
|
a Non-US Agency Agreement.
|
|
|
As of
|
||
(in millions)
|
|
May 31, 2018
|
||
Assets:
|
|
|
||
Cash and cash equivalents
|
|
$
|
95
|
|
Receivables, net
|
|
458
|
|
|
Prepaid expenses
|
|
82
|
|
|
Other current assets
|
|
35
|
|
|
Total current assets of discontinued operations
|
|
670
|
|
|
Intangible assets, net
|
|
882
|
|
|
Goodwill
|
|
2,029
|
|
|
Property and equipment, net
|
|
294
|
|
|
Other assets
|
|
157
|
|
|
Total non-current assets of discontinued operations
|
|
3,362
|
|
|
Total assets
|
|
$
|
4,032
|
|
|
|
|
||
Liabilities:
|
|
|
||
Short-term debt and current maturities of long-term debt
|
|
$
|
161
|
|
Accounts payable
|
|
165
|
|
|
Accrued payroll and related costs
|
|
17
|
|
|
Accrued expenses and other current liabilities
|
|
358
|
|
|
Deferred revenue and advance contract payments
|
|
53
|
|
|
Income tax payable
|
|
18
|
|
|
Total current liabilities of discontinued operations
|
|
772
|
|
|
Long-term debt, net of current maturities
|
|
1,320
|
|
|
Non-current deferred revenue
|
|
5
|
|
|
Non-current income tax liabilities and deferred tax liabilities
|
|
196
|
|
|
Other long-term liabilities
|
|
71
|
|
|
Total long-term liabilities of discontinued operations
|
|
1,592
|
|
|
Total liabilities
|
|
$
|
2,364
|
|
|
|
As of
|
||
(in millions)
|
|
March 31, 2018
|
||
Assets:
|
|
|
||
Cash and cash equivalents
|
|
$
|
68
|
|
Receivables, net
|
|
432
|
|
|
Prepaid expenses
|
|
75
|
|
|
Other current assets
|
|
6
|
|
|
Total current assets of discontinued operations
|
|
581
|
|
|
Intangible assets, net
|
|
912
|
|
|
Goodwill
|
|
2,033
|
|
|
Property and equipment, net
|
|
283
|
|
|
Other assets
|
|
135
|
|
|
Total non-current assets of discontinued operations
|
|
3,363
|
|
|
Total assets
|
|
$
|
3,944
|
|
|
|
|
||
Liabilities:
|
|
|
||
Short-term debt and current maturities of long-term debt
|
|
$
|
155
|
|
Accounts payable
|
|
195
|
|
|
Accrued payroll and related costs
|
|
22
|
|
|
Accrued expenses and other current liabilities
|
|
346
|
|
|
Deferred revenue and advance contract payments
|
|
53
|
|
|
Income tax payable
|
|
18
|
|
|
Total current liabilities of discontinued operations
|
|
789
|
|
|
Long-term debt, net of current maturities
|
|
214
|
|
|
Non-current deferred revenue
|
|
7
|
|
|
Non-current income tax liabilities and deferred tax liabilities
|
|
163
|
|
|
Other long-term liabilities
|
|
72
|
|
|
Total long-term liabilities of discontinued operations
|
|
456
|
|
|
Total liabilities
|
|
$
|
1,245
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
(in millions)
|
|
September 30, 2017
|
|
September 30, 2018
(1)
|
|
September 30, 2017
|
||||||
Revenue
|
|
$
|
710
|
|
|
$
|
431
|
|
|
$
|
1,387
|
|
|
|
|
|
|
|
|
||||||
Costs of services
|
|
509
|
|
|
311
|
|
|
1,045
|
|
|||
Selling, general and administrative
|
|
34
|
|
|
50
|
|
|
57
|
|
|||
Depreciation and amortization
|
|
55
|
|
|
33
|
|
|
74
|
|
|||
Restructuring costs
|
|
4
|
|
|
1
|
|
|
7
|
|
|||
Interest expense
|
|
5
|
|
|
8
|
|
|
7
|
|
|||
Other income, net
|
|
—
|
|
|
(25
|
)
|
|
—
|
|
|||
Total costs and expenses
|
|
607
|
|
|
378
|
|
|
1,190
|
|
|||
Total income from discontinued operations, before income taxes
|
|
103
|
|
|
53
|
|
|
197
|
|
|||
Income tax expense
|
|
43
|
|
|
18
|
|
|
72
|
|
|||
Total income from discontinued operations
|
|
$
|
60
|
|
|
$
|
35
|
|
|
$
|
125
|
|
|
|
Six Months Ended
|
||||||
(in millions)
|
|
September 30, 2018
(1)
|
|
September 30, 2017
|
||||
Depreciation
|
|
$
|
16
|
|
|
$
|
39
|
|
Amortization
|
|
$
|
17
|
|
|
$
|
35
|
|
Capital expenditures
|
|
$
|
—
|
|
|
$
|
(5
|
)
|
Significant operating non-cash items:
|
|
|
|
|
||||
Gain on dispositions
|
|
$
|
24
|
|
|
$
|
—
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(in millions, except per-share amounts)
|
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
||||||||
Net income attributable to DXC common shareholders:
|
|
|
|
|
|
|
|
|
||||||||
From continuing operations
|
|
$
|
262
|
|
|
$
|
196
|
|
|
$
|
486
|
|
|
$
|
290
|
|
From discontinued operations
|
|
$
|
—
|
|
|
$
|
60
|
|
|
$
|
35
|
|
|
$
|
125
|
|
|
|
|
|
|
|
|
|
|
||||||||
Common share information:
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding for basic EPS
|
|
281.37
|
|
|
284.87
|
|
|
282.89
|
|
|
284.35
|
|
||||
Dilutive effect of stock options and equity awards
|
|
4.41
|
|
|
4.42
|
|
|
4.64
|
|
|
5.03
|
|
||||
Weighted average common shares outstanding for diluted EPS
|
|
285.78
|
|
|
289.29
|
|
|
287.53
|
|
|
289.38
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
0.93
|
|
|
$
|
0.69
|
|
|
$
|
1.72
|
|
|
$
|
1.02
|
|
Discontinued operations
|
|
$
|
—
|
|
|
$
|
0.21
|
|
|
$
|
0.12
|
|
|
$
|
0.44
|
|
Total
|
|
$
|
0.93
|
|
|
$
|
0.90
|
|
|
$
|
1.84
|
|
|
$
|
1.46
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
0.92
|
|
|
$
|
0.67
|
|
|
$
|
1.69
|
|
|
$
|
1.00
|
|
Discontinued operations
|
|
$
|
—
|
|
|
$
|
0.21
|
|
|
$
|
0.12
|
|
|
$
|
0.43
|
|
Total
|
|
$
|
0.92
|
|
|
$
|
0.88
|
|
|
$
|
1.81
|
|
|
$
|
1.43
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
||||
Stock Options
|
|
—
|
|
|
32,060
|
|
|
—
|
|
|
41,327
|
|
RSUs
|
|
1,419
|
|
|
20,718
|
|
|
713
|
|
|
36,387
|
|
PSUs
|
|
—
|
|
|
2,844
|
|
|
—
|
|
|
1,430
|
|
|
|
As of and for the Three Months Ended
|
|
As of and for the Six Months Ended
|
||||||||||||
(in millions)
|
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
||||||||
Beginning balance
|
|
$
|
207
|
|
|
$
|
242
|
|
|
$
|
233
|
|
|
$
|
252
|
|
Transfers of receivables
|
|
2,122
|
|
|
606
|
|
|
2,651
|
|
|
1,154
|
|
||||
Collections
|
|
(1,378
|
)
|
|
(579
|
)
|
|
(1,900
|
)
|
|
(1,124
|
)
|
||||
Facility amendments
|
|
(442
|
)
|
|
—
|
|
|
(442
|
)
|
|
—
|
|
||||
Fair value adjustment
|
|
31
|
|
|
3
|
|
|
(2
|
)
|
|
(10
|
)
|
||||
Ending balance
|
|
$
|
540
|
|
|
$
|
272
|
|
|
$
|
540
|
|
|
$
|
272
|
|
(in millions)
|
|
For the
Six Months Ended September 30, 2018 (1) |
||
Transfers of receivables
|
|
$
|
464
|
|
Collections
|
|
$
|
521
|
|
Operating cash flow effect
|
|
$
|
(57
|
)
|
|
|
|
|
Fair Value Hierarchy
|
||||||||||||
(in millions)
|
|
September 30, 2018
|
||||||||||||||
Assets:
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Money market funds and money market deposit accounts
|
|
$
|
77
|
|
|
$
