☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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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 or other jurisdiction 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
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,
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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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Large Accelerated Filer
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x
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Accelerated Filer
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o
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Non-accelerated Filer
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o
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Smaller reporting company
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☐
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Emerging growth company
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☐
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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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Three Months Ended
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Nine Months Ended
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||||||||||||
(in millions, except per-share amounts)
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December 31, 2019
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December 31, 2018
|
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December 31, 2019
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December 31, 2018
|
||||||||
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||||||||
Revenues
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$
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5,021
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$
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5,178
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$
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14,762
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$
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15,473
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||||||||
Costs of services (excludes depreciation and amortization and restructuring costs)
|
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3,827
|
|
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3,725
|
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11,128
|
|
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11,110
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||||
Selling, general, and administrative (excludes depreciation and amortization and restructuring costs)
|
|
518
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|
491
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1,514
|
|
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1,500
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||||
Depreciation and amortization
|
|
479
|
|
|
508
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|
1,416
|
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1,463
|
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Goodwill impairment losses
|
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53
|
|
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—
|
|
|
2,940
|
|
|
—
|
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||||
Restructuring costs
|
|
74
|
|
|
76
|
|
|
248
|
|
|
418
|
|
||||
Interest expense
|
|
93
|
|
|
81
|
|
|
288
|
|
|
249
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||||
Interest income
|
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(33
|
)
|
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(27
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)
|
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(130
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)
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(92
|
)
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||||
Gain on arbitration award
|
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—
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|
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—
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|
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(632
|
)
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—
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||||
Other income, net
|
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(117
|
)
|
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(145
|
)
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(344
|
)
|
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(336
|
)
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||||
Total costs and expenses
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4,894
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4,709
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16,428
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14,312
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||||
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||||||||
Income (loss) from continuing operations before income taxes
|
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127
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|
|
469
|
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(1,666
|
)
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1,161
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Income tax expense
|
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37
|
|
|
3
|
|
|
191
|
|
|
205
|
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||||
Income (loss) from continuing operations
|
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90
|
|
|
466
|
|
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(1,857
|
)
|
|
956
|
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Income from discontinued operations, net of taxes
|
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—
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—
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—
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35
|
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||||
Net income (loss)
|
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90
|
|
|
466
|
|
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(1,857
|
)
|
|
991
|
|
||||
Less: net income attributable to non-controlling interest, net of tax
|
|
8
|
|
|
4
|
|
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17
|
|
|
8
|
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||||
Net income (loss) attributable to DXC common stockholders
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$
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82
|
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$
|
462
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$
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(1,874
|
)
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$
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983
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||||||||
Income (loss) per common share:
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Basic:
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Continuing operations
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$
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0.32
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$
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1.68
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$
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(7.20
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)
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$
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3.38
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Discontinued operations
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—
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—
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—
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0.12
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$
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0.32
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$
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1.68
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$
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(7.20
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)
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$
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3.50
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Diluted:
|
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Continuing operations
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$
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0.32
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$
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1.66
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$
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(7.20
|
)
|
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$
|
3.33
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Discontinued operations
|
|
—
|
|
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—
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—
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0.12
|
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$
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0.32
|
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|
$
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1.66
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$
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(7.20
|
)
|
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$
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3.45
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Three Months Ended
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Nine Months Ended
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||||||||||||
(in millions)
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December 31, 2019
|
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December 31, 2018
|
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December 31, 2019
|
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December 31, 2018
|
||||||||||
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Net income (loss)
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$
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90
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$
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466
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$
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(1,857
|
)
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$
|
991
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Other comprehensive income (loss), net of taxes:
|
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|
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||||||||||
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Foreign currency translation adjustments, net of tax (1)
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293
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(64
|
)
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87
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(472
|
)
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Cash flow hedges adjustments, net of tax (2)
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(8
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)
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14
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(6
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)
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(16
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)
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Available-for-sale securities, net of tax (3)
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—
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—
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2
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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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Prior service cost, net of tax (4)
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—
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(23
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)
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—
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(23
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)
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Amortization of prior service cost, net of tax (5)
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(2
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)
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(4
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)
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(6
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)
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(10
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)
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Pension and other post-retirement benefit plans, net of tax
|
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(2
|
)
|
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(27
|
)
|
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(6
|
)
|
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(33
|
)
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|||||
Other comprehensive income (loss), net of taxes
|
|
283
|
|
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(77
|
)
|
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77
|
|
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(522
|
)
|
||||||
Comprehensive income (loss)
|
|
373
|
|
|
389
|
|
|
(1,780
|
)
|
|
469
|
|
||||||
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Less: comprehensive income attributable to non-controlling interest
|
|
39
|
|
|
9
|
|
|
26
|
|
|
8
|
|
|||||
Comprehensive income (loss) attributable to DXC common stockholders
|
|
$
|
334
|
|
|
$
|
380
|
|
|
$
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(1,806
|
)
|
|
$
|
461
|
|
|
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As of
|
||||||
(in millions, except per-share and share amounts)
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December 31, 2019
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March 31, 2019
|
||||
ASSETS
|
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Current assets:
|
|
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Cash and cash equivalents
|
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$
|
2,560
|
|
|
$
|
2,899
|
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Receivables and contract assets, net of allowance for doubtful accounts of $76 and $60
|
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4,619
|
|
|
5,181
|
|
||
Prepaid expenses
|
|
660
|
|
|
627
|
|
||
Other current assets
|
|
344
|
|
|
359
|
|
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Total current assets
|
|
8,183
|
|
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9,066
|
|
||
|
|
|
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|
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Intangible assets, net of accumulated amortization of $4,262 and $3,399
|
|
6,140
|
|
|
5,939
|
|
||
Operating right-of-use assets, net
|
|
1,484
|
|
|
—
|
|
||
Goodwill
|
|
6,003
|
|
|
7,606
|
|
||
Deferred income taxes, net
|
|
372
|
|
|
355
|
|
||
Property and equipment, net of accumulated depreciation of $4,317 and $3,958
|
|
3,631
|
|
|
3,179
|
|
||
Other assets
|
|
3,786
|
|
|
3,429
|
|
||
Total Assets
|
|
$
|
29,599
|
|
|
$
|
29,574
|
|
|
|
|
|
|
||||
LIABILITIES and EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Short-term debt and current maturities of long-term debt
|
|
1,581
|
|
|
1,942
|
|
||
Accounts payable
|
|
1,576
|
|
|
1,666
|
|
||
Accrued payroll and related costs
|
|
678
|
|
|
652
|
|
||
Current operating lease liabilities
|
|
498
|
|
|
—
|
|
||
Accrued expenses and other current liabilities
|
|
3,139
|
|
|
3,355
|
|
||
Deferred revenue and advance contract payments
|
|
1,069
|
|
|
1,630
|
|
||
Income taxes payable
|
|
243
|
|
|
208
|
|
||
Total current liabilities
|
|
8,784
|
|
|
9,453
|
|
||
|
|
|
|
|
||||
Long-term debt, net of current maturities
|
|
7,315
|
|
|
5,470
|
|
||
Non-current deferred revenue
|
|
747
|
|
|
256
|
|
||
Non-current operating lease liabilities
|
|
1,097
|
|
|
—
|
|
||
Non-current income tax liabilities and deferred tax liabilities
|
|
1,189
|
|
|
1,184
|
|
||
Other long-term liabilities
|
|
1,366
|
|
|
1,486
|
|
||
Total Liabilities
|
|
20,498
|
|
|
17,849
|
|
||
|
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
|
||
|
|
|
