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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Emerging growth company
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Item
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Page
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1.
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1A.
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1B.
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3.
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5.
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6.
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7.
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7A.
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8.
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9.
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9A.
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9B.
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10.
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11.
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12.
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13.
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14.
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PART IV
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15.
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16.
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any issue that compromises our relationships with the U.S. federal government, or any state or local governments, or damages our professional reputation;
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changes in the U.S. federal, state and local governments’ spending and mission priorities that shift expenditures away from agencies or programs that we support;
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any delay in completion of the U.S. federal government’s budget process;
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failure to comply with numerous laws, regulations and rules, including regarding procurement, anti-bribery and organizational conflicts of interest;
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failure by us or our employees to obtain and maintain necessary security clearances or certifications;
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our ability to compete effectively in the competitive bidding process and delays, contract terminations or cancellations caused by competitors’ protests of major contract awards received by us;
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our ability to accurately estimate or otherwise recover expenses, time and resources for our contracts;
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problems or delays in the development, delivery and transition of new products and services or the enhancement of existing products and services to meet customer needs and respond to emerging technological trends;
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failure of third parties to deliver on commitments under contracts with us;
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misconduct or other improper activities from our employees or subcontractors;
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delays, terminations or cancellations of our major contract awards, including as a result of our competitors protesting such awards;
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failure of our internal control over financial reporting to detect fraud or other issues;
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failure or disruptions to our systems, due to cyber-attack, service interruptions or other security threats;
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failure to be awarded task orders under our indefinite delivery/indefinite quantity (“ID/IQ”) contracts;
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changes in government procurement, contract or other practices or the adoption by the government of new laws, rules and regulations in a manner adverse to us; and
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the other factors described in “Risk Factors” in this Annual Report on Form 10-K.
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The USPS business of DXC dates back to 1962, when H. Ross Perot founded Electronic Data Systems Corporation (“EDS”), a pioneer in IT infrastructure, applications and business process outsourcing. EDS was acquired by Hewlett-Packard Company in 2008, and later merged into DXC in April 2017.
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Vencore, Inc., now renamed Perspecta Engineering Services Inc. (“PES”), traces its roots back to General Electric Company's aerospace division, established in 1972 as The SI Organization Inc. (“The SI”) to enable the National Reconnaissance Office (“NRO”) to create a comprehensive, space-based national intelligence system. The SI was acquired by the predecessor of Lockheed Martin Corporation (“Lockheed Martin”), the Martin Marietta Corporation, in 1993 and sold to Veritas Capital in 2010. The SI rebranded as Vencore, Inc. after the acquisitions of Applied Communication Sciences in 2013 and QinetiQ North America Services and Solutions Group in 2014, which brought capabilities in applied research and technology solutions, agile software development for mission-critical systems, classified and commercial launch support, spacecraft engineering and enterprise IT.
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The legacy of KeyPoint is Kroll Government Services, Inc. (“KGS”), which was founded in 1995 to provide investigative due diligence and independent investigation services for police departments. KGS expanded to investigative support services for federal security and border patrol agents for the Department of Homeland Security (“DHS”) in 2003 and the National Background Investigation Bureau in 2004. In 2009, Kroll Government Services was acquired by Veritas Capital and renamed KeyPoint Government Solutions, Inc., which remains the largest provider of background investigative services for the U.S. government.
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Application services.
We develop, modernize, transform and manage customers’ enterprise application portfolios enabling a shift of IT spend from maintenance and operations to innovation. Our customers experience accelerated time-to-mission benefits by applying Agile/DevOps frameworks, accelerators, and other reusable components.
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Analytics and data services
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We offer an analytic services portfolio and robust partner ecosystem which enables our customers to gain rapid insights that accelerate their digital transformation journey and to make critical decisions to enable business and mission outcomes defensible with data-driven analysis.
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Applied research
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We deliver research, engineering, consulting and technology solutions that drive market innovation across government. Primary research areas include cybersecurity, cloud, quantum computing, network configuration and data analytics capabilities.
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Cybersecurity
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We bring transformative cyber expertise and mission-enabled solutions to the forefront of operations. Our security solutions predict attacks, proactively respond to threats, ensure compliance and protect data, applications, infrastructure and endpoints.
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Cloud computing and infrastructure services
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We help customers maximize their private cloud, public cloud and legacy infrastructure, in order to transform, optimize, and secure their hybrid environments.
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Digital strategy and transformation
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We
accelerate customers’ digital transformation and business results through innovative approaches to transforming legacy technologies, processes and applications
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Digital workplace
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We provide a user-focused digital workplace environment to enable government organizations to accomplish their missions with secure devices, productivity and collaboration tools, and workplace support.
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Integrated Solutions
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Our industry-specific solutions enable organizations to quickly integrate technology, transform their operations and develop new ways of doing business.
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Investigative services
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We provide identification and authentication validation to government organizations through investigative and risk mitigation services. We also help the government identify and eliminate fraud, waste, and abuse through integrated data analysis, medical claims review, and investigation services.
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Systems engineering and integration
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We help customers design, manage and integrate complex systems throughout the project life cycle to ensure enterprises are successful, affordable and reliable.
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Defense and Intelligence
, which provides services to the Department of Defense (“DoD”), intelligence community, branches of the U.S. Armed Forces, and other DoD agencies; and
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Civilian and Health Care
, which provides services to the DHS, Department of Justice (“DOJ”), Department of Health and Human Services (“HHS”), as well as other federal civilian and state and local government agencies.
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U.S. Navy.
We provide the U.S. Navy with innovative solutions to secure its intranet, the largest in the world, by implementing a broad range of integrated security solutions to improve depth and secure posture, and network security and authentication for secure network access across all devices. Through our multifaceted security solution, the U.S. Navy’s intranet successfully detects over 300 million threats and prevents over 2.5 billion unauthorized intrusion attempts per year.
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Defense Information Systems Agency (“DISA”)
. We partnered with DISA to transform key applications and services to drive efficiencies, improve security and capture costs savings. Through the integration of our offerings, DISA is able to provide integrated, interoperable and assured infrastructure capabilities, applications and services to its users across the software development lifecycle, engineering and technical support.
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U.S. federal government.
We are partnering with a client in the U.S. federal government to develop a DevOps environment, providing IT and engineering services for software residing on the government’s secure version of Amazon Web Services (“AWS”). The program scope includes identifying, prioritizing, integrating, and testing new and modified software and components to satisfy the architectural vision of the enterprise of the software services platform. Through the contract, our government client has enjoyed an exponential growth in the user base and the number of software services offerings to the enterprise community, and as a result, realized savings in project schedules and cost across many contracts within the enterprise.