|
77
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Time deposits
(1)
|
|
89
|
|
|
89
|
|
|
—
|
|
|
—
|
|
||||
Other debt securities
(2)
|
|
54
|
|
|
—
|
|
|
49
|
|
|
5
|
|
||||
Deferred purchase price receivable
|
|
540
|
|
|
—
|
|
|
—
|
|
|
540
|
|
||||
Total assets
|
|
$
|
760
|
|
|
$
|
166
|
|
|
$
|
49
|
|
|
$
|
545
|
|
|
|
March 31, 2018
|
||||||||||||||
Assets:
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Money market funds and money market deposit accounts
|
|
$
|
84
|
|
|
$
|
84
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Time deposits
(1)
|
|
114
|
|
|
114
|
|
|
—
|
|
|
—
|
|
||||
Other debt securities
(2)
|
|
59
|
|
|
—
|
|
|
53
|
|
|
6
|
|
||||
Deferred purchase price receivable
|
|
233
|
|
|
—
|
|
|
—
|
|
|
233
|
|
||||
Total assets
|
|
$
|
490
|
|
|
$
|
198
|
|
|
$
|
53
|
|
|
$
|
239
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
Total liabilities
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
|
Derivative Assets
|
||||||||
|
|
|
|
As of
|
||||||
(in millions)
|
|
Balance Sheet Line Item
|
|
September 30, 2018
|
|
March 31, 2018
|
||||
Derivatives designated for hedge accounting:
|
|
|
||||||||
Interest rate swaps
|
|
Other assets
|
|
$
|
—
|
|
|
$
|
6
|
|
Foreign currency forward contracts
|
|
Other current assets
|
|
—
|
|
|
14
|
|
||
Total fair value of derivatives designated for hedge accounting
|
|
$
|
—
|
|
|
$
|
20
|
|
||
|
|
|
||||||||
Derivatives not designated for hedge accounting:
|
|
|
||||||||
Foreign currency forward contracts
|
|
Other current assets
|
|
$
|
4
|
|
|
$
|
4
|
|
Total fair value of derivatives not designated for hedge accounting
|
|
$
|
4
|
|
|
$
|
4
|
|
|
|
Derivative Liabilities
|
||||||||
|
|
|
|
As of
|
||||||
(in millions)
|
|
Balance Sheet Line Item
|
|
September 30, 2018
|
|
March 31, 2018
|
||||
Derivatives designated for hedge accounting:
|
|
|
|
|
||||||
Foreign currency forward contracts
|
|
Accrued expenses and other current liabilities
|
|
$
|
27
|
|
|
$
|
3
|
|
Total fair value of derivatives designated for hedge accounting:
|
|
$
|
27
|
|
|
$
|
3
|
|
||
|
|
|
|
|
|
|||||
Derivatives not designated for hedge accounting:
|
|
|
|
|
||||||
Foreign currency forward contracts
|
|
Accrued expenses and other current liabilities
|
|
$
|
13
|
|
|
$
|
6
|
|
Total fair value of derivatives not designated for hedge accounting
|
|
$
|
13
|
|
|
$
|
6
|
|
|
|
As of September 30, 2018
|
||||||||||
(in millions)
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
||||||
Software
|
|
$
|
3,555
|
|
|
$
|
1,996
|
|
|
$
|
1,559
|
|
Transition and transformation contract costs
|
|
1,464
|
|
|
873
|
|
|
591
|
|
|||
Customer related intangible assets
|
|
5,294
|
|
|
898
|
|
|
4,396
|
|
|||
Other intangible assets
|
|
77
|
|
|
21
|
|
|
56
|
|
|||
Total intangible assets
|
|
$
|
10,390
|
|
|
$
|
3,788
|
|
|
$
|
6,602
|
|
|
|
As of March 31, 2018
|
||||||||||
(in millions)
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
||||||
Software
|
|
$
|
3,484
|
|
|
$
|
1,918
|
|
|
$
|
1,566
|
|
Transition and transformation contract costs
|
|
1,569
|
|
|
766
|
|
|
803
|
|
|||
Customer related intangible assets
|
|
5,405
|
|
|
666
|
|
|
4,739
|
|
|||
Other intangible assets
|
|
90
|
|
|
19
|
|
|
71
|
|
|||
Total intangible assets
|
|
$
|
10,548
|
|
|
$
|
3,369
|
|
|
$
|
7,179
|
|
Fiscal Year
|
|
(in millions)
|
|
|
Remainder of 2019
|
|
$
|
614
|
|
2020
|
|
$
|
1,079
|
|
2021
|
|
$
|
972
|
|
2022
|
|
$
|
813
|
|
2023
|
|
$
|
734
|
|
(in millions)
|
|
GBS
|
|
GIS
|
|
Total
|
||||||
Balance as of March 31, 2018, net
|
|
$
|
4,531
|
|
|
$
|
3,088
|
|
|
$
|
7,619
|
|
Acquisitions
|
|
42
|
|
|
—
|
|
|
42
|
|
|||
Divestitures
|
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
|||
Foreign currency translation
|
|
(151
|
)
|
|
(81
|
)
|
|
(232
|
)
|
|||
Balance as of September 30, 2018, net
|
|
$
|
4,410
|
|
|
$
|
3,007
|
|
|
$
|
7,417
|
|
(in millions)
|
|
Interest Rates
|
|
Fiscal Year Maturities
|
|
September 30, 2018
|
|
March 31, 2018
|
||||
Short-term debt and current maturities of long-term debt
|
|
|
|
|
|
|
|
|
||||
Euro-denominated commercial paper
(1)
|
|
(0.1)% - 0.02%
(2)
|
|
2019
|
|
$
|
813
|
|
|
$
|
863
|
|
Current maturities of long-term debt
|
|
Various
|
|
2019 - 2020
|
|
229
|
|
|
439
|
|
||
Current maturities of capitalized lease liabilities
|
|
1.0% - 12.0%
|
|
2019 - 2020
|
|
576
|
|
|
616
|
|
||
Short-term debt and current maturities of long-term debt
|
|
|
|
|
|
$
|
1,618
|
|
|
$
|
1,918
|
|
|
|
|
|
|
|
|
|
|
||||
Long-term debt, net of current maturities
|
|
|
|
|
|
|
|
|
||||
GBP term loan
|
|
1.3%
(3)
|
|
2019
|
|
$
|
241
|
|
|
$
|
260
|
|
EUR term loan
|
|
0.65% - 1.75%
(4)
|
|
2020
|
|
—
|
|
|
493
|
|
||
AUD term loan
|
|
2.9% - 3.2%
(5)
|
|
2022
|
|
188
|
|
|
210
|
|
||
EUR term loan
|
|
0.9%
(6)
|
|
2022
|
|
—
|
|
|
187
|
|
||
USD term loan
|
|
3.1% - 3.3%
(7)
|
|
2022
|
|
—
|
|
|
899
|
|
||
$500 million Senior notes
|
|
2.875%
|
|
2020
|
|
501
|
|
|
502
|
|
||
$650 million Senior notes
|
|
2.96%
(8)
|
|
2021
|
|
646
|
|
|
646
|
|
||
$274 million Senior notes
|
|
4.45%
|
|
2023
|
|
277
|
|
|
278
|
|
||
$171 million Senior notes
|
|
4.45%
|
|
2023
|
|
173
|
|
|
173
|
|
||
$500 million Senior notes
|
|
4.25%
|
|
2025
|
|
507
|
|
|
507
|
|
||
£250 million Senior notes
|
|
2.75%
|
|
2025
|
|
322
|
|
|
346
|
|
||
€650 million Senior notes
|
|
1.75%
|
|
2026
|
|
750
|
|
|
—
|
|
||
$500 million Senior notes
|
|
4.75%
|
|
2028
|
|
509
|
|
|
509
|
|
||
$234 million Senior notes
|
|
7.45%
|
|
2030
|
|
276
|
|
|
277
|
|
||
Lease credit facility
|
|
2.8% - 3.2%
|
|
2019 - 2023
|
|
35
|
|
|
46
|
|
||
Capitalized lease liabilities
|
|
1.0% - 12.0%
|
|
2019 - 2024
|
|
1,226
|
|
|
1,235
|
|
||
Borrowings for assets acquired under long-term financing
|
|
2.3% - 4.0%
|
|
2019 - 2023
|
|
382
|
|
|
405
|
|
||
Mandatorily redeemable preferred stock outstanding
|
|
6.0%
|
|
2023
|
|
62
|
|
|
61
|
|
||
Other borrowings
|
|
0.5% - 7.4%
|
|
2019 - 2022
|
|
119
|
|
|
113
|
|
||
Long-term debt
|
|
|
|
|
|
6,214
|
|
|
7,147
|
|
||
Less: current maturities
|
|
|
|
|
|
805
|
|
|
1,055
|
|
||
Long-term debt, net of current maturities
|
|
|
|
|
|
$
|
5,409
|
|
|
$
|
6,092
|
|
(1)
|
At DXC's option, DXC can borrow up to a maximum of
€1 billion
.