|
|
||||
DXC stockholders’ equity:
|
|
|
|
|
||||
Preferred stock, par value $.01 per share, 1,000,000 shares authorized, none issued as of December 31, 2019 and March 31, 2019
|
|
—
|
|
|
—
|
|
||
Common stock, par value $.01 per share, 750,000,000 shares authorized, 255,605,750 issued as of December 31, 2019 and 270,213,891 issued as of March 31, 2019
|
|
3
|
|
|
3
|
|
||
Additional paid-in capital
|
|
10,701
|
|
|
11,301
|
|
||
(Accumulated deficit) retained earnings
|
|
(1,628
|
)
|
|
478
|
|
||
Accumulated other comprehensive loss
|
|
(176
|
)
|
|
(244
|
)
|
||
Treasury stock, at cost, 2,132,967 and 1,788,658 shares as of December 31, 2019 and March 31, 2019
|
|
(151
|
)
|
|
(136
|
)
|
||
Total DXC stockholders’ equity
|
|
8,749
|
|
|
11,402
|
|
||
Non-controlling interest in subsidiaries
|
|
352
|
|
|
323
|
|
||
Total Equity
|
|
9,101
|
|
|
11,725
|
|
||
Total Liabilities and Equity
|
|
$
|
29,599
|
|
|
$
|
29,574
|
|
|
|
Nine Months Ended
|
||||||
(in millions)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net (loss) income
|
|
$
|
(1,857
|
)
|
|
$
|
991
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
1,429
|
|
|
1,514
|
|
||
Goodwill impairment losses
|
|
2,940
|
|
|
—
|
|
||
Operating right-of-use expense
|
|
506
|
|
|
—
|
|
||
Share-based compensation
|
|
57
|
|
|
57
|
|
||
Loss (gain) on dispositions
|
|
6
|
|
|
(137
|
)
|
||
Unrealized foreign currency exchange loss (gain)
|
|
14
|
|
|
(32
|
)
|
||
Other non-cash charges, net
|
|
7
|
|
|
(21
|
)
|
||
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
|
|
|
|
|
||||
Decrease (increase) in assets
|
|
141
|
|
|
(1,012
|
)
|
||
Decrease in operating lease liability
|
|
(506
|
)
|
|
—
|
|
||
Decrease in other liabilities
|
|
(675
|
)
|
|
(325
|
)
|
||
Net cash provided by operating activities
|
|
2,062
|
|
|
1,035
|
|
||
|
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
||||
Purchases of property and equipment
|
|
(240
|
)
|
|
(219
|
)
|
||
Payments for transition and transformation contract costs
|
|
(220
|
)
|
|
(294
|
)
|
||
Software purchased and developed
|
|
(178
|
)
|
|
(183
|
)
|
||
Payments for acquisitions, net of cash acquired
|
|
(1,997
|
)
|
|
(332
|
)
|
||
Business dispositions
|
|
—
|
|
|
(65
|
)
|
||
Cash collections related to deferred purchase price receivable
|
|
513
|
|
|
761
|
|
||
Proceeds from sale of assets
|
|
55
|
|
|
283
|
|
||
Short-term investing
|
|
(75
|
)
|
|
—
|
|
||
Other investing activities, net
|
|
20
|
|
|
9
|
|
||
Net cash used in investing activities
|
|
(2,122
|
)
|
|
(40
|
)
|
||
|
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
||||
Borrowings of commercial paper
|
|
4,010
|
|
|
1,853
|
|
||
Repayments of commercial paper
|
|
(3,893
|
)
|
|
(1,853
|
)
|
||
Borrowings on long-term debt, net of discount
|
|
2,198
|
|
|
1,646
|
|
||
Principal payments on long-term debt
|
|
(1,029
|
)
|
|
(2,619
|
)
|
||
Payments on finance leases and borrowings for asset financing
|
|
(646
|
)
|
|
(710
|
)
|
||
Borrowings for USPS spin transaction
|
|
—
|
|
|
1,114
|
|
||
Proceeds from bond issuance
|
|
—
|
|
|
753
|
|
||
Proceeds from stock options and other common stock transactions
|
|
11
|
|
|
40
|
|
||
Taxes paid related to net share settlements of share-based compensation awards
|
|
(15
|
)
|
|
(52
|
)
|
||
Repurchase of common stock and advance payment for accelerated share repurchase
|
|
(736
|
)
|
|
(1,253
|
)
|
||
Dividend payments
|
|
(161
|
)
|
|
(159
|
)
|
||
Other financing activities, net
|
|
(44
|
)
|
|
57
|
|
||
Net cash used in financing activities
|
|
(305
|
)
|
|
(1,183
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
26
|
|
|
(66
|
)
|
||
Net decrease in cash and cash equivalents
|
|
(339
|
)
|
|
(254
|
)
|
||
Cash and cash equivalents at beginning of year
|
|
2,899
|
|
|
2,729
|
|
||
Cash and cash equivalents at end of period
|
|
$
|
2,560
|
|
|
$
|
2,475
|
|
|
Three Months Ended December 31, 2019
|
||||||||||||||||||||||||||
(in millions, except shares in thousands)
|
Common Stock
|
Additional
Paid-in Capital
|
Retained Earnings (Accumulated Deficit)
|
Accumulated
Other
Comprehensive Loss
|
Treasury Stock (1)
|
Total
DXC Equity
|
Non-
Controlling Interest
|
Total Equity
|
|||||||||||||||||||
Shares
|
|
Amount
|
|||||||||||||||||||||||||
Balance at September 30, 2019
|
257,626
|
|
|
$
|
3
|
|
$
|
10,793
|
|
$
|
(1,668
|
)
|
$
|
(428
|
)
|
$
|
(150
|
)
|
$
|
8,550
|
|
$
|
320
|
|
$
|
8,870
|
|
Net income
|
|
|
|
|
82
|
|
|
|
82
|
|
8
|
|
90
|
|
|||||||||||||
Other comprehensive income
|
|
|
|
|
|
252
|
|
|
252
|
|
31
|
|
283
|
|
|||||||||||||
Share-based compensation expense
|
|
|
|
6
|
|
|
|
|
6
|
|
|
6
|
|
||||||||||||||
Acquisition of treasury stock
|
|
|
|
|
|
|
(1
|
)
|
(1
|
)
|
|
(1
|
)
|
||||||||||||||
Share repurchase program
|
(2,354
|
)
|
|
|
(98
|
)
|
12
|
|
|
|
(86
|
)
|
|
(86
|
)
|
||||||||||||
Stock option exercises and other common stock transactions
|
334
|
|
|
|
|
|
|
|
|
—
|
|
|
—
|
|
|||||||||||||
Dividends declared ($0.21 per share)
|
|
|
|
|
(54
|
)
|
|
|
(54
|
)
|
|
(54
|
)
|
||||||||||||||
Non-controlling interest distributions and other
|
|
|
|
|
|
|
|
|
—
|
|
(7
|
)
|
(7
|
)
|
|||||||||||||
Balance at December 31, 2019
|
255,606
|
|
|
$
|
3
|
|
$
|
10,701
|
|
$
|
(1,628
|
)
|
$
|
(176
|
)
|
$
|
(151
|
)
|
$
|
8,749
|
|
$
|
352
|
|
$
|
9,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Three Months Ended December 31, 2018
|
||||||||||||||||||||||||||
(in millions, except shares in thousands)
|
Common Stock
|
Additional
Paid-in Capital
|
Retained Earnings
|
Accumulated
Other
Comprehensive
Loss
|
Treasury Stock
|
Total
DXC Equity
|
Non-
Controlling Interest
|
Total Equity
|
|||||||||||||||||||
Shares
|
|
Amount
|
|||||||||||||||||||||||||
Balance at September 30, 2018
|
282,519
|
|
|
$
|
3
|
|
$
|
11,848
|
|
$
|
136
|
|
$
|
(382
|
)
|
$
|
(105
|
)
|
$
|
11,500
|
|
$
|
337
|
|
$
|
11,837
|
|
Net income
|
|
|
|
|
462
|
|
|
|
462
|
|
4
|
|
466
|
|
|||||||||||||
Other comprehensive loss
|
|
|
|
|
|
(82
|
)
|
|
(82
|
)
|
5
|
|
(77
|
)
|
|||||||||||||
Share-based compensation expense
|
|
|
|
17
|
|
|
|
|
17
|
|
|
17
|
|
||||||||||||||
Acquisition of treasury stock
|
|
|
|
|
|
|
(29
|
)
|
(29
|
)
|
|
(29
|
)
|
||||||||||||||
Share repurchase program
|
(12,452
|
)
|
|
|
(525
|
)
|
(272
|
)
|
|
|
(797
|
)
|
|
(797
|
)
|
||||||||||||
Stock option exercises and other common stock transactions
|
1,565
|
|
|
|
3
|
|
|
|
|
3
|
|
|
3
|
|
|||||||||||||
Dividends declared ($0.19 per share)
|
|
|
|
|
(52
|
)
|
|
|
(52
|
)
|
|
(52
|
)
|
||||||||||||||
Non-controlling interest distributions and other
|
|
|
|
|
|
|
|
|
—
|
|
(12
|
)
|
(12
|
)
|
|||||||||||||
Balance at December 31, 2018
|
271,632
|
|
|
$
|
3
|
|
$
|
11,343
|
|
$
|
274
|
|
$
|
(464
|
)
|
$
|
(134
|
)
|
$
|
11,022
|
|
$
|
334
|
|
$
|
11,356
|
|
|
Nine Months Ended December 31, 2019
|
||||||||||||||||||||||||||
(in millions, except shares in thousands)
|
Common Stock
|
Additional
Paid-in Capital
|
Retained Earnings (Accumulated Deficit)
|
Accumulated
Other
Comprehensive
Loss
|
Treasury Stock (1)
|
Total
DXC Equity
|
Non-
Controlling Interest
|
Total Equity
|
|||||||||||||||||||
Shares
|
|
Amount
|
|||||||||||||||||||||||||
Balance at March 31, 2019
|
270,214
|
|
|
$
|
3
|
|
$
|
11,301
|
|
$
|
478
|
|
$
|
(244
|
)
|
$
|
(136
|
)
|
$
|
11,402
|
|
$
|
323
|
|
$
|
11,725
|
|
Net loss
|
|
|
|
|
(1,874
|
)
|
|
|
(1,874
|
)
|
17
|
|
(1,857
|
)
|
|||||||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
68
|
|
|
68
|
|
9
|
|
77
|
|
|||||||||||||
Share-based compensation expense
|
|
|
|
55
|
|
|
|
|
55
|
|
|
55
|
|
||||||||||||||
Acquisition of treasury stock
|
|
|
|
|
|
|
(15
|
)
|
(15
|
)
|
|
(15
|
)
|
||||||||||||||
Share repurchase program
|
(15,934
|
)
|
|
|
|
(669
|
)
|
(67
|
)
|
|
|
(736
|
)
|
|
(736
|
)
|
|||||||||||
Stock option exercises and other common stock transactions
|
1,326
|
|
|
|
|
14
|
|
|
|
|
14
|
|
|
14
|
|
||||||||||||
Dividends declared ($0.63 per share)
|
|
|
|
|
(165
|
)
|
|
|
(165
|
)
|
|
(165
|
)
|
||||||||||||||
Non-controlling interest distributions and other
|
|
|
|
|
|
|
|
|
—
|
|
3
|
|
3
|
|
|||||||||||||
Balance at December 31, 2019
|
255,606
|
|
|
$
|
3
|
|
$
|
10,701
|
|
$
|
(1,628
|
)
|
$
|
(176
|
)
|
$
|
(151
|
)
|
$
|
8,749
|
|
$
|
352
|
|
$
|
9,101
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Nine Months Ended December 31, 2018
|
||||||||||||||||||||||||||
(in millions, except shares in thousands)
|
Common Stock
|
Additional
Paid-in Capital
|
Retained Earnings
|
Accumulated
Other
Comprehensive
Income (Loss)
|
Treasury Stock
|
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
|
|
|
|
|
983
|
|
|
|
983
|
|
8
|
|
991
|
|
|||||||||||||
Other comprehensive loss
|
|
|
|
|
|
(522
|
)
|
|
(522
|
)
|
|
|
(522
|
)
|
|||||||||||||
Share-based compensation expense
|
|
|
|
57
|
|
|
|
|
57
|
|
|
57
|
|
||||||||||||||
Acquisition of treasury stock
|
|
|
|
|
|
|
(49
|
)
|
(49
|
)
|
|
(49
|
)
|
||||||||||||||
Share repurchase program
|
(17,680
|
)
|
|
|
|
(776
|
)
|
(472
|
)
|
|
|
(1,248
|
)
|
|
(1,248
|
)
|
|||||||||||
Stock option exercises and other common stock transactions
|
2,919
|
|
|
|
|
29
|
|
|
|
|
29
|
|
|
29
|
|
||||||||||||
Dividends declared ($0.57 per share)
|
|
|
|
|
(161
|
)
|
|
|
(161
|
)
|
|
(161
|
)
|
||||||||||||||
Non-controlling interest distributions and other
|
|
|
|
|
|
|
|
|
—
|
|
(24
|
)
|
(24
|
)
|
|||||||||||||
Divestiture of USPS
|
|
|
|
(177
|
)
|
(1,491
|
)
|
|
|
(1,668
|
)
|
|
(1,668
|
)
|
|||||||||||||
Balance at December 31, 2018
|
271,632
|
|
|
$
|
3
|
|
$
|
11,343
|
|
$
|
274
|
|
$
|
(464
|
)
|
$
|
(134
|
)
|
$
|
11,022
|
|
$
|
334
|
|
$
|
11,356
|
|
Buildings
|
Up to 40 years
|
Computers and related equipment
|
4 to 7 years
|
Furniture and other equipment
|
3 to 15 years
|
Leasehold improvements
|
Shorter of lease term or useful life up to 20 years
|
Date Issued and ASU
|
Date Adopted and Method
|
Description
|
Impact
|
February 2016
ASU 2016-02 "Leases (Topic 842)"
|
April 1, 2019
Modified retrospective
|
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. 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.
|
The Company adopted this update utilizing the simplified transition method allowing the Company to not restate comparative periods and apply Topic 842 beginning on April 1, 2019. During adoption, the Company implemented changes in its systems, including the implementation of new lease accounting software, internal controls, business processes, and accounting policies related to both the implementation of, and ongoing compliance with, the new guidance. The adoption resulted in following impacts.
The Company recorded increases of $1.7 billion in assets and $1.8 billion in liabilities as of April 1, 2019, due to the recording of operating ROU assets and operating lease liabilities for lease obligations that were historically classified as operating leases. The Company's cumulative adjustment to the opening balance of retained earnings was not material. Additionally, the update did not have a material impact on the statements of operations or statements of cash flows.
DXC elected the practical expedient package permitted under Topic 842, which among other things, permits the Company not to reassess historical conclusions related to contracts that contain leases, lease classification and initial direct costs for leases that commenced prior to the adoption date. DXC applied the lessee component election, allowing the Company to account for lease and non-lease components as a single lease component. In addition, DXC made an accounting policy election to not capitalize leases with an initial term of 12 months or less that do not contain a ‘reasonably certain’ purchase option.
Refer to Note 7 - "Leases" for additional information.
|
February 2018
ASU 2018-02 - "Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income"
|
April 1, 2019
Retrospective
|
This update provides an option to reclassify stranded tax effects within accumulated other comprehensive income ("AOCI") to retained earnings in each period in which the effect (or portion thereof) of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recorded.
|
The Company adopted this update and opted to not elect to reclassify any stranded tax effects within AOCI to retained earnings, and as such, the adoption of ASU 2018-02 did not have an effect on its condensed consolidated financial statements. In accordance with its accounting policy, the Company uses the portfolio approach and will release income tax effects from AOCI once the reason the tax effects were established cease to exist (e.g., when available-for-sale debt securities are sold or if a pension plan is liquidated).
|
January 2017
ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the test for Goodwill Impairment
|
July 1, 2019
Prospective
|
This update is intended to simplify goodwill impairment testing by eliminating Step 2 from the goodwill impairment test. Under the new guidance, if a reporting unit’s carrying amount exceeds its fair value, the entity will record an impairment loss based on that difference. The impairment loss will be limited to the amount of goodwill allocated to that reporting unit. Previously, if the fair value of a reporting unit was lower than its carrying amount (Step 1), an entity was required to calculate any impairment loss by comparing the implied fair value of goodwill with its carrying amount (Step 2). Additionally, under the new standard, companies that have reporting units with zero or negative carrying amounts will no longer be required to perform the qualitative assessment to determine whether to perform Step 2 of the goodwill impairment test. As a result, reporting units with zero or negative carrying amounts will generally be expected to pass the simplified impairment test; however, additional disclosure will be required of those companies.
|
DXC early adopted this guidance on a prospective basis as of July 1, 2019. As a result of adopting this ASU, the Company no longer performs Step 2 while completing its goodwill impairment testing, beginning with its annual goodwill impairment testing performed during the second quarter of fiscal 2020.
DXC's impairment testing resulted in a non-cash impairment charge of $2,940 million, consisting of $2,675 million and $265 million in its GBS and GIS reporting units, respectively. See Note 11 - "Goodwill" for additional information.
|
Date Issued and ASU
|
DXC Effective Date
|
Description
|
Impact
|
June 2016
ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”
|
Fiscal 2021
|
This update is intended to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in this update replace the existing incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This update must be adopted using a prospective transition approach for debt securities for which an other-than-temporary impairment has been recognized before the effective date.
|
DXC is currently evaluating its trade receivables and financial arrangements for the potential impact this update may have on its financial statements in future reporting periods.
|
August 2018
ASU 2018-15,
"Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract"
|
Fiscal 2021
|
This update helps entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. Entities have the option to apply this standard prospectively to all implementation costs incurred after the date of adoption or retrospectively.
|
DXC is currently evaluating its cloud computing arrangements for the potential impact this update may have on its financial statements in future reporting periods.
|
(in millions)
|
|
Estimated Fair Value
|
||
Cash and cash equivalents
|
|
$
|
113
|
|
Accounts receivable
|
|
233
|
|
|
Other current assets
|
|
15
|
|
|
Total current assets
|
|
361
|
|
|
Property and equipment
|
|
31
|
|
|
Intangible assets
|
|
571
|
|
|
Other assets
|
|
96
|
|
|
Total assets acquired
|
|
1,059
|
|
|
Accounts payable, accrued payroll, accrued expenses, and other current liabilities
|
|
(119
|
)
|
|
Deferred revenue
|
|
(8
|
)
|
|
Long-term deferred tax liabilities and income tax payable
|
|
(86
|
)
|
|
Other liabilities
|
|
(68
|
)
|
|
Total liabilities assumed
|
|
(281
|
)
|
|
Net identifiable assets acquired
|
|
778
|
|
|
Goodwill
|
|
1,245
|
|
|
Total estimated consideration transferred
|
|
$
|
2,023
|
|
(in millions)
|
|
Amount
|
||
Land, buildings, and leasehold improvements
|
|
$
|
8
|
|
Computers and related equipment
|
|
12
|
|
|
Furniture and other equipment
|
|
11
|
|
|
Total
|
|
$
|
31
|
|
(in millions)
|
|
Amount
|
|
Estimated Useful Lives (Years)
|
||
Customer related intangibles
|
|
$
|
411
|
|
|
10
|
Trade names
|
|
$
|
143
|
|
|
20
|
Developed technology
|
|
$
|
6
|
|
|
3
|
Third-party purchased software
|
|
$
|
11
|
|
|
3
|
Total
|
|
$
|
571
|
|
|
|
(in millions)
|
|
Three Months Ended December 31, 2019
|
|
Nine Months Ended December 31, 2019(1)
|
||||
Revenues
|
|
$
|
225
|
|
|
$
|
483
|
|
Net income (loss)
|
|
$
|
7
|
|
|
$
|
(1
|
)
|
•
|
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;
|
•
|
an IT Services Agreement and,
|
•
|
a Non-US Agency Agreement.