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Centers for Medicare and Medicaid Services (“CMS”).
As a result of the implementation of the Affordable Care Act, uninsured Americans were able to purchase health insurance through the Federal Health Insurance Marketplace (healthcare.gov), which we helped CMS and the U.S. government develop. More than 18 million people used the healthcare.gov website from November 1 to December 15, 2017, including 700,000 users on the Spanish-language website. Despite the high usage, website reliability and security were never compromised. Open Enrollment 2018 represented a record year for the federal marketplace as well as state-based exchanges, even with a compressed enrollment period. Approximately 8.8 million Americans from 39 states signed up for coverage through state exchanges.
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County of San Diego.
To help San Diego County probation officers more efficiently manage their caseloads, we developed the Probation Utility and Mobile Applications, which has provided on-demand access to cases and the ability to enter contact notes in the field. We rationalized and modernized hundreds of applications in a heterogeneous applications infrastructure across a distributed management structure, transforming the applications environment to enable the county to achieve its IT vision of “anytime, anywhere” service. As a result, San Diego County probation officers increased productivity by approximately 54% while ensuring accuracy and consistency. Application rationalization and modernization reduced the number of applications by 25%, refocused apps management personnel for higher value initiatives, and positioned the applications portfolio for further modernization in a cloud environment.
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Large addressable market
. U.S. federal, state and local governments will spend more than $120 billion on contracted services in our markets during the upcoming fiscal year, and spending will see incremental growth in the near term. Our addressable market includes both IT and mission services, much of which is classified.
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Increasing demand for technology-based enterprise solutions.
The public sector marketplace is undergoing a transformation driven, in part, by the imperative that public agencies be able to anticipate changing demands of the public while staying ahead of threats and adversaries. Given the central role technology plays in this transformation, there will be a continued demand for our enterprise IT and mission solutions.
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Government-wide mandate to improve efficiency and reduce cost
. U.S. federal, state and local governments have expressed a need to improve efficiency and reduce costs to help fund priorities such as national defense, cybersecurity, and an aging infrastructure. IT has the potential to disrupt traditional government business models and enable increased efficiency and cost savings, while improving public value.
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Government cloud-first policy
. The U.S. federal government’s cloud-first policy and the expectations for standardization, rationalization and modernization of IT presents an opportunity for us to lead government clients in digital business transformation to modern service-delivered platforms. Also, mission owners, with clear targets for policy outcomes, are becoming increasingly significant in digital decision making.
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Aging critical systems require modernization
. Mission critical legacy applications are rapidly aging, but still have rising costs, decreased performance, reliability, and functionality issues. With the passage of the Modernizing Government Technology Act, the U.S. federal government has prioritized modernizing their IT systems and created a working capital fund to support legacy modernization efforts. Our customers require application modernization and transformation services to update legacy systems in order to maintain mission critical services and leverage social, mobile, analytical and cloud technologies to improve IT services available to government employees and citizens.
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Increased cybersecurity demands and focus
. U.S. federal, state and local governments have established initiatives to modernize their cybersecurity in order to protect their IT enterprise systems. The need to secure large, complex, sensitive government networks, communications, data, and applications has created a growing demand for innovative security solutions to defend the country and protect sensitive information of its citizens.
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Pure-play U.S. government service providers that are highly specialized firms with exceptional mission knowledge, customer intimacy or specific intellectual property (“IP”) that can make them major competitors in the markets that they serve. Some of our competitors in this category include Leidos Holdings, Inc., Booz Allen
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Large defense contractors that are capable of competing across our entire market, possessing the reputation and ability to compete on large deals with any U.S. government agency and the financial strength to manage and execute large-scale programs. Some of the large defense contractors we regularly compete with include Lockheed Martin, Northrop Grumman Corporation, General Dynamics, Raytheon Company, and The Boeing Company.
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Diversified commercial consulting, technology and outsourcing service providers that are successful with commercial customers, but typically lack the breadth of public sector offerings and presence to compete broadly across the public-sector market. Some of our competitors in this category include subsidiaries of International Business Machines Corporation, Deloitte LLP, AT&T Inc., Verizon Communications Inc., Dell Inc., Accenture plc, NTT Data Corp, Unisys Corporation, and CGI Group Inc.
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Small businesses generally providing services to the U.S. government pursuant to requirements and incentive programs designed to create entrepreneurial opportunities for small business owners. These can include businesses identified to receive a “fair proportion” of government contracts through the Small Business Act such as small disadvantaged businesses, woman owned small businesses, HUBZone businesses and service disabled veteran owned small businesses.
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Commercial IT vendors have recently emerged as players in the U.S. government market. These vendors include AWS, Microsoft Azure, Google Inc., Salesforce.com, Inc., ServiceNow and other cloud providers.
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Leveraging innovation backed by its innovative applied research arm, Perspecta Labs, combined with highly-skilled talent, technical expertise, advanced IP, and a deep partnership ecosystem to enhance the technological sophistication and capabilities of its customers;
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Bringing transformative digital skills and mission-enabled offerings in advanced analytics, cyber security, and agile software development (more than 1,000 agile certified developers) that have positioned the new company as the U.S. government’s partner of choice to help customers overcome mission-critical challenges; and
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Tapping into a larger addressable market enabled by deep IP (with over 260 issued or licensed patents and significant research and development investment), industry expertise, and customer intimacy.
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the Federal Acquisition Regulation (“FAR”), agency supplements to the FAR, and related regulations, which regulate the formation, administration, and performance of U.S. federal government contracts;
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the False Claims Act, which allows the government and whistleblowers filing on behalf of the government to pursue treble damages, civil penalties, and sanctions for the provision of false or fraudulent claims to the U.S. federal government.