|
(2)
|
Approximate weighted average interest rate.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(in millions)
|
|
September 30, 2018
|
|
September 30, 2017
(1)
|
|
September 30, 2018
|
|
September 30, 2017
(1)
|
||||||||
United States
|
|
$
|
1,863
|
|
|
$
|
2,083
|
|
|
$
|
3,750
|
|
|
$
|
4,066
|
|
United Kingdom
|
|
760
|
|
|
835
|
|
|
1,560
|
|
|
1,633
|
|
||||
Australia
|
|
391
|
|
|
411
|
|
|
845
|
|
|
837
|
|
||||
Other Europe
|
|
1,263
|
|
|
1,322
|
|
|
2,610
|
|
|
2,568
|
|
||||
Other International
|
|
736
|
|
|
802
|
|
|
1,530
|
|
|
1,585
|
|
||||
Total Revenues
|
|
$
|
5,013
|
|
|
$
|
5,453
|
|
|
$
|
10,295
|
|
|
$
|
10,689
|
|
|
|
As of
|
||||||
(in millions)
|
|
September 30, 2018
|
|
April 1, 2018
|
||||
Trade receivables, net
|
|
$
|
3,140
|
|
|
$
|
3,937
|
|
Contract assets
|
|
$
|
342
|
|
|
$
|
444
|
|
Contract liabilities
|
|
$
|
1,743
|
|
|
$
|
2,053
|
|
(in millions)
|
|
Three months ended September 30, 2018
|
|
Six months ended September 30, 2018
|
||||
ASC 605 Balance, beginning of period
(1)
|
|
$
|
—
|
|
|
$
|
2,434
|
|
Adjustment related to Topic 606 adoption
(1)
|
|
—
|
|
|
(381
|
)
|
||
ASC 606 Balance, beginning of period
|
|
1,881
|
|
|
2,053
|
|
||
Deferred revenue
|
|
569
|
|
|
1,172
|
|
||
Recognition of deferred revenue
|
|
(665
|
)
|
|
(1,307
|
)
|
||
Currency translation adjustment
|
|
(19
|
)
|
|
(137
|
)
|
||
Other
|
|
(23
|
)
|
|
(38
|
)
|
||
Balance, end of period
|
|
$
|
1,743
|
|
|
$
|
1,743
|
|
(in millions)
|
|
As of September 30, 2018
|
||
Capitalized sales commission cost
(1)
|
|
$
|
182
|
|
Transition and transformation contract costs, net
(2)
|
|
$
|
591
|
|
Statement of Operations (Selected Captions)
|
|
|
|
|
|
|
||||||
|
|
Three Months Ended September 30, 2018
|
||||||||||
(in millions)
|
|
As Reported
|
|
Amounts Without Adoption of ASC 606
|
|
Effect of Change Higher/(Lower)
|
||||||
Revenues
|
|
$
|
5,013
|
|
|
$
|
5,009
|
|
|
$
|
4
|
|
Costs of services
|
|
$
|
3,518
|
|
|
$
|
3,521
|
|
|
$
|
(3
|
)
|
Selling, general and administrative
|
|
$
|
569
|
|
|
$
|
583
|
|
|
$
|
(14
|
)
|
Interest income
|
|
$
|
(33
|
)
|
|
$
|
(36
|
)
|
|
$
|
(3
|
)
|
Income tax expense
|
|
$
|
73
|
|
|
$
|
69
|
|
|
$
|
4
|
|
Net income attributable to DXC common stockholders
|
|
$
|
262
|
|
|
$
|
248
|
|
|
$
|
14
|
|
Statement of Operations (Selected Captions)
|
|
|
|
|
|
|
||||||
|
|
Six Months Ended September 30, 2018
|
||||||||||
(in millions)
|
|
As Reported
|
|
Amounts Without Adoption of ASC 606
|
|
Effect of Change Higher/(Lower)
|
||||||
Revenues
|
|
$
|
10,295
|
|
|
$
|
10,281
|
|
|
$
|
14
|
|
Costs of services
|
|
$
|
7,385
|
|
|
$
|
7,388
|
|
|
$
|
(3
|
)
|
Selling, general and administrative
|
|
$
|
1,009
|
|
|
$
|
1,036
|
|
|
$
|
(27
|
)
|
Interest income
|
|
$
|
(65
|
)
|
|
$
|
(72
|
)
|
|
$
|
(7
|
)
|
Income tax expense
|
|
$
|
202
|
|
|
$
|
194
|
|
|
$
|
8
|
|
Net income attributable to DXC common stockholders
|
|
$
|
521
|
|
|
$
|
492
|
|
|
$
|
29
|
|
Balance Sheet (Selected Captions)
|
|
|
|
|
|
|
||||||
|
|
As of September 30, 2018
|
||||||||||
(in millions)
|
|
As Reported
|
|
Amounts Without Adoption of ASC 606
|
|
Effect of Change Higher/(Lower)
|
||||||
Assets:
|
|
|
|
|
|
|
||||||
Receivables and contract assets, net of allowance for doubtful accounts
|
|
$
|
4,928
|
|
|
$
|
4,936
|
|
|
$
|
(8
|
)
|
Other current assets
|
|
$
|
477
|
|
|
$
|
519
|
|
|
$
|
(42
|
)
|
Deferred income taxes, net
|
|
$
|
326
|
|
|
$
|
338
|
|
|
$
|
(12
|
)
|
Other assets
|
|
$
|
2,441
|
|
|
$
|
2,548
|
|
|
$
|
(107
|
)
|
|
|
|
|
|
|
|
||||||
Liabilities:
|
|
|
|
|
|
|
||||||
Accrued expenses and other current liabilities
|
|
$
|
3,268
|
|
|
$
|
3,268
|
|
|
$
|
—
|
|
Deferred revenue and advance contract payments
|
|
$
|
1,442
|
|
|
$
|
1,520
|
|
|
$
|
(78
|
)
|
Income taxes payable
|
|
$
|
94
|
|
|
$
|
81
|
|
|
$
|
13
|
|
Non-current deferred revenue
|
|
$
|
301
|
|
|
$
|
562
|
|
|
$
|
(261
|
)
|
Non-current income tax liabilities and deferred tax liabilities
|
|
$
|
1,219
|
|
|
$
|
1,198
|
|
|
$
|
21
|
|
|
|
|
|
|
|
|
||||||
Equity:
|
|
|
|
|
|
|
||||||
Retained earnings
|
|
$
|
136
|
|
|
$
|
(4
|
)
|
|
$
|
140
|
|
Accumulated other comprehensive loss
|
|
$
|
(382
|
)
|
|
$
|
(378
|
)
|
|
$
|
(4
|
)
|
|
|
As of
|
||
(in millions)
|
|
September 30, 2018
|
||
Accrued expenses and other current liabilities
|
|
$
|
415
|
|
Other long-term liabilities
|
|
143
|
|
|
Total
|
|
$
|
558
|
|
|
|
Restructuring Liability as of March 31, 2018
|
|
Costs Expensed, Net of Reversals
(1)
|
|
Costs Not Affecting Restructuring Liability
(2)
|
|
Cash Paid
|
|
Other
(3)
|
|
Restructuring Liability as of September 30, 2018
|
||||||||||||
Fiscal 2019 Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Workforce Reductions
|
|
$
|
—
|
|
|
$
|
241
|
|
|
$
|
—
|
|
|
$
|
(66
|
)
|
|
$
|
(3
|
)
|
|
$
|
172
|
|
Facilities Costs
|
|
—
|
|
|
112
|
|
|
(5
|
)
|
|
(30
|
)
|
|
(1
|
)
|
|
76
|
|
||||||
Total
|
|
$
|
—
|
|
|
$
|
353
|
|
|
$
|
(5
|
)
|
|
$
|
(96
|
)
|
|
$
|
(4
|
)
|
|
$
|
248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fiscal 2018 Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Workforce Reductions
|
|
$
|
257
|
|
|
$
|
(8
|
)
|
|
$
|
—
|
|
|
$
|
(106
|
)
|
|
$
|
(14
|
)
|
|
$
|
129
|
|
Facilities Costs
|
|
98
|
|
|
(5
|
)
|
|
(3
|
)
|
|
(29
|
)
|
|
(5
|
)
|
|
56
|
|
||||||
Total
|
|
$
|
355
|
|
|
$
|
(13
|
)
|
|
$
|
(3
|
)
|
|
$
|
(135
|
)
|
|
$
|
(19
|
)
|
|
$
|
185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fiscal 2017 Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Workforce Reductions
|
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(10
|
)
|
|
$
|
(1
|
)
|
|
$
|
8
|
|
Facilities Costs
|
|
3
|
|
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
||||||
Total
|
|
$
|
22
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(12
|
)
|
|
$
|
(1
|
)
|
|
$
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other Prior Year Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Workforce Reductions
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
3
|
|
Facilities Costs
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Total
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Acquired Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Workforce Reductions
|
|
$
|
110
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
(23
|
)
|
|
$
|
(2
|
)
|
|
$
|
87
|
|
Facilities Costs
|
|
$
|
27
|
|
|
1
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
25
|
|
|||||
Total
|
|
$
|
137
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
(26
|
)
|
|
$
|
(2
|
)
|
|
$
|
112
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(in millions)
|
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
||||||||
Service cost
|
|
$
|
22
|
|
|
$
|
34
|
|
|
$
|
45
|
|
|
$
|
66
|
|
Interest cost
|
|
63
|
|
|
61
|
|
|
128
|
|
|
121
|
|
||||
Expected return on assets
|
|
(138
|
)
|
|
(132
|
)
|
|
(287
|
)
|
|
(260
|
)
|
||||
Amortization of prior service costs
|
|
(6
|
)
|
|
(4
|
)
|
|
(7
|
)
|
|
(8
|
)
|
||||
Contractual termination benefit
|
|
—
|
|
|
2
|
|
|
—
|
|
|
11
|
|
||||
Curtailment gain