|
(in millions)
|
|
Nine Months Ended December 31, 2018(1)
|
||
Revenue
|
|
$
|
431
|
|
|
|
|
||
Costs of services
|
|
311
|
|
|
Selling, general and administrative
|
|
50
|
|
|
Depreciation and amortization
|
|
33
|
|
|
Restructuring costs
|
|
1
|
|
|
Interest expense
|
|
8
|
|
|
Other income, net
|
|
(25
|
)
|
|
Total costs and expenses
|
|
378
|
|
|
Total income from discontinued operations, before income taxes
|
|
53
|
|
|
Income tax expense
|
|
18
|
|
|
Total income from discontinued operations
|
|
$
|
35
|
|
(in millions)
|
|
Nine Months Ended December 31, 2018
|
||
Depreciation
|
|
$
|
16
|
|
Amortization
|
|
$
|
17
|
|
Capital expenditures
|
|
$
|
—
|
|
Significant operating non-cash items:
|
|
|
||
Gain on dispositions
|
|
$
|
24
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in millions, except per-share amounts)
|
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||
Net income (loss) attributable to DXC common shareholders:
|
|
|
|
|
|
|
|
|
||||||||
From continuing operations
|
|
$
|
82
|
|
|
$
|
462
|
|
|
$
|
(1,874
|
)
|
|
$
|
948
|
|
From discontinued operations
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
35
|
|
|
|
|
|
|
|
|
|
|
||||||||
Common share information:
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding for basic EPS
|
|
255.09
|
|
|
275.66
|
|
|
260.24
|
|
|
280.47
|
|
||||
Dilutive effect of stock options and equity awards
|
|
0.96
|
|
|
3.33
|
|
|
—
|
|
|
4.23
|
|
||||
Weighted average common shares outstanding for diluted EPS
|
|
256.05
|
|
|
278.99
|
|
|
260.24
|
|
|
284.70
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Earnings (Loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
0.32
|
|
|
$
|
1.68
|
|
|
$
|
(7.20
|
)
|
|
$
|
3.38
|
|
Discontinued operations
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.12
|
|
Total
|
|
$
|
0.32
|
|
|
$
|
1.68
|
|
|
$
|
(7.20
|
)
|
|
$
|
3.50
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
0.32
|
|
|
$
|
1.66
|
|
|
$
|
(7.20
|
)
|
|
$
|
3.33
|
|
Discontinued operations
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.12
|
|
Total
|
|
$
|
0.32
|
|
|
$
|
1.66
|
|
|
$
|
(7.20
|
)
|
|
$
|
3.45
|
|
(in millions)
|
|
As of and for the Three Months Ended
|
|
As of and for the Nine Months Ended
|
||||||||
|
|
December 31, 2018
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||
Beginning balance
|
|
$
|
540
|
|
|
$
|
574
|
|
|
$
|
233
|
|
Transfers of receivables
|
|
1,199
|
|
|
1,214
|
|
|
4,175
|
|
|||
Collections
|
|
(1,215
|
)
|
|
(1,265
|
)
|
|
(3,115
|
)
|
|||
Change in funding availability
|
|
74
|
|
|
2
|
|
|
(236
|
)
|
|||
Facility amendments
|
|
—
|
|
|
(525
|
)
|
|
(457
|
)
|
|||
Fair value adjustment
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||
Ending balance
|
|
$
|
598
|
|
|
$
|
—
|
|
|
$
|
598
|
|
(in millions)
|
|
As of December 31, 2019
|
||
Beginning balance
|
|
$
|
—
|
|
Transfers of receivables
|
|
534
|
|
|
Collections
|
|
(427
|
)
|
|
Change in funding availability
|
|
13
|
|
|
Ending balance
|
|
$
|
120
|
|
(in millions)
|
|
As of and for the
Nine Months Ended December 31, 2018(1) |
||
Transfers of receivables
|
|
$
|
464
|
|
Collections
|
|
$
|
521
|
|
Operating cash flow effect
|
|
$
|
(57
|
)
|
(in millions)
|
|
Three Months Ended December 31, 2019
|
|
Nine Months Ended December 31, 2019
|
||||
Operating lease cost
|
|
$
|
166
|
|
|
$
|
506
|
|
Short-term lease cost
|
|
17
|
|
|
41
|
|
||
Variable lease cost
|
|
9
|
|
|
35
|
|
||
Sublease income
|
|
(9
|
)
|
|
(28
|
)
|
||
Total operating costs
|
|
$
|
183
|
|
|
$
|
554
|
|
|
|
|
|
|
||||
Finance lease cost:
|
|
|
|
|
||||
Amortization of right-of-use assets
|
|
$
|
90
|
|
|
$
|
339
|
|
Interest on lease liabilities
|
|
16
|
|
|
50
|
|
||
Total finance lease cost
|
|
$
|
106
|
|
|
$
|
389
|
|
(in millions)
|
|
Nine Months Ended December 31, 2019
|
||
Cash paid for amounts included in the measurement of:
|
|
|
||
Operating cash flows from operating leases
|
|
$
|
506
|
|
Operating cash flows from finance leases
|
|
$
|
50
|
|
Financing cash flows from finance leases
|
|
$
|
436
|
|
|
|
|
|
As of
|
||
(in millions)
|
|
Balance Sheet Line Item
|
|
December 31, 2019
|
||
Assets:
|
|
|
|
|
||
ROU operating lease assets
|
|
Operating right-of-use assets, net
|
|
$
|
1,484
|
|
ROU finance lease assets
|
|
Property and Equipment, net
|
|
1,277
|
|
|
Total
|
|
|
|
$
|
2,761
|
|
|
|
|
|
|
||
Liabilities:
|
|
|
|
|
||
Current
|
|
|
|
|
||
Operating lease
|
|
Current operating lease liabilities
|
|
$
|
498
|
|
Finance lease
|
|
Short-term debt and current maturities of long-term debt
|
|
475
|
|
|
Total
|
|
|
|
$
|
973
|
|
|
|
|
|
|
||
Non-current
|
|
|
|
|
||
Operating lease
|
|
Non-current operating lease liabilities
|
|
$
|
1,097
|
|
Finance lease
|
|
Long-term debt, net of current maturities
|
|
639
|
|
|
Total
|
|
|
|
$
|
1,736
|
|
Weighted Average remaining lease term:
|
|
Years
|
|
Operating leases
|
|
4.8
|
|
Finance leases
|
|
2.8
|
|
|
|
|
|
Weighted average remaining discount rate:
|
|
Rate
|
|
Operating leases
|
|
3.7
|
%
|
Finance leases
|
|
6.5
|
%
|
Fiscal year
|
|
Operating Leases
|
|
|
||||||||
(in millions)
|
|
Real Estate
|
|
Equipment
|
|
Finance Leases
|
||||||
Remainder of 2020
|
|
$
|
115
|
|
|
$
|
31
|
|
|
$
|
148
|
|
2021
|
|
398
|
|
|
84
|
|
|
449
|
|
|||
2022
|
|
321
|
|
|
38
|
|
|
325
|
|
|||
2023
|
|
240
|
|
|
15
|
|
|
183
|
|
|||
2024
|
|
182
|
|
|
9
|
|
|
69
|
|
|||
Thereafter
|
|
305
|
|
|
14
|
|
|
10
|
|
|||
Total lease payments
|
|
1,561
|
|
|
191
|
|
|
1,184
|
|
|||
Less: imputed interest
|
|
(147
|
)
|
|
(10
|
)
|
|
(70
|
)
|
|||
Total payments
|
|
$
|
1,414
|
|
|
$
|
181
|
|
|
$
|
1,114
|
|
Fiscal year
|
|
Operating Leases
|
||||||
(in millions)
|
|
Real Estate
|
|
Equipment
|
||||
2020
|
|
$
|
409
|
|
|
$
|
248
|
|
2021
|
|
288
|
|
|
119
|
|
||
2022
|
|
203
|
|
|
27
|
|
||
2023
|
|
159
|
|
|
4
|
|
||
2024
|
|
124
|
|
|
1
|
|
||
Thereafter
|
|
274
|
|
|
—
|
|
||
Minimum fixed rentals
|
|
1,457
|
|
|
399
|
|
||
Less: sublease rental income
|
|
(149
|
)
|
|
—
|
|
||
Total rental payments
|
|
$
|
1,308
|
|
|
$
|
399
|
|
Fiscal year
|
|
|
||
(in millions)
|
|
Finance Leases
|
||
2020
|
|
$
|
509
|
|
2021
|
|
310
|
|
|
2022
|
|
212
|
|
|
2023
|
|
128
|
|
|
2024
|
|
36
|
|
|
Thereafter
|
|
—
|
|
|
Total minimum lease payments
|
|
1,195
|
|
|
Less: Amount representing interest and executory costs
|
|
(68
|
)
|
|
Present value of net minimum lease payments
|
|
$
|
1,127
|
|
|
|
Fair Value Hierarchy
|
||||||||||||||
(in millions)
|
|
December 31, 2019
|
||||||||||||||
Assets:
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Money market funds and money market deposit accounts
|
|
$
|
7
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Time deposits(1)
|
|
256
|
|
|
256
|
|
|
—
|
|
|
—
|
|
||||
Other debt securities(2)
|
|
54
|
|
|
—
|
|
|
51
|
|
|
3
|
|
||||
Deferred purchase price receivable
|
|
120
|
|
|
—
|
|
|
—
|
|
|
120
|
|
||||
Total assets
|
|
$
|
437
|
|
|
$
|
263
|
|
|
$
|
51
|
|
|
$
|
123
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
|
$
|
58
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
58
|
|
Total liabilities
|
|
$
|
58
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
58
|
|
|
|
March 31, 2019
|
||||||||||||||
Assets:
|
|
Fair Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Money market funds and money market deposit accounts
|
|
$
|
6
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Time deposits(1)
|
|
194
|
|
|
194
|
|
|
—
|
|
|
—
|
|
||||
Other debt securities(2)
|
|
53
|
|
|
—
|
|
|
49
|
|
|
4
|
|
||||
Deferred purchase price receivable
|
|
574
|
|
|
—
|
|
|
—
|
|
|
574
|
|
||||
Total assets
|
|
$
|
827
|
|
|
$
|
200
|
|
|
$
|
49
|
|
|
$
|
578
|
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
|
$
|
41
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
41
|
|
Total liabilities
|
|
$
|
41
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
41
|
|
|
|
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
||||||||||||
(in millions)
|
|
Statement of Operations Line Item
|
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||
Foreign currency forward contracts
|
|
Other expense (income), net
|
|
$
|
1
|
|
|
$
|
18
|
|
|
$
|
(21
|
)
|
|
$
|
62
|
|
|
|
Derivative Assets
|
||||||||
|
|
|
|
As of
|
||||||
(in millions)
|
|
Balance Sheet Line Item
|
|
December 31, 2019
|
|
March 31, 2019
|
||||
|
|
|
|
|
|
|
||||
Derivatives designated for hedge accounting:
|
|
|
||||||||
Foreign currency forward contracts
|
|
Other current assets
|
|
$
|
3
|
|
|
$
|
38
|
|
Total fair value of derivatives designated for hedge accounting
|
|
$
|
3
|
|
|
$
|
38
|
|
||
|
|
|
||||||||
Derivatives not designated for hedge accounting:
|
|
|
||||||||
Foreign currency forward contracts
|
|
Other current assets
|
|
$
|
5
|
|
|
$
|
5
|
|
Total fair value of derivatives not designated for hedge accounting
|
|
$
|
5
|
|
|
$
|
5
|
|
|
|
Derivative Liabilities
|
||||||||
|
|
|
|
As of
|
||||||
(in millions)
|
|
Balance Sheet Line Item
|
|
December 31, 2019
|
|
March 31, 2019
|
||||
|
|
|
|
|
|
|
||||
Derivatives designated for hedge accounting:
|
|
|
|
|
||||||
Foreign currency forward contracts
|
|
Accrued expenses and other current liabilities
|
|
$
|
8
|
|
|
$
|
4
|
|
Total fair value of derivatives designated for hedge accounting:
|
|
$
|
8
|
|
|
$
|
4
|
|
||
|
|
|
|
|
|
|||||
Derivatives not designated for hedge accounting:
|
|
|
|
|
||||||
Foreign currency forward contracts
|
|
Accrued expenses and other current liabilities
|
|
$
|
12
|
|
|
$
|
9
|
|
Total fair value of derivatives not designated for hedge accounting
|
|
$
|
12
|
|
|
$
|
9
|
|
|
|
As of December 31, 2019
|
||||||||||
(in millions)
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
||||||
Software
|
|
$
|
4,217
|
|
|
$
|
2,622
|
|
|
$
|
1,595
|
|
Customer related intangible assets
|
|
5,941
|
|
|
1,607
|
|
|
4,334
|
|
|||
Other intangible assets
|
|
244
|
|
|
33
|
|
|
211
|
|
|||
Total intangible assets
|
|
$
|
10,402
|
|
|
$
|
4,262
|
|
|
$
|
6,140
|
|
|
|
As of March 31, 2019
|
||||||||||
(in millions)
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
||||||
Software
|
|
$
|
3,864
|
|
|
$
|
2,235
|
|
|
$
|
1,629
|
|
Customer related intangible assets
|
|
5,389
|
|
|
1,139
|
|
|
4,250
|
|
|||
Other intangible assets
|
|
85
|
|
|
25
|
|
|
60
|
|
|||
Total intangible assets
|
|
$
|
9,338
|
|
|
$
|
3,399
|
|
|
$
|
5,939
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in millions)
|
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||
Intangible asset amortization
|
|
$
|
272
|
|
|
$
|
225
|
|
|
$
|
747
|
|
|
$
|
665
|
|
Transition and transformation contract cost amortization(1)
|
|
71
|
|
|
59
|
|
|
197
|
|
|
188
|
|
||||
Total amortization expense
|
|
$
|
343
|
|
|
$
|
284
|
|
|
$
|
944
|
|
|
$
|
853
|
|
(1)
|
Transaction and transformation contract costs are included within other assets on the balance sheet.