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the Truth in Negotiations Act, which requires certification and disclosure of cost and pricing data in connection with the negotiation of certain contracts, modifications, or task orders;
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the Procurement Integrity Act, which regulates access to competitor bid and proposal information, as well as certain internal government procurement sensitive information, and regulates our ability to provide compensation to certain former government procurement officials;
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laws and regulations restricting the ability of employees of the U.S. government to accept gifts or gratuities from a contractor;
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post-government employment laws and regulations, which restrict the ability of a contractor to recruit and hire current employees of the U.S. government and deploy former employees of the U.S. government;
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laws, regulations, and executive orders requiring the safeguarding of and restricting the use and dissemination of information classified for national security purposes or determined to be “controlled unclassified information,” “covered defense information,” or “for official use only”;
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laws and regulations relating to the export of certain products, services, and technical data, including requirements regarding any applicable licensing of our employees involved in such work;
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laws, regulations, and executive orders regulating the handling, use, and dissemination of personally identifiable information in the course of performing a U.S. government contract;
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laws, regulations, and executive orders governing organizational conflicts of interest that may prevent us from bidding for or restrict our ability to compete for certain U.S. government contracts because of the work that we currently perform for the U.S. government;
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laws, regulations, and executive orders that mandate compliance with requirements to protect the government from risks related to our supply chain;
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laws, regulations, and mandatory contract provisions providing protections to employees or subcontractors seeking to report alleged fraud, waste, and abuse related to a government contract;
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the DoD’s “Contractor Business Systems Rule,” which authorizes DoD agencies to withhold a portion of our payments if we are determined to have a significant deficiency in any of our accounting, cost estimating, purchasing, earned value management, material management and accounting, or property management systems; and
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the Cost Accounting Standards and the Cost Principles, which impose accounting requirements that govern our right to reimbursement under certain cost-based U.S. government contracts and require consistency of accounting practices over time.
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affirmative action plans;
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applicant tracking;
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compliance training;
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customized affirmative action databases and forms;
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glass ceiling and compensation audits;
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desk and on-site audits;
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conciliation agreements;
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disability accessibility for applicants and employees;
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diversity initiatives;
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equal employment opportunity compliance;
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employment eligibility verification (known as “E-Verify”);
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internal affirmative action audits;
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internet recruiting and hiring processes;
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OFCCP administrative enforcement actions;
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record-keeping requirements; and
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Sarbanes-Oxley Act of 2002 compliance.
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Name
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Age
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Year First Appointed as Officer
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Position Held With the Registrant as of the filing date
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Mr. John M. Curtis
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62
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2018
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President, Chief Executive Officer and Director
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Mr. John P. Kavanaugh
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57
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2018
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Senior Vice President and Chief Financial Officer
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Mr. James L. Gallagher
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52
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2018
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Senior Vice President, General Counsel and Secretary
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Ms. Tammy M. Heller
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46
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2018
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Senior Vice President and Chief Human Resources Officer
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Mr. William G. Luebke
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52
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2018
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Senior Vice President, Principal Accounting Officer and Controller
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budgetary constraints, including Congressionally-mandated automatic spending cuts, that affect U.S. federal government spending generally or specific agencies in particular;
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changes in available funding or in government programs, including a shift in expenditures away from agencies or programs that we support;
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reduced U.S. federal government outsourcing of functions that we are currently contracted to provide, including as a result of increased insourcing by various U.S. federal government agencies due to changes in the definition of “inherently governmental” work, including proposals to limit contractor access to sensitive or classified information and work assignments;
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efforts to improve efficiency and reduce costs affecting government programs, including a continuation of recent efforts by the U.S. federal government to decrease spending for management support service contracts;
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government agencies awarding contracts on a technically-acceptable/lowest-cost basis to reduce expenditures;
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delays in the payment of our invoices by government payment offices;
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U.S. government shutdowns due to a failure by elected officials to fully fund the government, such as the recent partial shutdown in December 2018 and January 2019, and other potential disruption of the appropriations process;
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an inability by the U.S federal government to fund its operations as a result of a failure to increase the U.S. federal government’s debt ceiling, a credit downgrade of U.S. government obligations or for any other reason;
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elections, particularly that result in a change of the Presidential administration or control of Congress, or other changes in the political climate; and
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general economic conditions, including a slowdown of the economy or unstable economic conditions and actions taken in response to such conditions, including emergency spending that may reduce funds available for other government priorities.
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terminate existing contracts, with short notice, for convenience as well as for default;
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reduce orders under or otherwise modify contracts;
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for contracts subject to the Truth in Negotiations Act, reduce the contract price or cost where it was increased because a contractor or subcontractor furnished cost or pricing data during negotiations that was not complete, accurate, and current;
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for some contracts, demand a refund, make a forward price adjustment, or terminate a contract for default if a contractor provided inaccurate or incomplete data during the contract negotiation process and/or reduce the contract price under certain triggering circumstances, including the revision of price lists or other documents upon which the contract award was predicated;
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terminate our facility security clearances and thereby prevent us from receiving classified contracts;
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cancel multi-year contracts and related orders if funds for contract performance for any subsequent year become unavailable;
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decline to exercise an option to renew a multi-year contract or issue task orders in connection with ID/IQ contracts;
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assert rights in solutions, systems, and technology produced by us during contract performance, and continue to use that work product without continuing to contract for our services, and/or disclose or permit such work
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prohibit future procurement awards with a particular U.S. federal government agency due to a finding of organizational conflict of interest based upon prior related work performed for the U.S. federal government agency that would give a contractor an unfair advantage over competing contractors, or the existence of conflicting roles that might bias a contractor’s judgment;
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suspend or debar us from doing business with the U.S. federal government;
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impose fines and penalties on us, and subject us to criminal prosecution;
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repurpose funds to address rated orders;
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control or prohibit the export of our services; and
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impose special handling and control requirements for controlled information.
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impaired objectivity during performance;
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unfair access to non-public information; or
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the ability to set the “ground rules” for another procurement for which the contractor competes.
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the necessity to expend resources, make financial commitments (such as procuring leased premises) and bid on engagements in advance of the completion of their design, which may result in unforeseen difficulties in execution and cost overruns;
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the substantial cost and managerial time and effort spent to prepare bids and proposals for contracts that may not be awarded to us;
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the ability to accurately estimate the resources and costs that will be required to service any contract we are awarded;
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the expense and delay that may arise if our competitors protest or challenge contract awards made to us pursuant to competitive bidding, and the risk that any such protest or challenge could result in the resubmission of bids on modified specifications, or in termination, reduction, or modification of the awarded contract; and
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any opportunity costs associated with not bidding and winning other contracts we might otherwise pursue.