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||
Net periodic pension income
|
|
$
|
(59
|
)
|
|
$
|
(39
|
)
|
|
$
|
(122
|
)
|
|
$
|
(70
|
)
|
|
|
September 30, 2018
|
|
September 30, 2017
|
||
Discount or settlement rates
|
|
2.3
|
%
|
|
2.5
|
%
|
Expected long-term rates of return on assets
|
|
5.3
|
%
|
|
4.9
|
%
|
Rates of increase in compensation levels
|
|
2.1
|
%
|
|
2.7
|
%
|
|
|
Fiscal 2019
|
|
Fiscal 2018
|
||||||||||||||||||
Fiscal Period
|
|
Number of Shares Repurchased
|
|
Average Price Per Share
|
|
Amount
(1)
(in millions)
|
|
Number of Shares Repurchased
|
|
Average Price Per Share
|
|
Amount (in millions)
|
||||||||||
1st Quarter
|
|
3,779,194
|
|
$
|
85.86
|
|
|
$
|
324
|
|
|
250,000
|
|
|
$
|
77.39
|
|
|
$
|
19
|
|
|
2nd Quarter
|
|
1,448,729
|
|
|
$
|
87.16
|
|
|
$
|
127
|
|
|
591,505
|
|
|
$
|
78.20
|
|
|
$
|
47
|
|
Total
|
|
5,227,923
|
|
|
$
|
86.22
|
|
|
$
|
451
|
|
|
841,505
|
|
|
$
|
77.96
|
|
|
$
|
66
|
|
(in millions)
|
|
Foreign Currency Translation Adjustments
|
|
Cash Flow Hedges
|
|
Available-for-sale Securities
|
|
Pension and Other Post-retirement Benefit Plans
|
|
Accumulated Other Comprehensive Income (Loss)
|
||||||||||
Balance at March 31, 2018
|
|
$
|
(261
|
)
|
|
$
|
9
|
|
|
$
|
9
|
|
|
$
|
301
|
|
|
$
|
58
|
|
Current-period other comprehensive loss
|
|
(408
|
)
|
|
(30
|
)
|
|
(1
|
)
|
|
—
|
|
|
(439
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
—
|
|
|
5
|
|
|
—
|
|
|
(6
|
)
|
|
(1
|
)
|
|||||
Balance at September 30, 2018
|
|
$
|
(669
|
)
|
|
$
|
(16
|
)
|
|
$
|
8
|
|
|
$
|
295
|
|
|
$
|
(382
|
)
|
(in millions)
|
|
Foreign Currency Translation Adjustments
|
|
Cash Flow Hedges
|
|
Available-for-sale Securities
|
|
Pension and Other Post-retirement Benefit Plans
|
|
Accumulated Other Comprehensive (Loss) Income
|
||||||||||
Balance at March 31, 2017
|
|
$
|
(458
|
)
|
|
$
|
20
|
|
|
$
|
—
|
|
|
$
|
276
|
|
|
$
|
(162
|
)
|
Current-period other comprehensive income (loss)
|
|
109
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
104
|
|
|||||
Amounts reclassified from accumulated other comprehensive loss
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
(12
|
)
|
|||||
Balance at September 30, 2017
|
|
$
|
(354
|
)
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
269
|
|
|
$
|
(70
|
)
|
|
As of September 30, 2018
|
||||
|
Reserved for issuance
|
|
Available for future grants
|
||
DXC Employee Equity Plan
|
34,200,000
|
|
|
21,878,972
|
|
DXC Director Equity Plan
|
230,000
|
|
|
104,310
|
|
DXC Share Purchase Plan
|
250,000
|
|
|
243,031
|
|
Total
|
34,680,000
|
|
|
22,226,313
|
|
|
|
Number
of Option Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
(in millions)
|
|||||
Outstanding as of March 31, 2018
(1)
|
|
2,933,501
|
|
|
$
|
32.54
|
|
|
5.24
|
|
$
|
185
|
|
Granted
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Issued due to Separation modification
|
|
400,170
|
|
|
$
|
31.72
|
|
|
|
|
|
||
Exercised
|
|
(676,021
|
)
|
|
$
|
37.62
|
|
|
|
|
$
|
35
|
|
Canceled/Forfeited
|
|
(6,825
|
)
|
|
$
|
31.02
|
|
|
|
|
|
||
Expired
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Outstanding as of September 30, 2018
|
|
2,650,825
|
|
|
$
|
31.13
|
|
|
5.00
|
|
$
|
165
|
|
Vested and expected to vest in the future as of September 30, 2018
|
|
2,648,720
|
|
|
$
|
31.11
|
|
|
5.00
|
|
$
|
165
|
|
Exercisable as of September 30, 2018
|
|
2,629,871
|
|
|
$
|
30.97
|
|
|
4.99
|
|
$
|
164
|
|
|
Employee Equity Plan
|
|
Director Equity Plan
|
||||||||||
|
Number of
Shares |
|
Weighted
Average Grant Date Fair Value |
|
Number of
Shares |
|
Weighted
Average
Grant Date
Fair Value
|
||||||
Outstanding as of March 31, 2018
(1)
|
3,985,616
|
|
|
$
|
47.25
|
|
|
66,386
|
|
|
$
|
37.26
|
|
Granted
|
816,973
|
|
|
$
|
81.09
|
|
|
19,200
|
|
|
$
|
87.88
|
|
Issued due to Separation modification
|
649,649
|
|
|
$
|
51.97
|
|
|
10,488
|
|
|
$
|
37.69
|
|
Settled
|
(695,632
|
)
|
|
$
|
46.13
|
|
|
(18,960
|
)
|
|
$
|
54.30
|
|
Canceled/Forfeited
|
(516,527
|
)
|
|
$
|
56.65
|
|
|
—
|
|
|
$
|
—
|
|
Outstanding as of September 30, 2018
|
4,240,079
|
|
|
$
|
53.54
|
|
|
77,114
|
|
|
$
|
45.74
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(in millions)
|
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
||||||||
Total share-based compensation cost
|
|
$
|
19
|
|
|
$
|
17
|
|
|
$
|
41
|
|
|
$
|
57
|
|
Related income tax benefit
|
|
$
|
3
|
|
|
$
|
6
|
|
|
$
|
6
|
|
|
$
|
19
|
|
Total intrinsic value of options exercised
|
|
$
|
25
|
|
|
$
|
45
|
|
|
$
|
35
|
|
|
$
|
74
|
|
Tax benefits from exercised stock options and awards
|
|
$
|
14
|
|
|
$
|
18
|
|
|
$
|
19
|
|
|
$
|
53
|
|
|
|
Six Months Ended
|
||||||
(in millions)
|
|
September 30, 2018
|
|
September 30, 2017
|
||||
Cash paid for:
|
|
|
|
|
||||
Interest
|
|
$
|
149
|
|
|
$
|
91
|
|
Taxes on income, net of refunds
|
|
$
|
74
|
|
|
$
|
72
|
|
|
|
|
|
|
||||
Non-cash activities:
|
|
|
|
|
||||
Investing:
|
|
|
|
|
||||
Capital expenditures in accounts payable and accrued expenses
|
|
$
|
28
|
|
|
$
|
3
|
|
Capital expenditures through capital lease obligations
|
|
$
|
396
|
|
|
$
|
109
|
|
Deferred purchase price receivable
|
|
$
|
716
|
|
|
$
|
53
|
|
Assets acquired under long-term financing
|
|
$
|
76
|
|
|
$
|
236
|
|
Financing:
|
|
|
|
|
||||
Dividends declared but not yet paid
|
|
$
|
54
|
|
|
$
|
52
|
|
Stock issued for the acquisition of HPES
|
|
$
|
—
|
|
|
$
|
9,850
|
|
•
|
Enterprise, Cloud Applications and Consulting.
GBS provides industry, business process systems integration and technical delivery experience to maximize value from enterprise application portfolios. GBS also helps clients accelerate their digital transformations and business results with industry, business, technology and complex integration services.
|
•
|
Application Services.
GBS's comprehensive services helps clients modernize, develop, test and manage their applications.
|
•
|
Analytics.
GBS's portfolio of analytics services and robust partner ecosystem helps clients gain rapid insights and accelerate their digital transformation journeys.
|
•
|
Business Process Services.
GBS provides seamless digital integration and optimization of front and back office processes, including its Agile Process Automation approach.
|
•
|
Industry Software and Solutions.
GBS's industry-specific solutions enable businesses to quickly integrate technology, transform their operations and develop new ways of doing business. GBS's vertical-specific IP includes insurance, healthcare and life sciences, travel and transportation, and banking and capital markets solutions.
|
•
|
Cloud and Platform Services.
GIS helps clients maximize their private cloud, public cloud and legacy infrastructures, as well as securely manage their hybrid environments.
|
•
|
Workplace and Mobility
. GIS's workplace, mobility and Internet of Things ("IoT") services provides a consumer-like experience with enterprise security and instant connectivity for its clients.
|
•
|
Security.
GIS's security solutions help predict attacks, proactively respond to threats, ensure compliance and protect data, applications, infrastructure and endpoints.