|
Fiscal Year
|
|
(in millions)
|
|
|
Remainder of 2020
|
|
$
|
404
|
|
2021
|
|
$
|
1,021
|
|
2022
|
|
$
|
940
|
|
2023
|
|
$
|
862
|
|
2024
|
|
$
|
779
|
|
(in millions)
|
|
GBS
|
|
GIS
|
|
Total
|
||||||
Goodwill, gross
|
|
$
|
5,300
|
|
|
$
|
5,068
|
|
|
$
|
10,368
|
|
Accumulated impairment losses
|
|
(701
|
)
|
|
(2,061
|
)
|
|
(2,762
|
)
|
|||
Balance as of March 31, 2019, net
|
|
$
|
4,599
|
|
|
$
|
3,007
|
|
|
$
|
7,606
|
|
|
|
|
|
|
|
|
||||||
Acquisitions
|
|
1,271
|
|
|
65
|
|
|
1,336
|
|
|||
Foreign currency translation
|
|
1
|
|
|
—
|
|
|
1
|
|
|||
Impairment losses(1)
|
|
(2,675
|
)
|
|
(265
|
)
|
|
(2,940
|
)
|
|||
|
|
|
|
|
|
|
||||||
Goodwill, gross
|
|
6,572
|
|
|
5,133
|
|
|
11,705
|
|
|||
Accumulated impairment losses
|
|
(3,376
|
)
|
|
(2,326
|
)
|
|
(5,702
|
)
|
|||
Balance as of December 31, 2019, net
|
|
$
|
3,196
|
|
|
$
|
2,807
|
|
|
$
|
6,003
|
|
(in millions)
|
|
Interest Rates
|
|
Fiscal Year Maturities
|
|
December 31, 2019
|
|
March 31, 2019
|
||||
Short-term debt and current maturities of long-term debt
|
|
|
|
|
|
|
|
|
||||
Commercial paper(1)
|
|
(0.23)% - 2.76%
|
|
2020
|
|
$
|
809
|
|
|
$
|
694
|
|
Current maturities of long-term debt
|
|
Various
|
|
2020 - 2021
|
|
297
|
|
|
766
|
|
||
Current maturities of finance lease liabilities
|
|
.62% - 17.68%
|
|
2020 - 2021
|
|
475
|
|
|
482
|
|
||
Short-term debt and current maturities of long-term debt
|
|
|
|
|
|
$
|
1,581
|
|
|
$
|
1,942
|
|
|
|
|
|
|
|
|
|
|
||||
Long-term debt, net of current maturities
|
|
|
|
|
|
|
|
|
||||
AUD term loan
|
|
1.68% - 2.66%(2)
|
|
2022
|
|
562
|
|
|
567
|
|
||
GBP term loan
|
|
1.57 - 1.63%(3)
|
|
2022
|
|
595
|
|
|
583
|
|
||
EUR term loan
|
|
0.65%(4)
|
|
2022
|
|
840
|
|
|
—
|
|
||
EUR term loan
|
|
0.80%(5)
|
|
2023
|
|
840
|
|
|
—
|
|
||
USD term loan
|
|
2.95% - 3.67%(6)
|
|
2025
|
|
486
|
|
|
—
|
|
||
$500 million Senior notes
|
|
2.88%
|
|
2020
|
|
—
|
|
|
502
|
|
||
$500 million Senior notes
|
|
3.08% - 3.69%
|
|
2021
|
|
—
|
|
|
498
|
|
||
$274 million Senior notes
|
|
4.45%
|
|
2023
|
|
276
|
|
|
277
|
|
||
$171 million Senior notes
|
|
4.45%
|
|
2023
|
|
172
|
|
|
172
|
|
||
$500 million Senior notes
|
|
4.25%
|
|
2025
|
|
505
|
|
|
506
|
|
||
£250 million Senior notes
|
|
2.75%
|
|
2025
|
|
328
|
|
|
322
|
|
||
€650 million Senior notes
|
|
1.75%
|
|
2026
|
|
725
|
|
|
725
|
|
||
$500 million Senior notes
|
|
4.75%
|
|
2028
|
|
508
|
|
|
508
|
|
||
$234 million Senior notes
|
|
7.45%
|
|
2030
|
|
272
|
|
|
273
|
|
||
Lease credit facility
|
|
2.70% - 3.50%
|
|
2020 - 2023
|
|
15
|
|
|
25
|
|
||
Finance lease liabilities
|
|
.62% - 17.68%
|
|
2020 - 2025
|
|
1,114
|
|
|
1,127
|
|
||
Borrowings for assets acquired under long-term financing
|
|
0.38% - 5.78%
|
|
2020 - 2026
|
|
718
|
|
|
462
|
|
||
Mandatorily redeemable preferred stock outstanding
|
|
6.00%
|
|
2023
|
|
62
|
|
|
62
|
|
||
Other borrowings
|
|
0.50% - 7.40%
|
|
2020 - 2022
|
|
69
|
|
|
109
|
|
||
Long-term debt
|
|
|
|
|
|
8,087
|
|
|
6,718
|
|
||
Less: current maturities
|
|
|
|
|
|
772
|
|
|
1,248
|
|
||
Long-term debt, net of current maturities
|
|
|
|
|
|
$
|
7,315
|
|
|
$
|
5,470
|
|
(1)
|
At DXC's option, DXC can borrow up to a maximum of €1 billion or its equivalent in U.S. dollars.
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in millions)
|
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||
United States
|
|
$
|
1,843
|
|
|
$
|
1,917
|
|
|
$
|
5,500
|
|
|
$
|
5,667
|
|
United Kingdom
|
|
707
|
|
|
749
|
|
|
2,100
|
|
|
2,309
|
|
||||
Australia
|
|
380
|
|
|
377
|
|
|
1,119
|
|
|
1,222
|
|
||||
Other Europe
|
|
1,329
|
|
|
1,384
|
|
|
3,819
|
|
|
3,994
|
|
||||
Other International
|
|
762
|
|
|
751
|
|
|
2,224
|
|
|
2,281
|
|
||||
Total Revenues
|
|
$
|
5,021
|
|
|
$
|
5,178
|
|
|
$
|
14,762
|
|
|
$
|
15,473
|
|
|
|
As of
|
||||||
(in millions)
|
|
December 31, 2019
|
|
March 31, 2019
|
||||
Trade receivables, net
|
|
$
|
3,233
|
|
|
$
|
3,232
|
|
Contract assets
|
|
$
|
463
|
|
|
$
|
390
|
|
Contract liabilities
|
|
$
|
1,816
|
|
|
$
|
1,886
|
|
(in millions)
|
|
Nine Months Ended December 31, 2019
|
||
Balance, beginning of period
|
|
$
|
1,886
|
|
Deferred revenue
|
|
2,091
|
|
|
Recognition of deferred revenue
|
|
(2,137
|
)
|
|
Currency translation adjustment
|
|
12
|
|
|
Other
|
|
(36
|
)
|
|
Balance, end of period
|
|
$
|
1,816
|
|
|
|
As of
|
||
(in millions)
|
|
December 31, 2019
|
||
Accrued expenses and other current liabilities
|
|
$
|
204
|
|
Other long-term liabilities
|
|
38
|
|
|
Total
|
|
$
|
242
|
|
|
|
Restructuring Liability as of March 31, 2019
|
|
Adoption of ASC 842(1)
|
|
Costs Expensed, Net of Reversals(2)
|
|
Costs Not Affecting Restructuring Liability(3)
|
|
Cash Paid
|
|
Other(4)
|
|
Restructuring Liability as of December 31, 2019
|
||||||||||||||
Fiscal 2020 Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Workforce Reductions
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
252
|
|
|
$
|
(11
|
)
|
|
$
|
(139
|
)
|
|
$
|
1
|
|
|
$
|
103
|
|
Facilities Costs
|
|
—
|
|
|
—
|
|
|
23
|
|
|
(10
|
)
|
|
(11
|
)
|
|
—
|
|
|
2
|
|
|||||||
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
275
|
|
|
$
|
(21
|
)
|
|
$
|
(150
|
)
|
|
$
|
1
|
|
|
$
|
105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fiscal 2019 Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Workforce Reductions
|
|
$
|
138
|
|
|
$
|
—
|
|
|
$
|
(15
|
)
|
|
$
|
(3
|
)
|
|
$
|
(70
|
)
|
|
$
|
—
|
|
|
$
|
50
|
|
Facilities Costs
|
|
68
|
|
|
(53
|
)
|
|
(1
|
)
|
|
(1
|
)
|
|
(6
|
)
|
|
1
|
|
|
8
|
|
|||||||
Total
|
|
$
|
206
|
|
|
$
|
(53
|
)
|
|
$
|
(16
|
)
|
|
$
|
(4
|
)
|
|
$
|
(76
|
)
|
|
$
|
1
|
|
|
$
|
58
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Fiscal 2018 Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Workforce Reductions
|
|
$
|
59
|
|
|
$
|
—
|
|
|
$
|
(7
|
)
|
|
$
|
—
|
|
|
$
|
(28
|
)
|
|
$
|
1
|
|
|
$
|
25
|
|
Facilities Costs
|
|
35
|
|
|
(36
|
)
|
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|
4
|
|
|
—
|
|
|||||||
Total
|
|
$
|
94
|
|
|
$
|
(36
|
)
|
|
$
|
(8
|
)
|
|
$
|
—
|
|
|
$
|
(30
|
)
|
|
$
|
5
|
|
|
$
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Other Prior Year Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Workforce Reductions
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
6
|
|
Facilities Costs
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Total
|
|
$
|
10
|
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Acquired Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Workforce Reductions
|
|
$
|
51
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
(14
|
)
|
|
$
|
(1
|
)
|
|
$
|
39
|
|
Facilities Costs
|
|
$
|
18
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(1
|
)
|
|
(3
|
)
|
|
9
|
|
||||||
Total
|
|
$
|
69
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
(15
|
)
|
|
$
|
(4
|
)
|
|
$
|
48
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in millions)
|
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||
Service cost
|
|
$
|
23
|
|
|
$
|
21
|
|
|
$
|
69
|
|
|
$
|
66
|
|
Interest cost
|
|
60
|
|
|
62
|
|
|
177
|
|
|
190
|
|
||||
Expected return on assets
|
|
(161
|
)
|
|
(139
|
)
|
|
(476
|
)
|
|
(426
|
)
|
||||
Amortization of prior service costs
|
|
(2
|
)
|
|
(4
|
)
|
|
(6
|
)
|
|
(11
|
)
|
||||
Contractual termination benefit
|
|
—
|
|
|
2
|
|
|
17
|
|
|
2
|
|
||||
Curtailment gain
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||
Net periodic pension income
|
|
$
|
(80
|
)
|
|
$
|
(58
|
)
|
|
$
|
(219
|
)
|
|
$
|
(180
|
)
|
|
|
December 31, 2019
|
|
December 31, 2018
|
||
Discount or settlement rates
|
|
2.4
|
%
|
|
2.3
|
%
|
Expected long-term rates of return on assets
|
|
5.8
|
%
|
|
5.3
|
%
|
Rates of increase in compensation levels
|
|
2.0
|
%
|
|
2.0
|
%
|
|
|
Fiscal 2020
|
|
Fiscal 2019
|
||||||||||||||||||
Fiscal Period
|
|
Number of Shares Repurchased
|
|
Average Price Per Share
|
|
Amount (in millions)
|
|
Number of Shares Repurchased
|
|
Average Price Per Share
|
|
Amount (in millions)
|
||||||||||
1st Quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Open market purchases
|
|
5,510,415
|
|
|
$
|
54.44
|
|
|
$
|
300
|
|
|
3,779,194
|
|
|
$
|
85.86
|
|
|
$
|
324
|
|
ASR
|
|
1,849,194
|
|
|
54.08
|
|
|
100
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
1st Quarter Total
|
|
7,359,609
|
|
|
54.35
|
|
|
400
|
|
|
3,779,194
|
|
|
85.86
|
|
|
324
|
|
||||
2nd Quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Open market purchases
|
|
4,414,840
|
|
|
33.96
|
|
|
150
|
|
|
1,448,729
|
|
|
87.16
|
|
|
127
|
|
||||
ASR
|
|
1,805,350
|
|
|
55.39
|
|
|
100
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
2nd Quarter Total
|
|
6,220,190
|
|
|
40.18
|
|
|
250
|
|
|
1,448,729
|
|
|
87.16
|
|
|
127
|
|
||||
3rd Quarter
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Open market purchases
|
|
2,353,852
|
|
|
36.68
|
|
|
86
|
|
|
12,452,514
|
|
|
63.96
|
|
|
797
|
|
||||
ASR
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
3rd Quarter Total
|
|
2,353,852
|
|
|
36.68
|
|
|
86
|
|
|
12,452,514
|
|
|
63.96
|
|
|
797
|
|
||||
Total
|
|
15,933,651
|
|
|
$
|
46.21
|
|
|
$
|
736
|
|
|
17,680,437
|
|
|
$
|
70.58
|
|
|
$
|
1,248
|
|
(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, 2019
|
|
$
|
(517
|
)
|
|
$
|
(3
|
)
|
|
$
|
9
|
|
|
$
|
267
|
|
|
$
|
(244
|
)
|
Current-period other comprehensive loss
|
|
78
|
|
|
(4
|
)
|
|
2
|
|
|
—
|
|
|
76
|
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(6
|
)
|
|
(8
|
)
|
|||||
Balance at December 31, 2019
|
|
$
|
(439
|
)
|
|
$
|
(9
|
)
|
|
$
|
11
|
|
|
$
|
261
|
|
|
$
|
(176
|
)
|
(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
|
|
(472
|
)
|
|
(25
|
)
|
|
(1
|
)
|
|
(23
|
)
|
|
(521
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive loss
|
|
—
|
|
|
9
|
|
|
—
|
|
|
(10
|
)
|
|
(1
|
)
|
|||||
Balance at December 31, 2018
|
|
$
|
(733
|
)
|
|
$
|
(7
|
)
|
|
$
|
8
|
|
|
$
|
268
|
|
|
$
|
(464
|
)
|
|
|
As of December 31, 2019
|
||||
|
|
Reserved for Issuance
|
|
Available for Future Grants
|
||
DXC Employee Equity Plan
|
|
34,200,000
|
|
|
19,613,146
|
|
DXC Director Equity Plan
|
|
230,000
|
|
|
33,451
|
|
DXC Share Purchase Plan
|
|
250,000
|
|
|
216,969
|
|
Total
|
|
34,680,000
|
|
|
19,863,566
|
|
|
|
Number