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revise its procurement practices or adopt new contract laws, rules, and regulations, such as cost accounting standards, organizational conflicts of interest, and other rules governing inherently governmental functions at any time;
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reduce, delay, or cancel procurement programs resulting from government efforts to improve procurement practices and efficiency;
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limit the creation of new government-wide or agency-specific multiple award contracts;
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face restrictions or pressure from government employees and their unions regarding the amount of services the U.S. federal, state or local governments may obtain from private contractors;
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award contracts on a technically acceptable/lowest-cost basis to reduce expenditures, and we may not be the lowest-cost provider of services;
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adopt new socio-economic requirements, including setting aside procurement opportunities for small, disadvantaged, minority-, women- or veteran-owned businesses;
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change the basis upon which it reimburses our compensation and other expenses or otherwise limit such reimbursements; and
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at its option, terminate or decline to renew our contracts.
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divert sales from us by winning very large-scale government contracts, a risk that is enhanced by the recent trend in government procurement practices to bundle services into larger contracts;
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force us to offer lower prices in order to win or maintain contracts;
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seek to hire our employees; or
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adversely affect our relationships with current clients, including our ability to successfully recompete on incumbent work
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increase our vulnerability to general adverse economic and industry conditions;
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limit our ability to obtain additional financing to fund future working capital, capital expenditures and other general corporate requirements or to carry out other aspects of our business;
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increase our cost of borrowing;
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require us to dedicate a substantial portion of our cash flow from operations to payments on indebtedness, thereby reducing the availability of such cash flow to fund working capital, capital expenditures and other general corporate requirements or to carry out other aspects of our business;
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limit our ability to make material acquisitions or take advantage of business opportunities that may arise;
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expose us to fluctuations in interest rates, to the extent our borrowings bear variable rates of interest;
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limit our flexibility in planning for, or reacting to, changes in our business and industry; and
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place us at a potential disadvantage compared to our competitors that have less debt.
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Prior to the Spin-Off, we operated as part of DXC’s broader corporate organization and DXC performed various corporate functions for us, including IT, tax administration, treasury activities, technical accounting, benefits administration, procurement, legal and ethics and compliance program administration. Our historical financial information through May 31, 2018 reflects allocations of corporate expenses from DXC for these and similar functions. These allocations may not reflect the costs we will incur for similar services in the future as an independent publicly-traded company.
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We entered into transactions with DXC that did not exist prior to the Spin-Off, such as DXC’s provision of certain IT services, which has caused us to incur new costs.
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Our historical financial information through May 31, 2018 does not reflect changes that have resulted from our separation from DXC, including changes in our cost structure, personnel needs, tax profile, financing and business operations. As part of DXC, we enjoyed certain benefits from DXC’s operating diversity, size, purchasing power, borrowing leverage and available capital for investments, and we lost these benefits after the Spin-Off. As an independent entity, we may be unable to purchase goods, services and technologies, such as insurance and health care benefits and computer software licenses, or access capital markets on terms as favorable to us as those we obtained as part of DXC prior to the Spin-Off.
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The Mergers resulted in our consolidated operations and the results therefrom being substantially different than USPS’s operations and the results therefrom and a result, our historical information will not necessarily reflect our results of operations going forward.
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actual or anticipated fluctuations in our operating results due to factors related to our business;
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success or failure of our business strategies;
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our quarterly or annual earnings, or those of other companies in our industry;
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our ability to obtain financing as needed;
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announcements by us or our competitors of significant acquisitions or dispositions;
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changes in accounting standards, policies, guidance, interpretations or principles;
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the failure of securities analysts to cover our common stock after the Spin-Off;
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changes in earnings estimates by securities analysts or our ability to meet those estimates;
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the operating and stock price performance of other comparable companies;
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investor perception of our company and the IT services industry;
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overall market fluctuations;
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results from any material litigation or government investigation;
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changes in laws and regulations (including tax laws and regulations) affecting our business;
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changes in capital gains taxes and taxes on dividends affecting stockholders; and
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general economic conditions and other external factors.
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permit us to issue blank check preferred stock with conversion and exchange rights that could negatively affect the rights of our common stockholders, and the Board of Directors could take that action without stockholder approval;
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preclude stockholders from calling special meetings except where such special meetings are requested by stockholders representing 75% of the capital stock entitled to vote. Our Amended and Restated Bylaws
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require stockholders to follow certain advance notice and disclosure requirements in order to propose business or nominate directors at an annual or special meeting; and
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limit our ability to enter into business combination transactions with certain stockholders.
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Period
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Total Number
of Shares
Purchased
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Average Price
Paid Per Share
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Total Number
of Shares
Purchased as
Part of Publicly
Announced Plans
or Programs
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Approximate
Dollar Value
of Shares that
May Yet be Purchased
Under the Plans or
Programs
(in millions)
|
||||||
January 1, 2019 to January 31, 2019
|
|
295,111
|
|
|
$
|
18.96
|
|
|
295,111
|
|
|
$
|
351
|
|
February 1, 2019 to February 28, 2019
|
|
240,684
|
|
|
$
|
20.68
|
|
|
240,684
|
|
|
$
|
346
|
|
March 1, 2019 to March 31, 2019
|
|
269,655
|
|
|
$
|
20.74
|
|
|
269,655
|
|
|
$
|
340
|
|
Total
|
|
805,450
|
|
|
$
|
20.07
|
|
|
805,450
|
|
|
|
|
|
|
|
|
Successor
(1)
|
|
|
Predecessor
|
||||||||||||||||||||
|
|
Fiscal Years Ended March 31,
|
|
|
Five Months
Ended March 31,
2017
|
|
Fiscal Years Ended October 31,
|
||||||||||||||||||
(in millions)
|
|
2019
|
|
2018
|
|
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||||
Revenue
|
|
$
|
4,030
|
|
|
$
|
2,819
|
|
|
|
$
|
1,073
|
|
|
$
|
2,732
|
|
|
$
|
2,585
|
|
|
$
|
2,955
|
|
Income (loss) before taxes
|
|
112
|
|
|
199
|
|
|
|
59
|
|
|
129
|
|
|
(51
|
)
|
|
221
|
|
||||||
Income tax expense (benefit)
|
|
40
|
|
|
(9
|
)
|
|
|
23
|
|
|
49
|
|
|
(22
|
)
|
|
83
|
|
||||||
Net income (loss)
|
|
72
|
|
|
208
|
|
|
|
36
|
|
|
80
|
|
|
(29
|
)
|
|
138
|
|
|
|
Successor
(1)
|
|
|
Predecessor
|
||||||||||||||||||||
(in millions)
|
|
March 31, 2019
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
October 31, 2016
|
|
October 31, 2015
|
|
October 31, 2014
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
||||||||||||
Total assets
|
|
$
|
6,083
|
|
|
$
|
3,679
|
|
|
|
$
|
1,073
|
|
|
$
|
1,234
|
|
|
$
|
1,512
|
|
|
$
|
1,416
|
|
Capital leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current capital lease obligations
|
|
137
|
|
|
160
|
|
|
|
139
|
|
|
145
|
|
|
127
|
|
|
111
|
|
||||||
Non-current capital lease obligations
|
|
168
|
|
|
144
|
|
|
|
155
|
|
|
215
|
|
|
223
|
|
|
224
|
|
||||||
Total capital leases
|
|
305
|
|
|
304
|
|
|
|
294
|
|
|
360
|
|
|
350
|
|
|
335
|
|
||||||
Long-term debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current maturities of long-term debt
|
|
80
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Long-term debt, net of current maturities
|
|
2,297
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total long-term debt
|
|
2,377
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total equity
|
|
2,162
|
|
|
2,729
|
|
|
|
416
|
|
|
338
|
|
|
555
|
|
|
539
|
|
•
|
bid on and win new contract awards;
|
•
|
satisfy existing customers, obtain add-on business, and win contract re-competes;
|
•
|
compete on services offered, delivery models offered, technical ability and innovation, quality, flexibility, experience, and results created; and
|
•
|
identify and integrate acquisitions and leverage them to generate new revenue.