|
(in millions)
|
|
GBS
|
|
GIS
|
|
Total Reportable Segments
|
|
All Other
|
|
Totals
|
||||||||||
Three Months Ended September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
2,111
|
|
|
$
|
2,902
|
|
|
$
|
5,013
|
|
|
$
|
—
|
|
|
$
|
5,013
|
|
Segment profit
|
|
$
|
400
|
|
|
$
|
473
|
|
|
$
|
873
|
|
|
$
|
(74
|
)
|
|
$
|
799
|
|
Depreciation and amortization
(1)
|
|
$
|
16
|
|
|
$
|
305
|
|
|
$
|
321
|
|
|
$
|
31
|
|
|
$
|
352
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Three Months Ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
2,311
|
|
|
$
|
3,142
|
|
|
$
|
5,453
|
|
|
$
|
—
|
|
|
$
|
5,453
|
|
Segment profit
|
|
$
|
369
|
|
|
$
|
450
|
|
|
$
|
819
|
|
|
$
|
(79
|
)
|
|
$
|
740
|
|
Depreciation and amortization
(1)
|
|
$
|
15
|
|
|
$
|
298
|
|
|
$
|
313
|
|
|
$
|
24
|
|
|
$
|
337
|
|
(in millions)
|
|
GBS
|
|
GIS
|
|
Total Reportable Segments
|
|
All Other
|
|
Totals
|
||||||||||
Six Months Ended September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
4,324
|
|
|
$
|
5,971
|
|
|
$
|
10,295
|
|
|
$
|
—
|
|
|
$
|
10,295
|
|
Segment profit
|
|
$
|
803
|
|
|
$
|
947
|
|
|
$
|
1,750
|
|
|
$
|
(148
|
)
|
|
$
|
1,602
|
|
Depreciation and amortization
(1)
|
|
$
|
36
|
|
|
$
|
586
|
|
|
$
|
622
|
|
|
$
|
66
|
|
|
$
|
688
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Six Months Ended September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
4,578
|
|
|
$
|
6,111
|
|
|
$
|
10,689
|
|
|
$
|
—
|
|
|
$
|
10,689
|
|
Segment profit
|
|
$
|
643
|
|
|
$
|
721
|
|
|
$
|
1,364
|
|
|
$
|
(54
|
)
|
|
$
|
1,310
|
|
Depreciation and amortization
(1)
|
|
$
|
51
|
|
|
$
|
471
|
|
|
$
|
522
|
|
|
$
|
47
|
|
|
$
|
569
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(in millions)
|
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
||||||||
Profit
|
|
|
|
|
|
|
|
|
||||||||
Total profit for reportable segments
|
|
$
|
873
|
|
|
$
|
819
|
|
|
$
|
1,750
|
|
|
$
|
1,364
|
|
All other loss
|
|
(74
|
)
|
|
(79
|
)
|
|
(148
|
)
|
|
(54
|
)
|
||||
Interest income
|
|
33
|
|
|
16
|
|
|
65
|
|
|
32
|
|
||||
Interest expense
|
|
(83
|
)
|
|
(73
|
)
|
|
(168
|
)
|
|
(147
|
)
|
||||
Restructuring costs
|
|
(157
|
)
|
|
(188
|
)
|
|
(342
|
)
|
|
(375
|
)
|
||||
Transaction, separation and integration-related costs
|
|
(128
|
)
|
|
(66
|
)
|
|
(198
|
)
|
|
(190
|
)
|
||||
Amortization of acquired intangible assets
|
|
(132
|
)
|
|
(145
|
)
|
|
(267
|
)
|
|
(255
|
)
|
||||
Income from continuing operations before income taxes
|
|
$
|
332
|
|
|
$
|
284
|
|
|
$
|
692
|
|
|
$
|
375
|
|
Fiscal year
|
|
Minimum Purchase Commitment
(1)
|
||
(in millions)
|
|
|||
Remainder of 2019
|
|
$
|
1,529
|
|
2020
|
|
2,243
|
|
|
2021
|
|
573
|
|
|
2022
|
|
329
|
|
|
2023
|
|
327
|
|
|
Thereafter
|
|
163
|
|
|
Total
|
|
$
|
5,164
|
|
(in millions)
|
|
Fiscal 2019
|
|
Fiscal 2020
|
|
Fiscal 2021 and Thereafter
|
|
Totals
|
||||||||
Surety bonds
|
|
$
|
40
|
|
|
$
|
299
|
|
|
$
|
97
|
|
|
$
|
436
|
|
Letters of credit
|
|
122
|
|
|
68
|
|
|
294
|
|
|
484
|
|
||||
Stand-by letters of credit
|
|
36
|
|
|
27
|
|
|
85
|
|
|
148
|
|
||||
Totals
|
|
$
|
198
|
|
|
$
|
394
|
|
|
$
|
476
|
|
|
$
|
1,068
|
|
Condensed Consolidated Statement of Operations
|
|
Three Months Ended September 30, 2017
|
||||||||||||||
(in millions)
|
|
As Previously Reported
|
|
Reclassification of Discontinued Operations
|
|
Retrospective Adoption of ASU 2017-07
|
|
As Adjusted
|
||||||||
Costs of services (excludes depreciation and amortization and restructuring costs)
|
|
$
|
4,312
|
|
|
$
|
(509
|
)
|
|
$
|
67
|
|
|
$
|
3,870
|
|
Selling, general, and administrative (excludes depreciation and amortization and restructuring costs)
|
|
$
|
672
|
|
|
$
|
(34
|
)
|
|
$
|
6
|
|
|
$
|
644
|
|
Other expense (income), net
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
(73
|
)
|
|
$
|
(72
|
)
|
Condensed Consolidated Statement of Operations
|
|
Six Months Ended September 30, 2017
|
||||||||||||||
(in millions)
|
|
As Previously Reported
|
|
Reclassification of Discontinued Operations
|
|
Retrospective Adoption of ASU 2017-07
|
|
As Adjusted
|
||||||||
Costs of services (excludes depreciation and amortization and restructuring costs)
|
|
$
|
9,100
|
|
|
$
|
(1,045
|
)
|
|
$
|
124
|
|
|
$
|
8,179
|
|
Selling, general, and administrative (excludes depreciation and amortization and restructuring costs)
|
|
$
|
1,082
|
|
|
$
|
(57
|
)
|
|
$
|
12
|
|
|
$
|
1,037
|
|
Other income, net
|
|
$
|
(80
|
)
|
|
$
|
—
|
|
|
$
|
(136
|
)
|
|
$
|
(216
|
)
|
Condensed Consolidated Statement of Cash Flows
|
|
Six Months Ended September 30, 2017
|
||||||||||||||
(in millions)
|
|
As Previously Reported
|
|
Retrospective Adoption of ASU 2016-15
|
|
Retrospective Adoption of ASU 2016-18
|
|
As Adjusted
|
||||||||
Net cash provided by operating activities
|
|
$
|
1,543
|
|
|
$
|
(33
|
)
|
|
$
|
—
|
|
|
$
|
1,510
|
|
Net cash provided by investing activities
|
|
$
|
437
|
|
|
$
|
33
|
|
|
$
|
26
|
|
|
$
|
496
|
|
Cash and cash equivalents at beginning of year
|
|
$
|
1,263
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
1,268
|
|
Cash and cash equivalents at end of period
|
|
$
|
2,671
|
|
|
$
|
—
|
|
|
$
|
31
|
|
|
$
|
2,702
|
|
•
|
the integration of CSC's and HPES's businesses, operations, and culture and the ability to operate as effectively and efficiently as expected, and the combined company's ability to successfully manage and integrate acquisitions generally;
|
•
|
the ability to realize the synergies and benefits expected to result from the HPES Merger within the anticipated time frame or in the anticipated amounts;
|
•
|
other risks related to the HPES Merger including anticipated tax treatment, unforeseen liabilities, and future capital expenditures;
|
•
|
the USPS Separation and Mergers may result in disruptions to relationships with customers and other business partners or may not achieve the intended results;
|
•
|
the USPS Separation and Mergers could result in substantial tax liability to DXC and our stockholders;
|
•
|
changes in governmental regulations or the adoption of new laws or regulations that may make it more difficult or expensive to operate our business;
|
•
|
changes in senior management, the loss of key employees or the ability to retain and hire key personnel and maintain relationships with key business partners;
|
•
|
business interruptions in connection with our technology systems;
|
•
|
the competitive pressures faced by our business;
|
•
|
the effects of macroeconomic and geopolitical trends and events;
|
•
|
the need to manage third-party suppliers and the effective distribution and delivery of our products and services;
|
•
|
the protection of our intellectual property assets, including intellectual property licensed from third parties;
|
•
|
the risks associated with international operations;
|
•
|
the development and transition of new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends;
|
•
|
the execution and performance of contracts by us and our suppliers, customers, clients and partners;
|
•
|
the resolution of pending investigations, claims and disputes; and
|
•
|
the other factors described in Part I Item 1A "Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended March 31, 2018 and in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018
.
|
•
|
Background
|
•
|
Segments and Services
|
•
|
Results of Operations
|
•
|
Liquidity and Capital Resources
|
•
|
Off-Balance Sheet Arrangements
|
•
|
Contractual Obligations
|
•
|
Critical Accounting Policies and Estimates
|
•
|
Enterprise, Cloud Applications and Consulting.
We provide industry, business process systems integration and technical delivery experience to maximize value from enterprise application portfolios. We also help clients accelerate their digital transformations and business results with industry, business, technology and complex integration services.
|
•
|
Application Services.
Our comprehensive services help clients modernize, develop, test and manage their applications.
|
•
|
Analytics.
Our portfolio of analytics services and robust partner ecosystem helps clients gain rapid insights and accelerate their digital transformation journeys.
|
•
|
Business Process Services.
We provide seamless digital integration and optimization of front and back office processes, including our Agile Process Automation approach.
|
•
|
Industry Software and Solutions.
Our industry-specific solutions enable businesses to quickly integrate technology, transform their operations and develop new ways of doing business. Our vertical-specific IP includes insurance, healthcare and life sciences, travel and transportation, and banking and capital markets solutions.
|
•
|
Cloud and Platform Services.
We help clients maximize their private cloud, public cloud and legacy infrastructures, as well as securely manage their hybrid environments.
|
•
|
Workplace and Mobility
. Our workplace, mobility and Internet of Things ("IoT") services provide a consumer-like experience with enterprise security and instant connectivity for our clients.
|
•
|
Security.