of Option Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
(in millions)
|
|||||
Outstanding as of March 31, 2019
|
|
2,318,768
|
|
|
$
|
30.40
|
|
|
4.80
|
|
$
|
79
|
|
Granted
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Exercised
|
|
(315,655
|
)
|
|
$
|
31.87
|
|
|
|
|
$
|
8
|
|
Canceled/Forfeited
|
|
(618
|
)
|
|
$
|
48.60
|
|
|
|
|
|
||
Expired
|
|
(106,902
|
)
|
|
$
|
34.46
|
|
|
|
|
|
||
Outstanding as of December 31, 2019
|
|
1,895,593
|
|
|
$
|
29.92
|
|
|
4.69
|
|
$
|
18
|
|
Vested and expected to vest in the future as of December 31, 2019
|
|
1,895,481
|
|
|
$
|
29.92
|
|
|
4.69
|
|
$
|
18
|
|
Exercisable as of December 31, 2019
|
|
1,893,723
|
|
|
$
|
29.89
|
|
|
4.69
|
|
$
|
18
|
|
|
|
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, 2019
|
|
2,809,775
|
|
|
$
|
67.27
|
|
|
75,750
|
|
|
$
|
46.31
|
|
Granted
|
|
2,932,783
|
|
|
$
|
47.45
|
|
|
68,200
|
|
|
$
|
35.70
|
|
Settled
|
|
(986,573
|
)
|
|
$
|
54.57
|
|
|
(23,335
|
)
|
|
$
|
60.90
|
|
Canceled/Forfeited
|
|
(571,475
|
)
|
|
$
|
61.39
|
|
|
—
|
|
|
$
|
—
|
|
Outstanding as of December 31, 2019
|
|
4,184,510
|
|
|
$
|
57.18
|
|
|
120,615
|
|
|
$
|
37.49
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in millions)
|
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||
Total share-based compensation cost
|
|
$
|
9
|
|
|
$
|
16
|
|
|
$
|
57
|
|
|
$
|
57
|
|
Related income tax benefit
|
|
$
|
(3
|
)
|
|
$
|
5
|
|
|
$
|
8
|
|
|
$
|
11
|
|
Total intrinsic value of options exercised
|
|
$
|
1
|
|
|
$
|
3
|
|
|
$
|
8
|
|
|
$
|
38
|
|
Tax benefits from exercised stock options and awards
|
|
$
|
3
|
|
|
$
|
13
|
|
|
$
|
13
|
|
|
$
|
32
|
|
|
|
Nine Months Ended
|
||||||
(in millions)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Cash paid for:
|
|
|
|
|
||||
Interest
|
|
$
|
277
|
|
|
$
|
250
|
|
Taxes on income, net of refunds (1)
|
|
$
|
202
|
|
|
$
|
120
|
|
|
|
|
|
|
||||
Non-cash activities:
|
|
|
|
|
||||
Operating:
|
|
|
|
|
||||
ROU assets obtained in exchange for lease, net (2)
|
|
$
|
314
|
|
|
$
|
—
|
|
Prepaid assets acquired under long-term financing
|
|
$
|
23
|
|
|
$
|
—
|
|
Investing:
|
|
|
|
|
||||
Capital expenditures in accounts payable and accrued expenses
|
|
$
|
121
|
|
|
$
|
62
|
|
Capital expenditures through finance lease obligations
|
|
$
|
507
|
|
|
$
|
548
|
|
Assets acquired under long-term financing
|
|
$
|
282
|
|
|
$
|
160
|
|
(Decrease) / increase in deferred purchase price receivable
|
|
$
|
58
|
|
|
$
|
1,194
|
|
Contingent consideration
|
|
$
|
19
|
|
|
$
|
41
|
|
Financing:
|
|
|
|
|
||||
Dividends declared but not yet paid
|
|
$
|
54
|
|
|
$
|
52
|
|
•
|
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 December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
2,359
|
|
|
$
|
2,662
|
|
|
$
|
5,021
|
|
|
$
|
—
|
|
|
$
|
5,021
|
|
Segment profit
|
|
$
|
353
|
|
|
$
|
232
|
|
|
$
|
585
|
|
|
$
|
(57
|
)
|
|
$
|
528
|
|
Depreciation and amortization(1)
|
|
$
|
61
|
|
|
$
|
244
|
|
|
$
|
305
|
|
|
$
|
28
|
|
|
$
|
333
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Three Months Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
2,169
|
|
|
$
|
3,009
|
|
|
$
|
5,178
|
|
|
$
|
—
|
|
|
$
|
5,178
|
|
Segment profit
|
|
$
|
395
|
|
|
$
|
528
|
|
|
$
|
923
|
|
|
$
|
(83
|
)
|
|
$
|
840
|
|
Depreciation and amortization(1)
|
|
$
|
23
|
|
|
$
|
324
|
|
|
$
|
347
|
|
|
$
|
27
|
|
|
$
|
374
|
|
(in millions)
|
|
GBS
|
|
GIS
|
|
Total Reportable Segments
|
|
All Other
|
|
Totals
|
||||||||||
Nine Months Ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
6,803
|
|
|
$
|
7,959
|
|
|
$
|
14,762
|
|
|
$
|
—
|
|
|
$
|
14,762
|
|
Segment profit
|
|
$
|
1,078
|
|
|
$
|
815
|
|
|
$
|
1,893
|
|
|
$
|
(184
|
)
|
|
$
|
1,709
|
|
Depreciation and amortization(1)
|
|
$
|
128
|
|
|
$
|
771
|
|
|
$
|
899
|
|
|
$
|
82
|
|
|
$
|
981
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Nine Months Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
$
|
6,493
|
|
|
$
|
8,980
|
|
|
$
|
15,473
|
|
|
$
|
—
|
|
|
$
|
15,473
|
|
Segment profit
|
|
$
|
1,198
|
|
|
$
|
1,475
|
|
|
$
|
2,673
|
|
|
$
|
(231
|
)
|
|
$
|
2,442
|
|
Depreciation and amortization(1)
|
|
$
|
59
|
|
|
$
|
910
|
|
|
$
|
969
|
|
|
$
|
93
|
|
|
$
|
1,062
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in millions)
|
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||
Profit
|
|
|
|
|
|
|
|
|
||||||||
Total profit for reportable segments
|
|
$
|
585
|
|
|
$
|
923
|
|
|
1,893
|
|
|
$
|
2,673
|
|
|
All other loss
|
|
(57
|
)
|
|
(83
|
)
|
|
(184
|
)
|
|
(231
|
)
|
||||
Interest income
|
|
33
|
|
|
27
|
|
|
130
|
|
|
92
|
|
||||
Interest expense
|
|
(93
|
)
|
|
(81
|
)
|
|
(288
|
)
|
|
(249
|
)
|
||||
Restructuring costs
|
|
(74
|
)
|
|
(76
|
)
|
|
(248
|
)
|
|
(418
|
)
|
||||
Transaction, separation and integration-related costs
|
|
(68
|
)
|
|
(107
|
)
|
|
(226
|
)
|
|
(305
|
)
|
||||
Amortization of acquired intangible assets
|
|
(146
|
)
|
|
(134
|
)
|
|
(435
|
)
|
|
(401
|
)
|
||||
Goodwill impairment losses
|
|
(53
|
)
|
|
—
|
|
|
(2,940
|
)
|
|
—
|
|
||||
Gain on arbitration award
|
|
—
|
|
|
—
|
|
|
632
|
|
|
—
|
|
||||
Income (loss) from continuing operations before income taxes
|
|
$
|
127
|
|
|
$
|
469
|
|
|
$
|
(1,666
|
)
|
|
$
|
1,161
|
|
Fiscal year
|
|
Minimum Purchase Commitment(1)
|
||
(in millions)
|
|
|||
Remainder of 2020
|
|
$
|
394
|
|
2021
|
|
1,951
|
|
|
2022
|
|
647
|
|
|
2023
|
|
537
|
|
|
2024
|
|
261
|
|
|
Thereafter
|
|
25
|
|
|
Total
|
|
$
|
3,815
|
|
(in millions)
|
|
Fiscal 2020
|
|
Fiscal 2021
|
|
Fiscal 2022 and Thereafter
|
|
Totals
|
||||||||
Surety bonds
|
|
$
|
20
|
|
|
$
|
334
|
|
|
$
|
161
|
|
|
$
|
515
|
|
Letters of credit
|
|
104
|
|
|
68
|
|
|
411
|
|
|
583
|
|
||||
Stand-by letters of credit
|
|
60
|
|
|
99
|
|
|
31
|
|
|
190
|
|
||||
Totals
|
|
$
|
184
|
|
|
$
|
501
|
|
|
$
|
603
|
|
|
$
|
1,288
|
|
•
|
the integration of Computer Sciences Corporation's ("CSC") and Enterprise Services business of Hewlett Packard Enterprise Company's ("HPES") 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;
|
•
|
risks relating to the Luxoft Acquisition and the ability to achieve the expected results therefrom;
|
•
|
the U.S. Public Sector business ("USPS") Separation and Mergers as described in Note 1 - “Summary of Significant Accounting Policies”, 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;
|
•
|
the risk of liability or damage to our reputation resulting from security breaches or disclosure of sensitive data or failure to comply with data protection laws and regulations;
|
•
|
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, respond to emerging technological trends and maintain and grow our customer relationships over time;
|
•
|
the ability to succeed in our strategic objectives, including strategic alternatives material for our business;
|
•
|
the execution and performance of contracts by us and our suppliers, customers, clients and partners;
|
•
|
our credit rating and the ability to manage working capital, refinance and raise additional capital for future needs;
|
•
|
our ability to remediate any material weakness and maintain effective internal control over financial reporting;
|
•
|
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, 2019 and in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarterly periods ended June 30, 2019 and September 30, 2019 and of this Quarterly Report on Form 10-Q.
|
•
|
Background
|
•
|
Results of Operations
|
•
|
Liquidity and Capital Resources
|
•
|
Off-Balance Sheet Arrangements
|
•
|
Contractual Obligations
|
•
|
Critical Accounting Policies and Estimates
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(In millions, except per-share amounts)
|
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Revenues
|
|
$
|
5,021
|
|
|
$
|
5,178
|
|
|
$
|
14,762
|
|
|
$
|
15,473
|
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations, before taxes
|
|
127
|
|
|
469
|
|
|
(1,666
|
)
|
|
1,161
|
|
||||
Income tax expense
|
|
37
|
|
|
3
|
|
|
191
|
|
|
205
|
|
||||
Income (loss) from continuing operations
|
|
90
|
|
|
466
|
|
|
(1,857
|
)
|
|
956
|
|
||||
Income from discontinued operations, net of taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35
|
|
||||
Net income (loss)
|
|
$
|
90
|
|
|
$
|
466
|
|
|
$
|
(1,857
|
)
|
|
$
|
991
|
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
Continuing operations
|
|
$
|
0.32
|
|
|
$
|
1.66
|
|
|
$
|
(7.20
|
)
|
|
$
|
3.33
|
|
Discontinued operations
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
0.12
|
|
•
|
Revenues for the third quarter and first nine months of fiscal 2020 were $5.0 billion and $14.8 billion, respectively, a decrease of 3% and 5%, respectively, as compared to the same periods of the prior fiscal year.
|
•
|
Income from continuing operations and diluted EPS from continuing operations for the third quarter of fiscal 2020 were $90 million and $0.32, respectively, including the cumulative impact of certain items of $(238) 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 $466 million and $1.66, respectively, for the same period of the prior fiscal year.
|
•
|
Loss from continuing operations and diluted EPS from continuing operations for the first nine months of fiscal 2020 were $1,857 million and $7.20, respectively, including the cumulative impact of certain items of $(3,019) million, reflecting restructuring costs, transaction, separation and integration-related costs, amortization of acquired intangible assets, goodwill impairment losses, gain on arbitration award and a tax adjustment related to U.S. tax reform. This compares with income from continuing operations and diluted EPS from continuing operations of $956 million and $3.33, respectively, for the same period of the prior fiscal year.
|
•
|
Our cash and cash equivalents were $2.6 billion as of December 31, 2019.
|
•
|
We generated $2,062 million of cash from operations during the first nine months of fiscal 2020, as compared to cash generated of $1,035 million during the first nine months of fiscal 2019.
|
•
|
We returned $897 million to shareholders in the form of common stock dividends and share repurchases during the first nine months of fiscal 2020, as compared to $1,407 million during the first nine months of fiscal 2019.