|
•
|
integrate acquisitions and eliminate redundant costs;
|
•
|
control costs, particularly labor costs, subcontractor expenses, and overhead costs including health care, pension and general and administrative costs;
|
•
|
anticipate talent needs to avoid staff shortages or excesses; and
|
•
|
accurately estimate various factors incorporated in contract bids and proposals.
|
•
|
the ability to efficiently manage capital resources and expenditures;
|
•
|
timely management of receivables and payables;
|
•
|
investment opportunities available, particularly related to business acquisitions and implementations, dispositions and large outsourcing contracts; and
|
•
|
tax obligations.
|
(in millions)
|
|
Defense and
Intelligence |
|
Civilian and
Health Care |
|
Total
|
||||||
Funded backlog
|
|
$
|
1,215
|
|
|
$
|
1,023
|
|
|
$
|
2,238
|
|
Unfunded backlog
|
|
5,429
|
|
|
3,016
|
|
|
8,445
|
|
|||
Total contract value backlog
|
|
$
|
6,644
|
|
|
$
|
4,039
|
|
|
$
|
10,683
|
|
•
|
Revenue was
$4.0 billion
.
|
•
|
Net income was
$72 million
, including the cumulative impact of certain items of
$281 million
, reflecting restructuring costs of
$10 million
, transaction, separation and integration-related costs of
$106 million
and amortization of acquired intangible assets of
$165 million
.
|
•
|
We generated
$462 million
of cash from operations.
|
|
|
Successor
|
|
|
|
|
|
|
Predecessor
|
|
|
|
|
||||||||||||||||||
|
|
Fiscal Years Ended
|
|
Change from Fiscal
2019 to 2018
|
|
|
Five Months Ended
|
|
Fiscal Year Ended
|
|
Change from Fiscal
2018 to 2016
|
||||||||||||||||||||
(in millions)
|
|
March 31, 2019
|
|
March 31, 2018
|
|
$
|
|
%
|
|
|
March 31, 2017
|
|
October 31, 2016
|
|
$
|
|
%
|
||||||||||||||
Defense and Intelligence
|
|
$
|
2,587
|
|
|
$
|
1,416
|
|
|
$
|
1,171
|
|
|
83
|
%
|
|
|
$
|
488
|
|
|
$
|
1,153
|
|
|
$
|
263
|
|
|
23
|
%
|
% of total revenue
|
|
64
|
%
|
|
50
|
%
|
|
|
|
|
|
|
45
|
%
|
|
42
|
%
|
|
|
|
|
||||||||||
Civilian and Health Care
|
|
1,443
|
|
|
1,403
|
|
|
40
|
|
|
3
|
%
|
|
|
585
|
|
|
1,579
|
|
|
(176
|
)
|
|
(11
|
)%
|
||||||
% of total revenue
|
|
36
|
%
|
|
50
|
%
|
|
|
|
|
|
|
55
|
%
|
|
58
|
%
|
|
|
|
|
||||||||||
Total revenue
|
|
$
|
4,030
|
|
|
$
|
2,819
|
|
|
$
|
1,211
|
|
|
43
|
%
|
|
|
$
|
1,073
|
|
|
$
|
2,732
|
|
|
$
|
87
|
|
|
3
|
%
|
|
|
Fiscal Year Ended
|
|
Percentage of Revenue
|
|
Fiscal Year Ended
|
|
Percentage of Revenue
|
|
Change
|
|||||||||||
(in millions)
|
|
March 31, 2019
|
|
|
March 31, 2018
|
|
|
$
|
|
%
|
|||||||||||
Costs of services
|
|
$
|
3,043
|
|
|
76
|
%
|
|
$
|
2,155
|
|
|
76
|
%
|
|
$
|
888
|
|
|
41
|
%
|
Selling, general and administrative
|
|
300
|
|
|
7
|
%
|
|
182
|
|
|
6
|
%
|
|
118
|
|
|
65
|
%
|
|||
Depreciation and amortization
|
|
330
|
|
|
8
|
%
|
|
167
|
|
|
6
|
%
|
|
163
|
|
|
98
|
%
|
|||
Restructuring costs
|
|
10
|
|
|
—
|
%
|
|
14
|
|
|
—
|
%
|
|
(4
|
)
|
|
(29
|
)%
|
|||
Separation and integration-related costs
|
|
106
|
|
|
3
|
%
|
|
90
|
|
|
3
|
%
|
|
16
|
|
|
18
|
%
|
|||
Interest expense, net
|
|
121
|
|
|
3
|
%
|
|
12
|
|
|
—
|
%
|
|
109
|
|
|
908
|
%
|
|||
Other expense, net
|
|
8
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
8
|
|
|
NM
|
|
|||
Total costs and expenses
|
|
$
|
3,918
|
|
|
97
|
%
|
|
$
|
2,620
|
|
|
93
|
%
|
|
$
|
1,298
|
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Income before taxes
|
|
$
|
112
|
|
|
3
|
%
|
|
$
|
199
|
|
|
7
|
%
|
|
$
|
(87
|
)
|
|
(44
|
)%
|
Income tax expense (benefit)
|
|
40
|
|
|
1
|
%
|
|
(9
|
)
|
|
—
|
%
|
|
49
|
|
|
(544
|
)%
|
|||
Net income
|
|
$
|
72
|
|
|
2
|
%
|
|
$
|
208
|
|
|
7
|
%
|
|
$
|
(136
|
)
|
|
(65
|
)%
|
|
|
Predecessor
|
||||||||||||
|
|
Five Months Ended
|
|
Percentage of Revenue
|
|
Fiscal Year Ended
|
|
Percentage of Revenue
|
||||||
(in millions)
|
|
March 31, 2017
|
|
|
October 31, 2016
|
|
||||||||
Costs of services
|
|
$
|
820
|
|
|
76
|
%
|
|
$
|
2,086
|
|
|
76
|
%
|
Selling, general and administrative
|
|
77
|
|
|
7
|
%
|
|
207
|
|
|
8
|
%
|
||
Depreciation and amortization
|
|
73
|
|
|
7
|
%
|
|
225
|
|
|
8
|
%
|
||
Restructuring costs
|
|
—
|
|
|
—
|
%
|
|
20
|
|
|
1
|
%
|
||
Separation costs
|
|
34
|
|
|
3
|
%
|
|
34
|
|
|
1
|
%
|
||
Interest expense, net
|
|
10
|
|
|
1
|
%
|
|
31
|
|
|
1
|
%
|
||
Total costs and expenses
|
|
$
|
1,014
|
|
|
95
|
%
|
|
$
|
2,603
|
|
|
95
|
%
|
|
|
|
|
|
|
|
|
|
||||||
Income before taxes
|
|
$
|
59
|
|
|
5
|
%
|
|
$
|
129
|
|
|
5
|
%
|
Income tax expense
|
|
23
|
|
|
2
|
%
|
|
49
|
|
|
2
|
%
|
||
Net income
|
|
$
|
36
|
|
|
3
|
%
|
|
$
|
80
|
|
|
3
|
%
|
(in millions)
|
|
March 31, 2019
|
||