Our security solutions help predict attacks, proactively respond to threats, ensure compliance and protect data, applications, infrastructure and endpoints.
|
|
|
Three Months Ended
|
|||||||||||||
(In millions, except per-share amounts)
|
|
September 30, 2018
|
|
September 30, 2017
|
|
Change
|
|
Percentage Change
|
|||||||
Revenues
|
|
$
|
5,013
|
|
|
$
|
5,453
|
|
|
$
|
(440
|
)
|
|
(8.1
|
)%
|
Total costs and expenses
|
|
4,681
|
|
|
5,169
|
|
|
(488
|
)
|
|
(9.4
|
)%
|
|||
Income from continuing operations before income taxes
|
|
332
|
|
|
284
|
|
|
48
|
|
|
16.9
|
%
|
|||
Income tax expense
|
|
73
|
|
|
79
|
|
|
(6
|
)
|
|
(7.6
|
)%
|
|||
Income from continuing operations
|
|
259
|
|
|
205
|
|
|
54
|
|
|
26.3
|
%
|
|||
Income from discontinued operations, net of taxes
|
|
—
|
|
|
60
|
|
|
(60
|
)
|
|
(100.0
|
)%
|
|||
Net income
|
|
$
|
259
|
|
|
$
|
265
|
|
|
$
|
(6
|
)
|
|
(2.3
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
Diluted earnings per share from continuing operations
|
|
$
|
0.92
|
|
|
$
|
0.67
|
|
|
$
|
0.25
|
|
|
37.3
|
%
|
|
|
Six Months Ended
|
|||||||||||||
(In millions, except per-share amounts)
|
|
September 30, 2018
|
|
September 30, 2017
|
|
Change
|
|
Percentage Change
|
|||||||
Revenues
|
|
$
|
10,295
|
|
|
$
|
10,689
|
|
|
$
|
(394
|
)
|
|
(3.7
|
)%
|
Total costs and expenses
|
|
9,603
|
|
|
10,314
|
|
|
(711
|
)
|
|
(6.9
|
)%
|
|||
Income from continuing operations before income taxes
|
|
692
|
|
|
375
|
|
|
317
|
|
|
84.5
|
%
|
|||
Income tax expense
|
|
202
|
|
|
62
|
|
|
140
|
|
|
225.8
|
%
|
|||
Income from continuing operations
|
|
490
|
|
|
313
|
|
|
177
|
|
|
56.5
|
%
|
|||
Income from discontinued operations, net of taxes
|
|
35
|
|
|
125
|
|
|
(90
|
)
|
|
(72.0
|
)%
|
|||
Net income
|
|
$
|
525
|
|
|
$
|
438
|
|
|
$
|
87
|
|
|
19.9
|
%
|
|
|
|
|
|
|
|
|
|
|||||||
Diluted earnings per share from continuing operations
|
|
$
|
1.69
|
|
|
$
|
1.00
|
|
|
$
|
0.69
|
|
|
69.0
|
%
|
•
|
Revenues for the second quarter and first six months of fiscal 2019 were
$5.0 billion
and
$10.3 billion
, respectively, a decrease of
8.1%
and
3.7%
, respectively, as compared to same periods of the prior fiscal year.
|
•
|
Income from continuing operations and diluted EPS from continuing operations for the second quarter of fiscal 2019 were
$259 million
and
$0.92
, respectively, including the cumulative impact of certain items of
$314 million
, reflecting restructuring costs, transaction, separation and integration-related costs and amortization of acquired intangible assets. This compares with income from continuing operations and diluted EPS from continuing operations of
$205 million
and
$0.67
, respectively, for the same period of the prior fiscal year.
|
•
|
Income from continuing operations and diluted EPS from continuing operations for the first six months of fiscal 2019 were
$490 million
and
$1.69
, respectively, including the cumulative impact of certain items of
$647 million
, reflecting restructuring costs, transaction, separation and integration-related costs, amortization of acquired intangible assets and a tax adjustment related to U.S. tax reform. This compares with income from continuing operations and diluted EPS from continuing operations of
$313 million
and
$1.00
, respectively, for the same period of the prior fiscal year.
|
•
|
Our cash and cash equivalents increased to
$2.8 billion
as of
September 30, 2018
from $2.6 billion as of March 31, 2018.
|
•
|
Net cash provided by operating activities was
$885 million
during the first six months of fiscal 2019, as compared to
$1,510 million
during the first six months of fiscal 2018.
|
•
|
We returned
$552 million
to shareholders in the form of common stock dividends and share repurchases during the first six months of fiscal 2019, as compared to
$138 million
during the first six months of fiscal 2018.
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
(in millions)
|
|
September 30, 2018
|
|
September 30, 2017
|
|
Change
|
|
Percentage Change
|
|||||||
GBS
|
|
$
|
2,111
|
|
|
$
|
2,311
|
|
|
$
|
(200
|
)
|
|
(8.7
|
)%
|
GIS
|
|
2,902
|
|
|
3,142
|
|
|
(240
|
)
|
|
(7.6
|
)%
|
|||
Total Revenues
|
|
$
|
5,013
|
|
|
$
|
5,453
|
|
|
$
|
(440
|
)
|
|
(8.1
|
)%
|
|
|
Six Months Ended
|
|
|
|
|
|||||||||
(in millions)
|
|
September 30, 2018
|
|
September 30, 2017
|
|
Change
|
|
Percentage Change
|
|||||||
GBS
|
|
$
|
4,324
|
|
|
$
|
4,578
|
|
|
$
|
(254
|
)
|
|
(5.5
|
)%
|
GIS
|
|
5,971
|
|
|
6,111
|
|
|
(140
|
)
|
|
(2.3
|
)%
|
|||
Total Revenues
|
|
$
|
10,295
|
|
|
$
|
10,689
|
|
|
$
|
(394
|
)
|
|
(3.7
|
)%
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
(in millions)
|
|
Constant Currency September 30, 2018
|
|
September 30, 2017
|
|
Change
|
|
Percentage Change
|
|||||||
GBS
|
|
$
|
2,151
|
|
|
$
|
2,311
|
|
|
$
|
(160
|
)
|
|
(6.9
|
)%
|
GIS
|
|
2,962
|
|
|
3,142
|
|
|
(180
|
)
|
|
(5.7
|
)%
|
|||
Total
|
|
$
|
5,113
|
|
|
$
|
5,453
|
|
|
$
|
(340
|
)
|
|
(6.2
|
)%
|
|
|
Six Months Ended
|
|
|
|
|
|||||||||
(in millions)
|
|
Constant Currency September 30, 2018
|
|
September 30, 2017
|
|
Change
|
|
Percentage Change
|
|||||||
GBS
|
|
$
|
4,314
|
|
|
$
|
4,578
|
|
|
$
|
(264
|
)
|
|
(5.8
|
)%
|
GIS
|
|
5,940
|
|
|
6,111
|
|
|
(171
|
)
|
|
(2.8
|
)%
|
|||
Total
|
|
$
|
10,254
|
|
|
$
|
10,689
|
|
|
$
|
(435
|
)
|
|
(4.1
|
)%
|
|
|
Three Months Ended
|
|
|
|||||||||||||
|
|
Amount
|
Percentage of Revenues
|
|
Percentage of Revenue Change
|
||||||||||||
(in millions)
|
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
|
||||||||
Costs of services (excludes depreciation and amortization and restructuring costs)
|
|
$
|
3,518
|
|
|
$
|
3,870
|
|
|
70.1
|
%
|
|
71.1
|
%
|
|
(1.0
|
)%
|
Selling, general, and administrative (excludes depreciation and amortization and restructuring costs)
|
|
569
|
|
|
644
|
|
|
11.4
|
|
|
11.8
|
|
|
(0.4
|
)
|
||
Depreciation and amortization
|
|
484
|
|
|
482
|
|
|
9.7
|
|
|
8.8
|
|
|
0.9
|
|
||
Restructuring costs
|
|
157
|
|
|
188
|
|
|
3.1
|
|
|
3.4
|
|
|
(0.3
|
)
|
||
Interest expense
|
|
83
|
|
|
73
|
|
|
1.7
|
|
|
1.3
|
|
|
0.4
|
|
||
Interest income
|
|
(33
|
)
|
|
(16
|
)
|
|
(0.7
|
)
|
|
(0.3
|
)
|
|
(0.4
|
)
|
||
Other income, net
|
|
(97
|
)
|
|
(72
|
)
|
|
(1.9
|
)
|
|
(1.3
|
)
|
|
(0.6
|
)
|
||
Total costs and expenses
|
|
$
|
4,681
|
|
|
$
|
5,169
|
|
|
93.4
|
%
|
|
94.8
|
%
|
|
(1.4
|
)%
|
|
|
Six Months Ended
|
|
|
|||||||||||||
|
|
Amount
|
Percentage of Revenues
|
|
Percentage of Revenue Change
|
||||||||||||
(in millions)
|
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
|
||||||||
Costs of services (excludes depreciation and amortization and restructuring costs)
|
|
$
|
7,385
|
|
|
$
|
8,179
|
|
|
71.8
|
%
|
|
76.5
|
%
|
|
(4.7
|
)%
|
Selling, general, and administrative (excludes depreciation and amortization and restructuring costs)
|
|
1,009
|
|
|
1,037
|
|
|
9.8
|
|
|
9.7
|
|
|
0.1
|
|
||
Depreciation and amortization
|
|
955
|
|
|
824
|
|
|
9.3
|
|
|
7.7
|
|
|
1.6
|
|
||
Restructuring costs
|
|
342
|
|
|
375
|
|
|
3.3
|
|
|
3.5
|
|
|
(0.2
|
)
|
||
Interest expense
|
|
168
|
|
|
147
|
|
|
1.6
|
|
|
1.4
|
|
|
0.2
|
|
||
Interest income
|
|
(65
|
)
|
|
(32
|
)
|
|
(0.6
|
)
|
|
(0.3
|
)
|
|
(0.3
|
)
|
||
Other income, net
|
|
(191
|
)
|
|
(216
|
)
|
|
(1.9
|
)
|
|
(2.0
|
)
|
|
0.1
|
|
||
Total costs and expenses
|
|
$
|
9,603
|
|
|
$
|
10,314
|
|
|
93.3
|
%
|
|
96.5
|
%
|
|
(3.2
|
)%
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
(in millions)
|
|
September 30, 2018
|
|
September 30, 2017
|
|
Change
|
|
Percentage Change
|
|||||||
Income from continuing operations before income taxes
|
|
$
|
332
|
|
|
$
|
284
|
|
|
$
|
48
|
|
|
16.9
|
%
|
Non-GAAP income from continuing operations before income taxes
|
|
$
|
749
|
|
|
$
|
683
|
|
|
$
|
66
|
|
|
9.7
|
%
|
Net income
|
|
$
|
259
|
|
|
$
|
265
|
|
|
$
|
(6
|
)
|
|
(2.3
|
)%
|
Adjusted EBIT
|
|
$
|
799
|
|
|
$
|
740
|
|
|
$
|
59
|
|
|
8.0
|
%
|
|
|
Six Months Ended
|
|
|
|
|
|||||||||
(in millions)
|
|
September 30, 2018
|
|
September 30, 2017
|
|
Change
|
|
Percentage Change
|
|||||||
Income from continuing operations before income taxes
|
|
$
|
692
|
|
|
$
|
375
|
|
|
$
|
317
|
|
|
84.5
|
%
|
Non-GAAP income from continuing operations before income taxes
|
|
$
|
1,499
|
|
|
$
|
1,195
|
|
|
$
|
304
|
|
|
25.4
|
%
|
Net income
|
|
$
|
525
|
|
|
$
|
438
|
|
|
$
|
87
|
|
|
19.9
|
%
|
Adjusted EBIT
|
|
$
|
1,602
|
|
|
$
|
1,310
|
|
|
$
|
292
|
|
|
22.3
|
%
|
•
|
Restructuring - reflects costs, net of reversals, related to workforce optimization and real estate charges.