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
(in millions)
|
|
December 31, 2019
|
|
December 31, 2018
|
|
Change
|
|
Percentage Change
|
|||||||
GBS
|
|
$
|
2,359
|
|
|
$
|
2,169
|
|
|
$
|
190
|
|
|
8.8
|
%
|
GIS
|
|
2,662
|
|
|
3,009
|
|
|
(347
|
)
|
|
(11.5
|
)%
|
|||
Total Revenues
|
|
$
|
5,021
|
|
|
$
|
5,178
|
|
|
$
|
(157
|
)
|
|
(3.0
|
)%
|
|
|
Nine Months Ended
|
|
|
|
|
|||||||||
(in millions)
|
|
December 31, 2019
|
|
December 31, 2018
|
|
Change
|
|
Percentage Change
|
|||||||
GBS
|
|
$
|
6,803
|
|
|
$
|
6,493
|
|
|
$
|
310
|
|
|
4.8
|
%
|
GIS
|
|
7,959
|
|
|
8,980
|
|
|
(1,021
|
)
|
|
(11.4
|
)%
|
|||
Total Revenues
|
|
$
|
14,762
|
|
|
$
|
15,473
|
|
|
$
|
(711
|
)
|
|
(4.6
|
)%
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
(in millions)
|
|
Constant Currency December 31, 2019
|
|
December 31, 2018
|
|
Change
|
|
Percentage Change
|
|||||||
GBS
|
|
$
|
2,384
|
|
|
$
|
2,169
|
|
|
$
|
215
|
|
|
9.9
|
%
|
GIS
|
|
2,691
|
|
|
3,009
|
|
|
(318
|
)
|
|
(10.6
|
)%
|
|||
Total
|
|
$
|
5,075
|
|
|
$
|
5,178
|
|
|
$
|
(103
|
)
|
|
(2.0
|
)%
|
|
|
Nine Months Ended
|
|
|
|
|
|||||||||
(in millions)
|
|
Constant Currency December 31, 2019
|
|
December 31, 2018
|
|
Change
|
|
Percentage Change
|
|||||||
GBS
|
|
$
|
6,942
|
|
|
$
|
6,493
|
|
|
$
|
449
|
|
|
6.9
|
%
|
GIS
|
|
8,165
|
|
|
8,980
|
|
|
(815
|
)
|
|
(9.1
|
)%
|
|||
Total
|
|
$
|
15,107
|
|
|
$
|
15,473
|
|
|
$
|
(366
|
)
|
|
(2.4
|
)%
|
|
|
Three Months Ended
|
|
|
|||||||||||||
|
|
Amount
|
Percentage of Revenues
|
|
Percentage Point Change
|
||||||||||||
(in millions)
|
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2019
|
|
December 31, 2018
|
|
||||||||
Costs of services (excludes depreciation and amortization and restructuring costs)
|
|
$
|
3,827
|
|
|
$
|
3,725
|
|
|
76.1
|
%
|
|
71.8
|
%
|
|
4.3
|
|
Selling, general, and administrative (excludes depreciation and amortization and restructuring costs)
|
|
518
|
|
|
491
|
|
|
10.3
|
|
|
9.5
|
|
|
0.8
|
|
||
Depreciation and amortization
|
|
479
|
|
|
508
|
|
|
9.5
|
|
|
9.8
|
|
|
(0.3
|
)
|
||
Goodwill impairment losses
|
|
53
|
|
|
—
|
|
|
1.1
|
|
|
—
|
|
|
1.1
|
|
||
Restructuring costs
|
|
74
|
|
|
76
|
|
|
1.5
|
|
|
1.5
|
|
|
—
|
|
||
Interest expense
|
|
93
|
|
|
81
|
|
|
1.9
|
|
|
1.6
|
|
|
0.3
|
|
||
Interest income
|
|
(33
|
)
|
|
(27
|
)
|
|
(0.7
|
)
|
|
(0.5
|
)
|
|
(0.2
|
)
|
||
Other income, net
|
|
(117
|
)
|
|
(145
|
)
|
|
(2.3
|
)
|
|
(2.8
|
)
|
|
0.5
|
|
||
Total costs and expenses
|
|
$
|
4,894
|
|
|
$
|
4,709
|
|
|
97.5
|
%
|
|
90.9
|
%
|
|
6.6
|
|
|
|
Nine Months Ended
|
|
|
|||||||||||||
|
|
Amount
|
Percentage of Revenues
|
|
Percentage Point Change
|
||||||||||||
(in millions)
|
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2019
|
|
December 31, 2018
|
|
||||||||
Costs of services (excludes depreciation and amortization and restructuring costs)
|
|
$
|
11,128
|
|
|
$
|
11,110
|
|
|
75.3
|
%
|
|
71.8
|
%
|
|
3.5
|
|
Selling, general, and administrative (excludes depreciation and amortization and restructuring costs)
|
|
1,514
|
|
|
1,500
|
|
|
10.3
|
|
|
9.7
|
|
|
0.6
|
|
||
Depreciation and amortization
|
|
1,416
|
|
|
1,463
|
|
|
9.6
|
|
|
9.5
|
|
|
0.1
|
|
||
Goodwill impairment losses
|
|
2,940
|
|
|
—
|
|
|
19.9
|
|
|
—
|
|
|
19.9
|
|
||
Restructuring costs
|
|
248
|
|
|
418
|
|
|
1.7
|
|
|
2.7
|
|
|
(1.0
|
)
|
||
Interest expense
|
|
288
|
|
|
249
|
|
|
2.0
|
|
|
1.6
|
|
|
0.4
|
|
||
Interest income
|
|
(130
|
)
|
|
(92
|
)
|
|
(0.9
|
)
|
|
(0.6
|
)
|
|
(0.3
|
)
|
||
Gain on arbitration award
|
|
(632
|
)
|
|
—
|
|
|
(4.3
|
)
|
|
—
|
|
|
(4.3
|
)
|
||
Other income, net
|
|
(344
|
)
|
|
(336
|
)
|
|
(2.3
|
)
|
|
(2.2
|
)
|
|
(0.1
|
)
|
||
Total costs and expenses
|
|
$
|
16,428
|
|
|
$
|
14,312
|
|
|
111.3
|
%
|
|
92.5
|
%
|
|
18.8
|
|
|
|
Three Months Ended
|
|
|
|
|
|||||||||
(in millions)
|
|
December 31, 2019
|
|
December 31, 2018
|
|
Change
|
|
Percentage Change
|
|||||||
Income from continuing operations before income taxes
|
|
$
|
127
|
|
|
$
|
469
|
|
|
$
|
(342
|
)
|
|
(72.9
|
)%
|
Non-GAAP income from continuing operations before income taxes
|
|
$
|
468
|
|
|
$
|
786
|
|
|
$
|
(318
|
)
|
|
(40.5
|
)%
|
Net income
|
|
$
|
90
|
|
|
$
|
466
|
|
|
$
|
(376
|
)
|
|
(80.7
|
)%
|
Adjusted EBIT
|
|
$
|
528
|
|
|
$
|
840
|
|
|
$
|
(312
|
)
|
|
(37.1
|
)%
|
|
|
Nine Months Ended
|
|
|
|
|
|||||||||
(in millions)
|
|
December 31, 2019
|
|
December 31, 2018
|
|
Change
|
|
Percentage Change
|
|||||||
(Loss) income from continuing operations before income taxes
|
|
$
|
(1,666
|
)
|
|
$
|
1,161
|
|
|
$
|
(2,827
|
)
|
|
(243.5
|
)%
|
Non-GAAP income from continuing operations before income taxes
|
|
$
|
1,551
|
|
|
$
|
2,285
|
|
|
$
|
(734
|
)
|
|
(32.1
|
)%
|
Net (loss) income
|
|
$
|
(1,857
|
)
|
|
$
|
991
|
|
|
$
|
(2,848
|
)
|
|
(287.4
|
)%
|
Adjusted EBIT
|
|
$
|
1,709
|
|
|
$
|
2,442
|
|
|
$
|
(733
|
)
|
|
(30.0
|
)%
|
•
|
Restructuring costs - 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 combinations.
|
•
|
Goodwill impairment losses - reflects impairment losses on goodwill.
|
•
|
Gain on arbitration award - reflects a gain related to the HPES merger arbitration award.
|
•
|
Tax adjustment - for fiscal 2020 periods include the impact of Transition Tax (affecting the three and nine months ended December 31, 2019) and tax entries related to prior restructuring charges (affecting the nine months ended December 31, 2019). Fiscal 2019 periods reflect the estimated non-recurring benefit of the Tax Cuts and Jobs Act of 2017. Income tax expense of other non-GAAP adjustments is computed by applying the jurisdictional tax rate to the pre-tax adjustments on a jurisdictional basis.
|
|
|
Three Months Ended December 31, 2019
|
||||||||||||||||||||||||||
(in millions, except per-share amounts)
|
|
As Reported
|
|
Restructuring Costs
|
|
Transaction, Separation and Integration-Related Costs
|
|
Amortization of Acquired Intangible Assets
|
|
Goodwill Impairment Losses
|
|
Tax Adjustment
|
|
Non-GAAP Results
|
||||||||||||||
Costs of services (excludes depreciation and amortization and restructuring costs)
|
|
$
|
3,827
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,827
|
|
Selling, general, and administrative (excludes depreciation and amortization and restructuring costs)
|
|
518
|
|
|
—
|
|
|
(68
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
450
|
|
|||||||
Income from continuing operations before income taxes
|
|
127
|
|
|
74
|
|
|
68
|
|
|
146
|
|
|
53
|
|
|
—
|
|
|
468
|
|
|||||||
Income tax expense
|
|
37
|
|
|
10
|
|
|
16
|
|
|
34
|
|
|
53
|
|
|
(10
|
)
|
|
140
|
|
|||||||
Net income
|
|
90
|
|
|
64
|
|
|
52
|
|
|
112
|
|
|
—
|
|
|
10
|
|
|
328
|
|
|||||||
Less: net income attributable to non-controlling interest, net of tax
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|||||||
Net income attributable to DXC common stockholders
|
|
$
|
82
|
|
|
$
|
64
|
|
|
$
|
52
|
|
|
$
|
112
|
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Effective Tax Rate
|
|
29.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
29.9
|
%
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Basic EPS from continuing operations
|
|
$
|
0.32
|
|
|
$
|
0.25
|
|
|
$
|
0.20
|
|
|
$
|
0.44
|
|
|
$
|
—
|
|
|
$
|
0.04
|
|
|
$
|
1.25
|
|
Diluted EPS from continuing operations
|
|
$
|
0.32
|
|
|
$
|
0.25
|
|
|
$
|
0.20
|
|
|
$
|
0.44
|
|
|
$
|
—
|
|
|
$
|
0.04
|
|
|
$
|
1.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Weighted average common shares outstanding for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Basic EPS
|
|
255.09
|
|
|
255.09
|
|
|
255.09
|
|
|
255.09
|
|
|
255.09
|
|
|
255.09
|
|
|
255.09
|
|
|||||||
Diluted EPS
|
|
256.05
|
|
|
256.05
|
|
|
256.05
|
|
|
256.05
|
|
|
256.05
|
|
|
256.05
|
|
|
256.05
|
|
|
|
Nine Months Ended December 31, 2019
|
||||||||||||||||||||||||||||||
(in millions, except per-share amounts)
|
|
As Reported
|
|
Restructuring Costs
|
|
Transaction, Separation and Integration-Related Costs
|
|
Amortization of Acquired Intangible Assets
|
|
Goodwill Impairment Losses
|
|
Gain on Arbitration Award
|
|
Tax Adjustment
|
|
Non-GAAP Results
|
||||||||||||||||
Costs of services (excludes depreciation and amortization and restructuring costs)
|
|
$
|
11,128
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,128
|
|
Selling, general, and administrative (excludes depreciation and amortization and restructuring costs)
|
|
1,514
|
|
|
—
|
|
|
(226
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,288
|
|
||||||||
(Loss) income from continuing operations before income taxes
|
|
(1,666
|
)
|
|
248
|
|
|
226
|
|
|
435
|
|
|
2,940
|
|
|
(632
|
)
|
|
—
|
|
|
1,551
|
|
||||||||
Income tax expense
|
|
191
|
|
|
42
|
|
|
43
|
|
|
99
|
|
|
53
|
|
|
—
|
|
|
(39
|
)
|
|
389
|
|
||||||||
Net (loss) income
|
|
(1,857
|
)
|
|
206
|
|
|
183
|
|
|
336
|
|
|
2,887
|
|
|
(632
|
)
|
|
39
|
|
|
1,162
|
|
||||||||
Less: net income attributable to non-controlling interest, net of tax
|
|
17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||||||
Net (loss) income attributable to DXC common stockholders
|
|
$
|
(1,874
|
)
|
|
$
|
206
|
|
|
$
|
183
|
|
|
$
|
336
|
|
|
$
|
2,887
|
|
|
$
|
(632
|
)
|
|
$
|
39
|
|
|
$
|
1,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Effective Tax Rate
|
|
(11.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25.1
|
%
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic EPS from continuing operations
|
|
$
|
(7.20
|
)
|
|
$
|
0.79
|
|
|
$
|
0.70
|
|
|
$
|
1.29
|
|
|
$
|
11.09
|
|
|
$
|
(2.43
|
)
|
|
$
|
0.15
|
|
|
$
|
4.40
|
|
Diluted EPS from continuing operations
|
|
$
|
(7.20
|
)
|
|
$
|
0.79
|
|
|
$
|
0.70
|
|
|
$
|
1.28
|
|
|
$
|
11.03
|
|
|
$
|
(2.42
|
)
|
|
$
|
0.15
|
|
|
$
|
4.38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Weighted average common shares outstanding for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic EPS
|
|
260.24
|
|
|
260.24
|
|
|
260.24
|
|
|
260.24
|
|
|
260.24
|
|
|
260.24
|
|
|
260.24
|
|
|
260.24
|
|
||||||||
Diluted EPS
|
|
260.24
|
|
|
261.69
|
|
|
261.69
|
|
|
261.69
|
|
|
261.69
|
|
|
261.69
|
|
|
261.69
|
|
|
261.69
|
|
|
|
Three Months Ended December 31, 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)
|
|
$
|
3,725
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,725
|
|
Selling, general, and administrative (excludes depreciation and amortization and restructuring costs)
|
|
491
|
|
|
—
|
|
|
(107
|
)
|
|
—
|
|
|
—
|
|
|
$
|
384
|
|
|||||
Income from continuing operations before income taxes
|
|
469
|
|
|
76
|
|
|
107
|
|
|
134
|
|
|
—
|
|
|
786
|
|
||||||
Income tax expense
|
|
3
|
|
|
18
|
|
|
26
|
|
|
36
|
|
|