Cash and cash equivalents
|
|
$
|
88
|
|
Available borrowings under our Revolving Credit Facility
|
|
600
|
|
|
Total liquidity
|
|
$
|
688
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
|
Fiscal Years Ended
|
|
|
Fiscal Year Ended
|
||||||||
(in millions)
|
|
March 31, 2019
|
|
March 31, 2018
|
|
|
October 31, 2016
|
||||||
Net cash provided by operating activities
|
|
$
|
462
|
|
|
$
|
530
|
|
|
|
$
|
495
|
|
Net cash used in investing activities
|
|
(1,318
|
)
|
|
(34
|
)
|
|
|
(21
|
)
|
|||
Net cash provided by (used in) financing activities
|
|
955
|
|
|
(496
|
)
|
|
|
(474
|
)
|
|||
Net increase in cash and cash equivalents, including restricted
|
|
99
|
|
|
—
|
|
|
|
—
|
|
|||
Cash and cash equivalents, including restricted, at beginning of year
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|||
Cash and cash equivalents, including restricted, at end of year
|
|
99
|
|
|
—
|
|
|
|
—
|
|
|||
Less restricted cash and cash equivalents included in other current assets
|
|
11
|
|
|
—
|
|
|
|
—
|
|
|||
Cash and cash equivalents at end of year
|
|
$
|
88
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
(in millions)
|
|
March 31, 2019
|
|
March 31, 2018
|
||||
Current maturities of long-term debt
|
|
$
|
80
|
|
|
$
|
—
|
|
Long-term debt, net of current maturities
|
|
2,297
|
|
|
—
|
|
||
Total debt
|
|
$
|
2,377
|
|
|
$
|
—
|
|
(in millions)
|
|
March 31, 2019
|
|
March 31, 2018
|
||||
Total debt and capital leases
|
|
$
|
2,682
|
|
|
$
|
304
|
|
Cash and cash equivalents
|
|
88
|
|
|
—
|
|
||
Net debt
(1)
|
|
$
|
2,594
|
|
|
$
|
304
|
|
|
|
|
|
|
||||
Total debt and capital leases
|
|
$
|
2,682
|
|
|
$
|
304
|
|
Equity
|
|
2,162
|
|
|
2,729
|
|
||
Total capitalization
|
|
$
|
4,844
|
|
|
$
|
3,033
|
|
|
|
|
|
|
||||
Debt-to-total capitalization
|
|
55
|
%
|
|
10
|
%
|
||
Net debt-to-total capitalization
(1)
|
|
54
|
%
|
|
10
|
%
|
Inception
|
|
Maturity
|
|
Notional Amount
(in millions)
|
|
Weighted-
Average Interest
Rate Paid
|
|||
May 2018
|
|
May 2021
|
|
$
|
400
|
|
|
2.57
|
%
|
May 2018
|
|
May 2022
|
|
500
|
|
|
2.61
|
%
|
|
October 2018
|
|
October 2022
|
|
200
|
|
|
2.92
|
%
|
|
May 2018
|
|
May 2023
|
|
500
|
|
|
2.68
|
%
|
|
Total / Weighted-average interest rate
|
|
|
|
$
|
1,600
|
|
|
2.66
|
%
|
(in millions)
|
|
Less than
1 year
|
|
2-3 years
|
|
4-5 years
|
|
More than
5 years
|
|
Total
|
||||||||||
Debt
(1)
|
|
$
|
88
|
|
|
$
|
422
|
|
|
$
|
1,351
|
|
|
$
|
536
|
|
|
$
|
2,397
|
|
Capitalized lease obligations
(2)
|
|
137
|
|
|
146
|
|
|
22
|
|
|
—
|
|
|
305
|
|
|||||
Operating leases
|
|
57
|
|
|
55
|
|
|
19
|
|
|
5
|
|
|
136
|
|
|||||
Purchase obligations
(3)
|
|
18
|
|
|
71
|
|
|
—
|
|
|
—
|
|
|
89
|
|
|||||
Interest payments
(4)
|
|
127
|
|
|
207
|
|
|
123
|
|
|
37
|
|
|
494
|
|
|||||
Totals
(5)(6)
|
|
$
|
427
|
|
|
$
|
901
|
|
|
$
|
1,515
|
|
|
$
|
578
|
|
|
$
|
3,421
|
|
Index to Consolidated Combined Financial Statements
|
Page
|
|
|
|
|
Notes to Consolidated Combined Financial Statements
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
Fiscal Years Ended
|
|
|
Five Months Ended
March 31, 2017 |
|
Fiscal Year Ended
October 31, 2016 |
||||||||||
(in millions, except per share amounts)
|
|
March 31, 2019
|
|
March 31, 2018
|
|
|
|
||||||||||
Revenue
|
|
$
|
4,030
|
|
|
$
|
2,819
|
|
|
|
$
|
1,073
|
|
|
$
|
2,732
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Costs of services
|
|
3,043
|
|
|
2,155
|
|
|
|
820
|
|
|
2,086
|
|
||||
Selling, general and administrative
|
|
300
|
|
|
182
|
|
|
|
77
|
|
|
207
|
|
||||
Depreciation and amortization
|
|
330
|
|
|
167
|
|
|
|
73
|
|
|
225
|
|
||||
Restructuring costs
|
|
10
|
|
|
14
|
|
|
|
—
|
|
|
20
|
|
||||
Separation and integration-related costs
|
|
106
|
|
|
90
|
|
|
|
34
|
|
|
34
|
|
||||
Interest expense, net
|
|
121
|
|
|
12
|
|
|
|
10
|
|
|
31
|
|
||||
Other expense, net
|
|
8
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Total costs and expenses
|
|
3,918
|
|
|
2,620
|
|
|
|
1,014
|
|
|
2,603
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Income before taxes
|
|
112
|
|
|
199
|
|
|
|
59
|
|
|
129
|
|
||||
Income tax expense (benefit)
|
|
40
|
|
|
(9
|
)
|
|
|
23
|
|
|
49
|
|
||||
Net income
|
|
$
|
72
|
|
|
$
|
208
|
|
|
|
$
|
36
|
|
|
$
|
80
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per common share
(1)
:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.44
|
|
|
$
|
1.46
|
|
|
|
$
|
0.25
|
|
|
$
|
0.56
|
|
Diluted
|
|
$
|
0.44
|
|
|
$
|
1.46
|
|
|
|
$
|
0.25
|
|
|
$
|
0.56
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
Fiscal Years Ended
|
|
|
Five Months Ended
March 31,
2017
|
|