|
•
|
Transaction, separation and integration-related costs - reflects costs related to integration planning, financing and advisory fees associated with the HPES Merger and other acquisitions and costs related to the separation of USPS.
|
•
|
Amortization of acquired intangible assets - reflects amortization of intangible assets acquired through business
|
•
|
Tax adjustment - reflects the estimated non-recurring benefit of the Tax Cuts and Jobs Act of 2017 for fiscal 2019,
|
|
|
Three Months Ended September 30, 2018
|
||||||||||||||||||
(in millions, except per-share amounts)
|
|
As Reported
|
|
Restructuring Costs
|
|
Transaction, Separation and Integration-Related Costs
|
|
Amortization of Acquired Intangible Assets
|
|
Non-GAAP Results
|
||||||||||
Costs of services (excludes depreciation and amortization and restructuring costs)
|
|
$
|
3,518
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,518
|
|
Selling, general, and administrative (excludes depreciation and amortization and restructuring costs)
|
|
569
|
|
|
—
|
|
|
(128
|
)
|
|
—
|
|
|
441
|
|
|||||
Income from continuing operations before income taxes
|
|
332
|
|
|
157
|
|
|
128
|
|
|
132
|
|
|
749
|
|
|||||
Income tax expense
|
|
73
|
|
|
41
|
|
|
30
|
|
|
32
|
|
|
176
|
|
|||||
Income from continuing operations
|
|
259
|
|
|
116
|
|
|
98
|
|
|
100
|
|
|
573
|
|
|||||
Income from discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income
|
|
259
|
|
|
116
|
|
|
98
|
|
|
100
|
|
|
573
|
|
|||||
Less: net (loss) income attributable to non-controlling interest, net of tax
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||||
Net income attributable to DXC common stockholders
|
|
$
|
262
|
|
|
$
|
116
|
|
|
$
|
98
|
|
|
$
|
100
|
|
|
$
|
576
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Effective Tax Rate
|
|
22.0
|
%
|
|
|
|
|
|
|
|
23.5
|
%
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic EPS from continuing operations
|
|
$
|
0.93
|
|
|
$
|
0.41
|
|
|
$
|
0.35
|
|
|
$
|
0.36
|
|
|
$
|
2.05
|
|
Diluted EPS from continuing operations
|
|
$
|
0.92
|
|
|
$
|
0.41
|
|
|
$
|
0.34
|
|
|
$
|
0.35
|
|
|
$
|
2.02
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average common shares outstanding for:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic EPS
|
|
281.37
|
|
|
281.37
|
|
|
281.37
|
|
|
281.37
|
|
|
281.37
|
|
|||||
Diluted EPS
|
|
285.78
|
|
|
285.78
|
|
|
285.78
|
|
|
285.78
|
|
|
285.78
|
|
|
|
Six Months Ended September 30, 2018
|
||||||||||||||||||||||
(in millions, except per-share amounts)
|
|
As Reported
|
|
Restructuring Costs
|
|
Transaction, Separation and Integration-Related Costs
|
|
Amortization of Acquired Intangible Assets
|
|
Tax Adjustment
|
|
Non-GAAP Results
|
||||||||||||
Costs of services (excludes depreciation and amortization and restructuring costs)
|
|
$
|
7,385
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,385
|
|
Selling, general, and administrative (excludes depreciation and amortization and restructuring costs)
|
|
1,009
|
|
|
—
|
|
|
(198
|
)
|
|
—
|
|
|
—
|
|
|
$
|
811
|
|
|||||
Income before income taxes
|
|
692
|
|
|
342
|
|
|
198
|
|
|
267
|
|
|
—
|
|
|
1,499
|
|
||||||
Income tax expense (benefit)
|
|
202
|
|
|
82
|
|
|
46
|
|
|
65
|
|
|
(33
|
)
|
|
362
|
|
||||||
Income from continuing operations
|
|
490
|
|
|
260
|
|
|
152
|
|
|
202
|
|
|
33
|
|
|
1,137
|
|
||||||
Income from discontinued operations, net of tax
|
|
35
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35
|
|
||||||
Net income
|
|
525
|
|
|
260
|
|
|
152
|
|
|
202
|
|
|
33
|
|
|
1,172
|
|
||||||
Less: net income attributable to non-controlling interest, net of tax
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||||
Net income attributable to DXC common stockholders
|
|
$
|
521
|
|
|
$
|
260
|
|
|
$
|
152
|
|
|
$
|
202
|
|
|
$
|
33
|
|
|
$
|
1,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Effective Tax Rate
|
|
29.2
|
%
|
|
|
|
|
|
|
|
|
|
24.1
|
%
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic EPS from continuing operations
|
|
$
|
1.72
|
|
|
$
|
0.92
|
|
|
$
|
0.54
|
|
|
$
|
0.71
|
|
|
$
|
0.12
|
|
|
$
|
4.01
|
|
Diluted EPS from continuing operations
|
|
$
|
1.69
|
|
|
$
|
0.90
|
|
|
$
|
0.53
|
|
|
$
|
0.70
|
|
|
$
|
0.11
|
|
|
$
|
3.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted average common shares outstanding for:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic EPS
|
|
282.89
|
|
|
282.89
|
|
|
282.89
|
|
|
282.89
|
|
|
282.89
|
|
|
282.89
|
|
||||||
Diluted EPS
|
|
287.53
|
|
|
287.53
|
|
|
287.53
|
|
|
287.53
|
|
|
287.53
|
|
|
287.53
|
|
|
|
Three Months Ended September 30, 2017
|
||||||||||||||||||||||
(in millions, except per-share amounts)
|
|
As Reported
|
|
Restructuring Costs
|
|
Transaction, Separation and Integration-Related Costs
|
|
Amortization of Acquired Intangible Assets
|
|
Tax Adjustment
|
|
Non-GAAP Results
|
||||||||||||
Costs of services (excludes depreciation and amortization and restructuring costs)
|
|
$
|
3,870
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,870
|
|
Selling, general, and administrative (excludes depreciation and amortization and restructuring costs)
|
|
644
|
|
|
—
|
|
|
(66
|
)
|
|
—
|
|
|
—
|
|
|
$
|
578
|
|
|||||
Income before income taxes
|
|
284
|
|
|
188
|
|
|
66
|
|
|
145
|
|
|
—
|
|
|
683
|
|
||||||
Income tax expense
|
|
79
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
112
|
|
|
191
|
|
||||||
Income from continuing operations
|
|
205
|
|
|
188
|
|
|
66
|
|
|
145
|
|
|
(112
|
)
|
|
492
|
|
||||||
Income from discontinued operations, net of tax
|
|
60
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
60
|
|
|||||||
Net income
|
|
265
|
|
|
188
|
|
|
66
|
|
|
145
|
|
|
(112
|
)
|
|
552
|
|
||||||
Less: net income attributable to non-controlling interest, net of tax
|
|
9
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|
9
|
|
||||||||
Net income attributable to DXC common stockholders
|
|
$
|
256
|
|
|
$
|
188
|
|
|
$
|
66
|
|
|
$
|
145
|
|
|
$
|
(112
|
)
|
|
$
|
543
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Effective Tax Rate
|
|
27.8
|
%
|
|
|
|
|
|
|
|
|
|
28.0
|
%
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic EPS from continuing operations
|
|
$
|
0.69
|
|
|
$
|
0.66
|
|
|
$
|
0.23
|
|
|
$
|
0.51
|
|
|
$
|
(0.39
|
)
|
|
$
|
1.70
|
|
Diluted EPS from continuing operations
|
|
$
|
0.67
|
|
|
$
|
0.65
|
|
|
$
|
0.23
|
|
|
$
|
0.50
|
|
|
$
|
(0.39
|
)
|
|
$
|
1.67
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted average common shares outstanding for:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic EPS
|
|
284.87
|
|
|
284.87
|
|
|
284.87
|
|
|
284.87
|
|
|
284.87
|
|
|
284.87
|
|
||||||
Diluted EPS
|
|
289.29
|
|
|
289.29
|
|
|
289.29
|
|
|
289.29
|
|
|
289.29
|
|
|
289.29
|
|
|
|
Six Months Ended September 30, 2017