77
|
|
|
160
|
|
||||||
Income from continuing operations
|
|
466
|
|
|
58
|
|
|
81
|
|
|
98
|
|
|
(77
|
)
|
|
626
|
|
||||||
Income from discontinued operations, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net income
|
|
466
|
|
|
58
|
|
|
81
|
|
|
98
|
|
|
(77
|
)
|
|
626
|
|
||||||
Less: net income attributable to non-controlling interest, net of tax
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||||
Net income attributable to DXC common stockholders
|
|
$
|
462
|
|
|
$
|
58
|
|
|
$
|
81
|
|
|
$
|
98
|
|
|
$
|
(77
|
)
|
|
$
|
622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Effective Tax Rate
|
|
0.6
|
%
|
|
|
|
|
|
|
|
|
|
20.4
|
%
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic EPS from continuing operations
|
|
$
|
1.68
|
|
|
$
|
0.21
|
|
|
$
|
0.29
|
|
|
$
|
0.36
|
|
|
$
|
(0.28
|
)
|
|
$
|
2.26
|
|
Diluted EPS from continuing operations
|
|
$
|
1.66
|
|
|
$
|
0.21
|
|
|
$
|
0.29
|
|
|
$
|
0.35
|
|
|
$
|
(0.28
|
)
|
|
$
|
2.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted average common shares outstanding for:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic EPS
|
|
275.66
|
|
|
275.66
|
|
|
275.66
|
|
|
275.66
|
|
|
275.66
|
|
|
275.66
|
|
||||||
Diluted EPS
|
|
278.99
|
|
|
278.99
|
|
|
278.99
|
|
|
278.99
|
|
|
278.99
|
|
|
278.99
|
|
|
|
Nine Months Ended December 31, 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)
|
|
$
|
11,110
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,110
|
|
Selling, general, and administrative (excludes depreciation and amortization and restructuring costs)
|
|
1,500
|
|
|
—
|
|
|
(305
|
)
|
|
—
|
|
|
—
|
|
|
$
|
1,195
|
|
|||||
Income from continuing operations before income taxes
|
|
1,161
|
|
|
418
|
|
|
305
|
|
|
401
|
|
|
—
|
|
|
2,285
|
|
||||||
Income tax expense
|
|
205
|
|
|
100
|
|
|
72
|
|
|
101
|
|
|
44
|
|
|
522
|
|
||||||
Income from continuing operations
|
|
956
|
|
|
318
|
|
|
233
|
|
|
300
|
|
|
(44
|
)
|
|
1,763
|
|
||||||
Income from discontinued operations, net of tax
|
|
35
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35
|
|
||||||
Net income
|
|
991
|
|
|
318
|
|
|
233
|
|
|
300
|
|
|
(44
|
)
|
|
1,798
|
|
||||||
Less: net income attributable to non-controlling interest, net of tax
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||||
Net income attributable to DXC common stockholders
|
|
$
|
983
|
|
|
$
|
318
|
|
|
$
|
233
|
|
|
$
|
300
|
|
|
$
|
(44
|
)
|
|
$
|
1,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Effective Tax Rate
|
|
17.7
|
%
|
|
|
|
|
|
|
|
|
|
22.8
|
%
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic EPS from continuing operations
|
|
$
|
3.38
|
|
|
$
|
1.13
|
|
|
$
|
0.83
|
|
|
$
|
1.07
|
|
|
$
|
(0.16
|
)
|
|
$
|
6.26
|
|
Diluted EPS from continuing operations
|
|
$
|
3.33
|
|
|
$
|
1.12
|
|
|
$
|
0.82
|
|
|
$
|
1.05
|
|
|
$
|
(0.15
|
)
|
|
$
|
6.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Weighted average common shares outstanding for:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic EPS
|
|
280.47
|
|
|
280.47
|
|
|
280.47
|
|
|
280.47
|
|
|
280.47
|
|
|
280.47
|
|
||||||
Diluted EPS
|
|
284.70
|
|
|
284.70
|
|
|
284.70
|
|
|
284.70
|
|
|
284.70
|
|
|
284.70
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
(in millions)
|
|
December 31, 2019
|
|
December 31, 2018
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||
Net income (loss)
|
|
$
|
90
|
|
|
$
|
466
|
|
|
$
|
(1,857
|
)
|
|
$
|
991
|
|
Income from discontinued operations, net of taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35
|
)
|
||||
Income tax expense
|
|
37
|
|
|
3
|
|
|
191
|
|
|
205
|
|
||||
Interest income
|
|
(33
|
)
|
|
(27
|
)
|
|
(130
|
)
|
|
(92
|
)
|
||||
Interest expense
|
|
93
|
|
|
81
|
|
|
288
|
|
|
249
|
|
||||
EBIT
|
|
187
|
|
|
523
|
|
|
(1,508
|
)
|
|
1,318
|
|
||||
Restructuring costs
|
|
74
|
|
|
76
|
|
|
248
|
|
|
418
|
|
||||
Transaction, separation and integration-related costs
|
|
68
|
|
|
107
|
|
|
226
|
|
|
305
|
|
||||
Amortization of acquired intangible assets
|
|
146
|
|
|
134
|
|
|
435
|
|
|
401
|
|
||||
Goodwill impairment losses
|
|
53
|
|
|
—
|
|
|
2,940
|
|
|
—
|
|
||||
Gain on arbitration award
|
|
—
|
|
|
—
|
|
|
(632
|
)
|
|
—
|
|
||||
Adjusted EBIT
|
|
$
|
528
|
|
|
$
|
840
|
|
|
$
|
1,709
|
|
|
$
|
2,442
|
|
|
|
Nine Months Ended
|
|
|
||||||||
(in millions)
|
|
December 31, 2019
|
|
December 31, 2018
|
|
Change
|
||||||
Net cash provided by operating activities
|
|
$
|
2,062
|
|
|
$
|
1,035
|
|
|
$
|
1,027
|
|
Net cash used in investing activities
|
|
(2,122
|
)
|
|
(40
|
)
|
|
(2,082
|
)
|
|||
Net cash used in financing activities
|
|
(305
|
)
|
|
(1,183
|
)
|
|
878
|
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
|
26
|
|
|
(66
|
)
|
|
92
|
|
|||
Net decrease in cash and cash equivalents
|
|
$
|
(339
|
)
|
|
$
|
(254
|
)
|
|
$
|
(85
|
)
|
Cash and cash equivalents at beginning-of-year
|
|
2,899
|
|
|
2,729
|
|
|
|
||||
Cash and cash equivalents at the end-of-period
|
|
$
|
2,560
|
|
|
$
|
2,475
|
|
|
|
|
|
As of
|
||||||
(in millions)
|
|
December 31, 2019
|
|
March 31, 2019
|
||||
Short-term debt and current maturities of long-term debt
|
|
$
|
1,581
|
|
|
$
|
1,942
|
|
Long-term debt, net of current maturities
|
|
7,315
|
|
|
5,470
|
|
||
Total debt
|
|
$
|
8,896
|
|
|
$
|
7,412
|
|
|
|
As of
|
||||||
(in millions)
|
|
December 31, 2019
|
|
March 31, 2019
|
||||
Total debt
|
|
$
|
8,896
|
|
|
$
|
7,412
|
|
Cash and cash equivalents
|
|
2,560
|
|
|
2,899
|
|
||
Net debt(1)
|
|
$
|
6,336
|
|
|
$
|
4,513
|
|
|
|
|
|
|
||||
Total debt
|
|
$
|
8,896
|
|
|
$
|
7,412
|
|
Equity
|
|
9,101
|
|
|
11,725
|
|
||
Total capitalization
|
|
$
|
17,997
|
|
|
$
|
19,137
|
|
|
|
|
|
|
||||
Debt-to-total capitalization
|
|
49.4
|
%
|
|
38.7
|
%
|
||
Net debt-to-total capitalization(1)
|
|
35.2
|
%
|
|
23.6
|
%
|
|
|
As of
|
||
(in millions)
|
|
December 31, 2019
|
||
Cash and cash equivalents
|
|
$
|
2,560
|
|
Available borrowings under our revolving credit facility
|
|
4,000
|
|
|
Total liquidity
|
|
$
|
6,560
|
|
•
|
Management did not reassess in a timely manner the control activities related to goodwill impairment upon adoption of ASU 2017-04 which resulted in an immaterial out of period adjustment related to the tax effect of the impairment recognized.
|
•
|
Management did not reassess the control and procedures related to the balance sheet classification of deferred revenue following a large and complex acquisition which resulted in an immaterial out of period adjustment to the balance sheets.
|
•
|
Appointment of a new senior executive reporting directly to our Chief Financial Officer to lead remediation activities.
|
•
|
Enhance periodic reviews by management to determine if policies, procedures, and related control activities have continued relevance or need updating with a specific focus on complex transactions and processes.
|
•
|
Align the SOX compliance function under the newly appointed Chief Risk Officer.
|
•
|
Periodic reporting of the remediation plan progress to the Audit Committee.
|
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
|
||
October 1, 2019 to October 31, 2019
|
|
—
|
|
|
$—
|
|
—
|
|
|
$1,874,024,787
|
November 1, 2019 to November 30, 2019
|
|
848,953
|
|
|
$36.72
|
|
848,953
|
|
|
$1,842,853,650
|
December 1, 2019 to December 31, 2019
|
|
1,504,899
|
|
|
$36.68
|
|
1,504,899
|
|
|
$1,787,691,389
|
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
|
|
2.22
|
|
3.1
|
|
3.2
|
|
10.1
|
|
10.2
|
|
10.3
|
|
31.1
|
|
31.2
|
|
32.1
|
|
32.2
|
|
101
|
Interactive Data Files
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
XBRL Taxonomy Extension Calculation
|
101.LAB
|
XBRL Taxonomy Extension Labels
|
101.PRE
|
XBRL Taxonomy Extension Presentation
|
104
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
|
|
|
|
|
|
DXC TECHNOLOGY COMPANY
|
|
|
|
|
Dated:
|
February 7, 2020
|
By:
|
/s/ Neil A. Manna
|
|
|
Name:
|
Neil A. Manna
|
|
|
Title:
|
Senior Vice President, Corporate Controller Principal Accounting Officer
|
(i)
|
DXC TECHNOLOGY COMPANY, as Servicer (the “Servicer”);
|
(ii)
|
THE VARIOUS PARTIES LISTED ON THE SIGNATURE PAGES HERETO AS EXISTING ORIGINATORS, as existing Originators under the Agreement described below (collectively, the “Existing Originators” and each, an “Existing Originator”);
|
(iii)
|
THE VARIOUS PARTIES LISTED ON THE SIGNATURE PAGES HERETO AS NEW ORIGINATORS, as new Originators (collectively, the “New Originators” and each, a “New Originator”, and together with the Existing Originators, the “Originators”); and
|
(iv)
|
DXC RECEIVABLES LLC (F/K/A CSC RECEIVABLES LLC), as Buyer under the Agreement described below (the “Buyer”).
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US_ACTIVE-150380291.2
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1
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(i)
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DXC RECEIVABLES LLC (F/K/A CSC RECEIVABLES LLC), a Delaware limited liability company, as Seller (the “Seller”);
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(ii)
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DXC TECHNOLOGY COMPANY, a Nevada corporation, as Servicer (the “Servicer”);
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(iii)
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PNC BANK, NATIONAL ASSOCIATION, as a Committed Purchaser, as Group Agent for its Purchaser Group and as Administrative Agent (in such capacity, the “Administrative Agent”);
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(iv)
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WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Committed Purchaser and as Group Agent for its Purchaser Group;
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(v)
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MUFG BANK, LTD. (F/K/A THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.), as a Committed Purchaser and as Group Agent for its Purchaser Group;
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(vi)
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FIFTH THIRD BANK, NATIONAL ASSOCIATION (F/K/A FIFTH THIRD BANK), as a Committed Purchaser and as Group Agent for its Purchaser Group;
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(vii)
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MIZUHO BANK, LTD., as a Committed Purchaser and as Group Agent for its Purchaser Group; and
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(viii)
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THE TORONTO DOMINION BANK, as a Committed Purchaser and as Group Agent for its Purchaser Group.