Fiscal Year Ended
October 31,
2016
|
||||||||||
(in millions)
|
|
March 31, 2019
|
|
March 31, 2018
|
|
|
|
||||||||||
Net income
|
|
$
|
72
|
|
|
$
|
208
|
|
|
|
$
|
36
|
|
|
$
|
80
|
|
Other comprehensive income (loss), net of taxes:
|
|
|
|
|
|
|
|
|
|
||||||||
Cash flow hedge adjustment, net of tax benefit of $8, $0, $0 and $0
|
|
(23
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Comprehensive income
|
|
$
|
49
|
|
|
$
|
208
|
|
|
|
$
|
36
|
|
|
$
|
80
|
|
(in millions, except share and per share amounts)
|
|
March 31, 2019
|
|
March 31, 2018
|
||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
88
|
|
|
$
|
—
|
|
Receivables, net
|
|
484
|
|
|
354
|
|
||
Other receivables
|
|
92
|
|
|
—
|
|
||
Prepaid expenses
|
|
141
|
|
|
74
|
|
||
Deferred contract costs
|
|
35
|
|
|
21
|
|
||
Other current assets
|
|
38
|
|
|
—
|
|
||
Total current assets
|
|
878
|
|
|
449
|
|
||
Property and equipment, net
|
|
368
|
|
|
290
|
|
||
Goodwill
|
|
3,179
|
|
|
2,022
|
|
||
Intangible assets, net
|
|
1,466
|
|
|
897
|
|
||
Other assets
|
|
192
|
|
|
21
|
|
||
Total assets
|
|
$
|
6,083
|
|
|
$
|
3,679
|
|
LIABILITIES and STOCKHOLDERS’ EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Current maturities of long-term debt
|
|
$
|
80
|
|
|
$
|
—
|
|
Current capital lease obligations
|
|
137
|
|
|
160
|
|
||
Accounts payable
|
|
246
|
|
|
195
|
|
||
Accrued payroll and related costs
|
|
91
|
|
|
17
|
|
||
Accrued expenses
|
|
396
|
|
|
137
|
|
||
Deferred revenue and advance contract payments
|
|
33
|
|
|
53
|
|
||
Other current liabilities
|
|
31
|
|
|
43
|
|
||
Total current liabilities
|
|
1,014
|
|
|
605
|
|
||
Long-term debt, net of current maturities
|
|
2,297
|
|
|
—
|
|
||
Non-current capital lease obligations
|
|
168
|
|
|
144
|
|
||
Deferred tax liabilities
|
|
171
|
|
|
176
|
|
||
Other long-term liabilities
|
|
271
|
|
|
25
|
|
||
Total liabilities
|
|
3,921
|
|
|
950
|
|
||
Commitments and contingencies
|
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
|
||||
Parent company investment, prior to Spin-Off
|
|
—
|
|
|
2,729
|
|
||
Common stock, par value $0.01 per share; authorized 750,000,000; 165,844,994 issued and 163,099,080 outstanding at March 31, 2019 and 0 shares issued and outstanding at March 31, 2018
|
|
2
|
|
|
—
|
|
||
Additional paid-in capital
|
|
2,242
|
|
|
—
|
|
||
Retained earnings
|
|
2
|
|
|
—
|
|
||
Accumulated other comprehensive loss
|
|
(23
|
)
|
|
—
|
|
||
Treasury stock at cost, 2,745,914 and 0 shares at March 31, 2019 and 2018, respectively
|
|
(61
|
)
|
|
—
|
|
||
Total stockholders’ equity
|
|
2,162
|
|
|
2,729
|
|
||
Total liabilities and stockholders' equity
|
|
$
|
6,083
|
|
|
$
|
3,679
|
|
(in millions, except shares in thousands and per share amounts in ones)
|
Common Stock
|
Additional
Paid-in Capital |
Retained Earnings
|
Accumulated
Other Comprehensive Loss |
Treasury Stock
|
Parent Company Investment
|
Total Stockholders’ Equity
|
|||||||||||||||||
Shares
|
|
Amount
|
||||||||||||||||||||||
Successor:
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at April 1, 2017
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
416
|
|
$
|
416
|
|
Effects of purchase accounting
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,434
|
|
2,434
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
208
|
|
208
|
|
|||||||
Transfers to Parent, net
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(329
|
)
|
(329
|
)
|
|||||||
Balance at March 31, 2018
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,729
|
|
2,729
|
|
|||||||
Impact of adoption of new accounting standard
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4
|
|
4
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
49
|
|
49
|
|
|||||||
Transfers to Parent, net
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(145
|
)
|
(145
|
)
|
|||||||
Balance at May 31, 2018
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
2,637
|
|
2,637
|
|
|||||||
Dividend to DXC prior to May 31, 2018
|
—
|
|
|
—
|
|
(984
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
(984
|
)
|
|||||||
Spin-Off activity
|
142,426
|
|
|
2
|
|
2,635
|
|
—
|
|
—
|
|
—
|
|
(2,637
|
)
|
—
|
|
|||||||
Mergers activity
|
23,273
|
|
|
—
|
|
578
|
|
—
|
|
—
|
|
—
|
|
—
|
|
578
|
|
|||||||
Net income
|
—
|
|
|
—
|
|
—
|
|
23
|
|
—
|
|
—
|
|
—
|
|
23
|
|
|||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
—
|
|
—
|
|
(23
|
)
|
—
|
|
—
|
|
(23
|
)
|
|||||||
Stock-based compensation
|
—
|
|
|
—
|
|
9
|
|
—
|
|
—
|
|
—
|
|
—
|
|
9
|
|
|||||||
Repurchases of common stock
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(60
|
)
|
—