|
||||||||||||||||||||||
(in millions, except per-share amounts)
|
|
As Reported
|
|
Restructuring Costs
|
|
Transaction, Separation and Integration-Related Costs
|
|
Amortization of Acquired Intangible Assets
|
|
Tax Adjustment
|
|
Non-GAAP Results
|
||||||||||||
Costs of services (excludes depreciation and amortization and restructuring costs)
|
|
$
|
8,179
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,179
|
|
Selling, general, and administrative (excludes depreciation and amortization and restructuring costs)
|
|
1,037
|
|
|
—
|
|
|
(190
|
)
|
|
—
|
|
|
—
|
|
|
847
|
|
||||||
Income before income taxes
|
|
375
|
|
|
375
|
|
|
190
|
|
|
255
|
|
|
—
|
|
|
1,195
|
|
||||||
Income tax expense
|
|
62
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
272
|
|
|
334
|
|
||||||
Income from continuing operations
|
|
313
|
|
|
375
|
|
|
190
|
|
|
255
|
|
|
(272
|
)
|
|
861
|
|
||||||
Income from discontinued operations, net of tax
|
|
125
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
125
|
|
||||||
Net income
|
|
438
|
|
|
375
|
|
|
190
|
|
|
255
|
|
|
(272
|
)
|
|
986
|
|
||||||
Less: net income attributable to non-controlling interest, net of tax
|
|
23
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23
|
|
||||||
Net income attributable to DXC common stockholders
|
|
$
|
415
|
|
|
$
|
375
|
|
|
$
|
190
|
|
|
$
|
255
|
|
|
$
|
(272
|
)
|
|
$
|
963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Effective Tax Rate
|
|
16.5
|
%
|
|
|
|
|
|
|
|
|
|
28.0
|
%
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic EPS from continuing operations
|
|
$
|
1.02
|
|
|
$
|
1.32
|
|
|
$
|
0.67
|
|
|
$
|
0.90
|
|
|
$
|
(0.96
|
)
|
|
$
|
2.95
|
|
Diluted EPS from continuing operations
|
|
$
|
1.00
|
|
|
$
|
1.30
|
|
|
$
|
0.66
|
|
|
$
|
0.88
|
|
|
$
|
(0.94
|
)
|
|
$
|
2.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted average common shares outstanding for:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic EPS
|
|
284.35
|
|
|
284.35
|
|
|
284.35
|
|
|
284.35
|
|
|
284.35
|
|
|
284.35
|
|
||||||
Diluted EPS
|
|
289.38
|
|
|
289.38
|
|
|
289.38
|
|
|
289.38
|
|
|
289.38
|
|
|
289.38
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(in millions)
|
|
September 30, 2018
|
|
September 30, 2017
|
|
September 30, 2018
|
|
September 30, 2017
|
||||||||
Net income
|
|
$
|
259
|
|
|
$
|
265
|
|
|
$
|
525
|
|
|
$
|
438
|
|
Income from discontinued operations, net of taxes
|
|
—
|
|
|
(60
|
)
|
|
(35
|
)
|
|
(125
|
)
|
||||
Income tax expense
|
|
73
|
|
|
79
|
|
|
202
|
|
|
62
|
|
||||
Interest income
|
|
(33
|
)
|
|
(16
|
)
|
|
(65
|
)
|
|
(32
|
)
|
||||
Interest expense
|
|
83
|
|
|
73
|
|
|
168
|
|
|
147
|
|
||||
EBIT
|
|
382
|
|
|
341
|
|
|
795
|
|
|
490
|
|
||||
Restructuring
|
|
157
|
|
|
188
|
|
|
342
|
|
|
375
|
|
||||
Transaction, separation and integration-related costs
|
|
128
|
|
|
66
|
|
|
198
|
|
|
190
|
|
||||
Amortization of acquired intangible assets
|
|
132
|
|
|
145
|
|
|
267
|
|
|
255
|
|
||||
Adjusted EBIT
|
|
$
|
799
|
|
|
$
|
740
|
|
|
$
|
1,602
|
|
|
$
|
1,310
|
|
|
|
Six Months Ended
|
|
|
||||||||
(in millions)
|
|
September 30, 2018
|
|
September 30, 2017
|
|
Change
|
||||||
Net cash provided by operating activities
|
|
$
|
885
|
|
|
$
|
1,510
|
|
|
$
|
(625
|
)
|
Net cash (used in) provided by investing activities
|
|
(84
|
)
|
|
496
|
|
|
(580
|
)
|
|||
Net cash used in financing activities
|
|
(686
|
)
|
|
(621
|
)
|
|
(65
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
|
(64
|
)
|
|
49
|
|
|
(113
|
)
|
|||
Net increase in cash and cash equivalents
|
|
$
|
51
|
|
|
$
|
1,434
|
|
|
$
|
(1,383
|
)
|
Cash and cash equivalents at beginning-of-year
|
|
2,729
|
|
|
1,268
|
|
|
|
||||
Cash and cash equivalents at the end-of-period
|
|
$
|
2,780
|
|
|
$
|
2,702
|
|
|
|
|
|
As of
|
||||||
(in millions)
|
|
September 30, 2018
|
|
March 31, 2018
|
||||
Short-term debt and current maturities of long-term debt
|
|
$
|
1,618
|
|
|
$
|
1,918
|
|
Long-term debt, net of current maturities
|
|
5,409
|
|
|
6,092
|
|
||
Total debt
|
|
$
|
7,027
|
|
|
$
|
8,010
|
|
|
|
As of
|
||||||
(in millions)
|
|
September 30, 2018
|
|
March 31, 2018
|
||||
Total debt
|
|
$
|
7,027
|
|
|
$
|
8,010
|
|
Cash and cash equivalents
|
|
2,780
|
|
|
2,593
|
|
||
Net debt
(1)
|
|
$
|
4,247
|
|
|
$
|
5,417
|
|
|
|
|
|
|
||||
Total debt
|
|
$
|
7,027
|
|
|
$
|
8,010
|
|
Equity
|
|
11,837
|
|
|
13,837
|
|
||
Total capitalization
|
|
$
|
18,864
|
|
|
$
|
21,847
|
|
|
|
|
|
|
||||
Debt-to-total capitalization
|
|
37.3
|
%
|
|
36.7
|
%
|
||
Net debt-to-total capitalization
(1)
|
|
22.5
|
%
|
|
24.8
|
%
|
|
|
As of
|
||
(in millions)
|
|
September 30, 2018
|
||
Cash and cash equivalents
|
|
$
|
2,780
|
|
Available borrowings under our revolving credit facility
|
|
4,000
|
|
|
Total liquidity
|
|
$
|
6,780
|
|
Item 1A.
|
RISK FACTORS
|
|
|||||||||
Period
|
|
Total Number
of Shares
Purchased
|
|
Average Price
Paid Per Share
|
|
Total Number
of Shares
Purchased as
Part of Publicly
Announced Plans or Programs
|
|
Approximate
Dollar Value
of Shares that
May Yet be Purchased
Under the Plans or Programs
|
|
July 1, 2018 to July 31, 2018
|
|
998,729
|
|
|
$84.03
|
|
998,729
|
|
$1,454,097,566
|
August 1, 2018 to August 31, 2018
|
|
—
|
|
|
$—
|
|
—
|
|
$1,454,097,566
|
September 1, 2018 to September 30, 2018
|
|
450,000
|
|
|
$94.11
|
|
450,000
|
|
$1,411,749,723
|
Total:
|
|
1,448,729
|
|
|
$87.16
|
|
1,448,729
|
|
|
Exhibit
Number |
Description of Exhibit
|
2.1
|
|
2.2
|
|
2.3
|
|
2.4
|
|
2.5
|
|
2.6
|
|
2.7
|
|
2.8
|
|
2.9
|
|
2.10
|
|
2.11
|
|
2.12
|
|
2.13
|
|
2.14
|
2.15
|
|
2.16
|
|
2.17
|
|
2.18
|
|
2.19
|
|
2.20
|
|
2.21
|
|
3.1
|
|
3.2
|
|
4.1
|
|
4.2
|
|
4.3
|
|
4.4
|
|
4.5
|
|
4.6
|
|
4.7
|
|
4.8
|
|
4.9
|
|
4.10
|
|
4.11
|
|
4.12
|
|
|
|
DXC TECHNOLOGY COMPANY
|
|
|
|
|
Dated:
|
November 8, 2018
|
By:
|
/s/ Neil A. Manna
|
|
|
Name:
|
Neil A. Manna
|
|
|
Title:
|
Senior Vice President, Corporate Controller Principal Accounting Officer
|
1.
|
Section 6 of the Plan is hereby retitled “Claims Procedure.”
|
2.
|
The second sentence of Section 6(a)(i) of the Plan is hereby amended in its entirety as follows:
|
3.
|
Section 6(a)(vii) of the Plan is hereby amended in its entirety as follows:
|
4.
|
Section 6(b) of the Plan is hereby deleted in its entirety.
|
|
|
|
|
|
Date:
|
November 8, 2018
|
|
|
/s/ J. Michael Lawrie
|
|
|
|
|
J. Michael Lawrie President and Chief Executive Officer
|
|
|
|
|
|
Date:
|
November 8, 2018
|
|
|
/s/ Paul N. Saleh
|
|
|
|
|
Paul N. Saleh
Executive Vice President and Chief Financial Officer
|
Dated:
|
November 8, 2018
|
|
/s/ J. Michael Lawrie
|
|
|
|
J. Michael Lawrie
President and Chief Executive Officer
|
|
|
|
|
Dated:
|
November 8, 2018
|
|
/s/ Paul N. Saleh
|
|
|
|
Paul N. Saleh
Executive Vice President and Chief Financial Officer |