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PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent By: /s/ Christopher Blaney Name: Christopher Blaney Title: Senior Vice President |
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PNC BANK, NATIONAL ASSOCIATION,
as a Committed Purchaser By: /s/ Christopher Blaney Name: Christopher Blaney Title: Senior Vice President |
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PNC BANK, NATIONAL ASSOCIATION,
as Group Agent for its Purchaser Group By: /s/ Christopher Blaney Name: Christopher Blaney Title: Senior Vice President |
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WELLS FARGO, NATIONAL ASSOCIATION,
as a Committed Purchaser By: /s/ Eero Maki Name: Eero Maki Title: Managing Director |
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WELLS FARGO, NATIONAL ASSOCIATION,
as Group Agent for its Purchaser Group By: /s/ Eero Maki Name: Eero Maki Title: Managing Director |
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MUFG BANK, LTD.,
as a Committed Purchaser By: /s/ Eric Williams Name: Eric Williams Title: Managing Director |
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MUFG BANK, LTD.,
as Group Agent for its Purchaser Group By: /s/ Eric Williams Name: Eric Williams Title: Managing Director |
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FIFTH THIRD BANK, NATIONAL ASSOCIATION
as a Committed Purchaser By: /s/ Patrick Berning Name: Patrick Berning Title: AVP |
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FIFTH THIRD BANK, NATIONAL ASSOCIATION
as Group Agent for its Purchaser Group By: /s/ Patrick Berning Name: Patrick Berning Title: AVP |
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MIZUHO BANK, LTD.,
as a Committed Purchaser By: /s/ Richard A. Burke Name: Richard A. Burke Title: Managing Director |
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MIZUHO BANK, LTD.,
as Group Agent for its Purchaser Group By: /s/ Richard A. Burke Name: Richard A. Burke Title: Managing Director |
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THE TORONTO DOMINION BANK,
as a Committed Purchaser By: /s/ Brad Purkis Name: Brad Purkis Title: Managing Director |
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THE TORONTO DOMINION BANK,
as Group Agent for its Purchaser Group By: /s/ Brad Purkis Name: Brad Purkis Title: Managing Director |
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1.
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Performance Guarantor hereby unconditionally and irrevocably undertakes and assures for the benefit of the Administrative Agent (including, without limitation, as assignee of the Seller’s rights, interests and claims under the Purchase and Sale Agreement), the Purchasers and each of the other Secured Parties the due and punctual performance and observance by each Originator (together with their respective successors and assigns, collectively, the “Covered Entities”, and each, a “Covered Entity”) of the terms, covenants, indemnities, conditions, agreements, undertakings and obligations on the part of such Covered Entity to be performed or observed by it under the Purchase and Sale Agreement, the Receivables Purchase Agreement and each of the other Transaction Documents to which such Covered Entity is a party, including, without limitation, any agreement or obligation of such Covered Entity to pay any indemnity or make any payment in respect of any applicable dilution adjustment or repurchase obligation under any such Transaction Document, in each case on the terms and subject to the conditions set forth in the applicable Transaction Documents as the same shall be amended, restated, supplemented or otherwise modified and in effect from time to time (all such terms, covenants, indemnities, conditions, agreements, undertakings and obligations on the part of the Covered Entities to be paid, performed or observed by them being collectively called the “Guaranteed Obligations”). Without limiting the generality of the foregoing, Performance Guarantor agrees that if any Covered Entity shall fail in any manner whatsoever to perform or observe any of its Guaranteed Obligations when the same shall be required to be performed or observed under any applicable Transaction Document, then Performance Guarantor will itself duly and punctually perform or observe any of such Guaranteed Obligations capable of performance by Performance Guarantor, or cause to be performed or observed, such Guaranteed Obligations. Performance Guarantor agrees that its obligations under this Performance Guaranty shall be irrevocable. It is expressly acknowledged that this Performance Guaranty is a guarantee of performance only and is not a guarantee of the payment of any Pool Receivables, and there shall be no recourse to Performance Guarantor for any non-payment or delay in payment of any Pool Receivables solely by reason of the bankruptcy, insolvency or lack of creditworthiness of the related Obligor or the uncollectability of any such Pool Receivables or for any Guaranteed Obligations the payment of which could otherwise constitute recourse to Performance Guarantor or any Covered Entity for uncollectible Pool Receivables.
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2.
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Performance Guarantor absolutely, unconditionally and irrevocably agrees to pay promptly on demand all costs and expenses of the Guaranteed Party, if any (including, without limitation, reasonable and documented counsel fees and out of pocket expenses) in connection with enforcement (whether through negotiation, legal proceedings or otherwise) of its rights under this Performance Guaranty or any other Transaction Document (the “Expense Obligations”).
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3.
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Performance Guarantor agrees to pay the Guaranteed Obligations and Expense Obligations, regardless of any applicable law now or hereafter in effect in any jurisdiction affecting any terms of any Transaction Document or the rights of the Guaranteed Party with respect thereto, and notwithstanding a discharge in bankruptcy of all or any part of the Covered Entities’ obligations under the Transaction Documents. The liability of Performance Guarantor hereunder shall be an absolute and primary obligation of payment and the Guaranteed Party shall not be required to first (i) proceed against any Covered Entity; (ii) proceed against or exhaust any security held from any Covered Entity; or (iii) pursue any other remedies it may have, including remedies against other guarantors.
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4.
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Performance Guarantor unconditionally and irrevocably waives promptness, diligence, notice of acceptance hereof, and all other notices and demands of any kind to which Performance Guarantor may be entitled as a guarantor (other than as expressly provided in this Performance Guaranty), including, without limitation, demands of payment and notices of nonpayment, default, protest and dishonor to any Covered Entity. Performance Guarantor further hereby waives notice of, consents to, and irrevocably waives any defenses it may now have or hereafter acquire in any way relating to any or all of the following: (a) any agreement or arrangement for payment, extension or subordination, of the whole or any part of any Covered Entity’s obligations under the Transaction Documents, (b) the modification, amendment, waiver or consent to departure of any of the terms of the Transaction Documents, including, without limitation, in the time, place or manner of payment or any increase in the Guaranteed Obligations resulting from the extension of additional credit to any Covered Entity or otherwise, (c) the forbearance by the Guaranteed Party in the exercise of any rights against any Covered Entity, (d) the change in location or release of any collateral of any Covered Entity (if any) or the taking of a security interest in any additional or substituted collateral of any Covered Entity (if any), (e) any lack of validity or enforceability of any Transaction Document or any agreement or instrument relating thereto, (f) any defense arising by reason of any claim or defense based upon an election of remedies by the Guaranteed Party that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of Performance Guarantor or other rights of Performance Guarantor to proceed against any Covered Entity, (g) any defense based on the right of set-off or counterclaim against or in respect of the obligations owed by any Covered Entity under the Transaction Documents, or (h) any other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by the Guaranteed Party that might otherwise constitute a defense available to, or a discharge of any Covered Entity or any other guarantor or surety. The only defenses Performance Guarantor shall have under this Performance Guaranty are the defenses described in Section 12 and the payment in full of the Guaranteed Obligations and Expense Obligations.
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5.
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This Performance Guaranty will continue to be effective or will be reinstated, as the case may be, if at any time any payment made to the Guaranteed Party of any of the Guaranteed Obligations is rescinded or must be returned upon the occurrence of any bankruptcy proceeding of any Covered Entity, as if such payment had not been made.
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6.
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This Performance Guaranty is a continuing guaranty and shall continue in full force and effect until terminated pursuant to the last sentence of this Section 6. Upon the Final Payout Date, this Performance Guaranty shall automatically terminate (subject to the reinstatement provisions set forth in Section 5 of this Performance Guaranty).
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7.
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Performance Guarantor hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or hereafter acquire against any Covered Entity that arise from the existence, payment, performance or enforcement of this Performance Guaranty, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Guaranteed Party against such Covered Entity, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, unless and until all of the Guaranteed Obligations and Expense Obligations shall have been paid in full in cash. If any amount shall be paid to Performance Guarantor in violation of the immediately preceding sentence at any time prior to the payment in full in cash of the Guaranteed Obligations and Expense Obligations, such amount shall be received and held in trust for the benefit of the Guaranteed Party, and shall forthwith be paid or delivered to the Guaranteed Party in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Guaranteed Obligations and Expense Obligations, as applicable, and all other amounts payable under this Performance Guaranty.
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8.
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TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, PERFORMANCE GUARANTOR AND THE GUARANTEED PARTY HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS PERFORMANCE GUARANTY. Any assignee of the Guaranteed Party permitted by the Transaction Documents and all subsequent assignees permitted by the Transaction Documents shall have all of the rights of the Guaranteed Party hereunder and may enforce this Performance Guaranty with the same force and effect as if such Guaranty were given to such assignee in the first instance. The invalidity, illegality or unenforceability of any provision of this Performance Guaranty shall not affect the validity, legality or enforceability of any of its other provisions. THIS PERFORMANCE GUARANTY, INCLUDING THE RIGHTS AND DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. This Performance Guaranty shall be binding on Performance Guarantor and its successors and assigns.
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9.
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PERFORMANCE GUARANTOR AND THE GUARANTEED PARTY HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR FEDERAL COURT SITTING IN NEW YORK CITY, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS PERFORMANCE GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY. PERFORMANCE GUARANTOR AND THE GUARANTEED PARTY WAIVE, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING. THE PARTIES HERETO AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. PERFORMANCE GUARANTOR CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS DIRECTED TO UNDERSIGNED AT ITS ADDRESS SET FORTH BELOW.
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10.
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Performance Guarantor represents and warrants to each Secured Party as of the date hereof, on each Settlement Date and on the day of each Investment, Release and delivery of an Information Package:
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11.
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Performance Guarantor covenants and agrees that, from the date hereof until the Final Payout Date, Performance Guarantor will observe and perform all of the following covenants:
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12.
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Except as otherwise provided in this Performance Guaranty, Performance Guarantor shall be under no greater obligation or greater liability under this Performance Guaranty in relation to any Guaranteed Obligation than Performance Guarantor would have been under the Transaction Documents if Performance Guarantor had been named as an Originator in the Transaction Documents and any defenses available to an Originator in respect of its obligations under the Transaction Documents or otherwise shall be available to Performance Guarantor, and Guaranteed Party may not recover under the Transaction Documents, this Performance Guaranty or otherwise for the same loss more than once. For the avoidance of doubt, this Section shall not be construed as superseding or derogating from the agreements and waivers set forth in Sections 3 or 4 above.
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13.
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Unless otherwise defined herein, capitalized terms defined in the Receivables Purchase Agreement and used herein shall have the meanings given to them in the Receivables Purchase Agreement.
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14.
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Performance Guarantor acknowledges that each Secured Party may assign its rights, remedies, powers and privileges under this Performance Guaranty to the extent permitted in the Receivables Purchase Agreement. Performance Guarantor agrees that the Guaranteed Party and the Secured Parties shall have the right to enforce this Performance Guaranty and to exercise directly all of its rights, remedies, powers and privileges under this Performance Guaranty (including the right to give or withhold any consents or approvals to be given or withheld by it under this Performance Guaranty) and Performance Guarantor agrees to cooperate fully with the Guaranteed Party and the Secured Parties in the exercise of such rights, remedies, powers and privileges.
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15.
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No amendment or waiver of any provision of this Performance Guaranty shall be effective unless the same shall be in writing and signed by the Guaranteed Party and Performance Guarantor, and no consent to any departure by Performance Guarantor herefrom, shall in any event be effective unless the same shall be in writing and signed by the Guaranteed Party, and then such amendment, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
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16.
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All notices and other communications hereunder shall, unless otherwise stated herein, be in writing and unless otherwise stated shall be made by email or letter to each party hereto, at its address set forth under its name on Schedule III of the Receivables Purchase Agreement or at such other address as shall be designated by such party in a written notice to the other parties hereto. All notices, requests and demands shall be deemed to have been duly given or made (a) when dispatched by email during the recipient’s normal business hours when the confirmation showing the completed transmission has been received, or (b) if mailed via a reputable international courier, when it has been left at the relevant address or five (5) Business Days after being delivered to such reputable international courier, in an envelope addressed to the applicable person at that address and to the attention of the person(s) set forth above. Each party to this Performance Guaranty shall promptly inform the other parties hereto of any changes in their respective addresses, email address specified herein.
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17.
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This Performance Guaranty is the product of mutual negotiations by the parties thereto and their counsel, and no party shall be deemed the draftsperson of this Performance Guaranty or any provision hereof or to have provided the same. Accordingly, in the event of any inconsistency or ambiguity of any provision of this Performance Guaranty, such inconsistency or ambiguity shall not be interpreted against any party because of such party’s involvement in the drafting thereof.
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18.
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The Administrative Agent and the other Secured Parties may at any time during the continuance of an Event of Termination, setoff, appropriate and apply (without presentment, demand, protest or other notice which are hereby waived) any deposits and any other indebtedness held or owing by such Person (including by any branches or agencies of such Person) to, or for the account of, Performance Guarantor against the obligations owing by Performance Guarantor hereunder (even if contingent or unmatured); provided that such Person shall notify Performance Guarantor promptly following such setoff
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19.
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On the date hereof, the Existing Guaranty shall be amended, restated and superseded in its entirety by this Performance Guaranty. Performance Guarantor acknowledges and agrees that (i) this Performance Guaranty does not constitute a novation or termination of the Existing Guaranty as in effect immediately prior to the effectiveness of this Performance Guaranty and (ii) the obligations of Performance Guarantor under the Existing Guaranty as in effect immediately prior to the effectiveness of this Performance Guaranty are in all respects continuing (as amended and restated hereby) with only the terms thereof being modified as provided in this Performance Guaranty. Each reference to the Existing Guaranty or the “Performance Guaranty” in any Transaction Document shall be deemed to be a reference to this Performance Guaranty as amended and restated hereby.
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Date:
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February 7, 2020
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/s/ Michael J. Salvino
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Michael J. Salvino President and Chief Executive Officer
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Date:
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February 7, 2020
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/s/ Paul N. Saleh
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Paul N. Saleh
Executive Vice President and Chief Financial Officer
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Dated:
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February 7, 2020
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/s/ Michael J. Salvino
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Michael J. Salvino
President and Chief Executive Officer
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Dated:
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February 7, 2020
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/s/ Paul N. Saleh
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Paul N. Saleh
Executive Vice President and Chief Financial Officer |