|
|
(60
|
)
|
|||||||
Stock option exercises and other common stock transactions
|
146
|
|
|
—
|
|
2
|
|
—
|
|
—
|
|
(1
|
)
|
—
|
|
1
|
|
|||||||
Dividends declared ($0.20 per common share)
|
—
|
|
|
—
|
|
(12
|
)
|
(21
|
)
|
—
|
|
—
|
|
—
|
|
(33
|
)
|
|||||||
Separation-related tax adjustment
|
—
|
|
|
—
|
|
14
|
|
—
|
|
—
|
|
—
|
|
—
|
|
14
|
|
|||||||
Balance at March 31, 2019
|
165,845
|
|
|
$
|
2
|
|
$
|
2,242
|
|
$
|
2
|
|
$
|
(23
|
)
|
$
|
(61
|
)
|
$
|
—
|
|
$
|
2,162
|
|
(in millions)
|
Parent Company Investment
|
Total Equity
|
||||
Predecessor:
|
|
|
||||
Balance at October 31, 2015
|
$
|
555
|
|
$
|
555
|
|
Net income
|
80
|
|
80
|
|
||
Transfers to Parent, net
|
(297
|
)
|
(297
|
)
|
||
Balance at October 31, 2016
|
338
|
|
338
|
|
||
Net income
|
36
|
|
36
|
|
||
Transfers from Parent, net
|
42
|
|
42
|
|
||
Balance at March 31, 2017
|
$
|
416
|
|
$
|
416
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
Fiscal Years Ended
|
|
|
Five Months Ended
March 31,
2017
|
|
Fiscal Year Ended
October 31,
2016
|
||||||||||
(in millions)
|
|
March 31, 2019
|
|
March 31, 2018
|
|
|
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
72
|
|
|
$
|
208
|
|
|
|
$
|
36
|
|
|
$
|
80
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
330
|
|
|
167
|
|
|
|
73
|
|
|
225
|
|
||||
Net periodic benefit cost
|
|
26
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Stock-based compensation
|
|
11
|
|
|
6
|
|
|
|
7
|
|
|
20
|
|
||||
Deferred income taxes
|
|
8
|
|
|
(28
|
)
|
|
|
38
|
|
|
(14
|
)
|
||||
Gain on sale of assets
|
|
(25
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Restructuring charges
|
|
10
|
|
|
14
|
|
|
|
—
|
|
|
20
|
|
||||
Other non-cash charges, net
|
|
1
|
|
|
—
|
|
|
|
(1
|
)
|
|
(3
|
)
|
||||
Changes in assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
|
|
|
|
||||||||
Receivables, net
|
|
102
|
|
|
49
|
|
|
|
32
|
|
|
179
|
|
||||
Prepaid expenses and other current assets
|
|
(25
|
)
|
|
20
|
|
|
|
40
|
|
|
79
|
|
||||
Accounts payable, accrued expenses and other current liabilities
|
|
(18
|
)
|
|
113
|
|
|
|
(125
|
)
|
|
—
|
|
||||
Deferred revenue and advanced contract payments
|
|
(11
|
)
|
|
(11
|
)
|
|
|
(43
|
)
|
|
(70
|
)
|
||||
Income taxes payable
|
|
(22
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Accrued restructuring
|
|
(4
|
)
|
|
(8
|
)
|
|
|
(5
|
)
|
|
(21
|
)
|
||||
Other assets and liabilities, net
|
|
7
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Net cash provided by operating activities
|
|
462
|
|
|
530
|
|
|
|
52
|
|
|
495
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
||||||||
Payments for acquisitions, net of cash acquired
|
|
(312
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Extinguishment of Vencore debt and related costs
|
|
(994
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Proceeds from sale of assets
|
|
25
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Purchases of property, equipment and software
|
|
(26
|
)
|
|
(18
|
)
|
|
|
(2
|
)
|
|
(14
|
)
|
||||
Payments for outsourcing contract costs
|
|
(11
|
)
|
|
(16
|
)
|
|
|
(8
|
)
|
|
(7
|
)
|
||||
Net cash used in investing activities
|
|
(1,318
|
)
|
|
(34
|
)
|
|
|
(10
|
)
|
|
(21
|
)
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||
Principal payments on long-term debt
|
|
(170
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Proceeds from debt issuance
|
|
2,500
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Payment of debt issuance costs
|
|
(46
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Proceeds from revolving credit facility
|
|
50
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Payments on revolving credit facility
|
|
(50
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Payments on capital lease obligations
|
|
(172
|
)
|
|
(157
|
)
|
|
|
(65
|
)
|
|
(160
|
)
|
||||
Repurchases of common stock
|
|
(59
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Repurchases of common stock to satisfy tax withholding obligations
|
|
(1
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Dividend to DXC
|
|
(984
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Dividends paid to Perspecta stockholders
|
|
(25
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Transfers (to) from Parent, net
|
|
(88
|
)
|
|
(339
|
)
|
|
|
23
|
|
|
(314
|
)
|
||||
Net cash provided by (used in) financing activities
|
|
955
|
|
|
(496
|
)
|
|
|
(42
|
)
|
|
(474
|
)
|
||||
Net increase in cash and cash equivalents, including restricted
|
|
99
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Cash and cash equivalents, including restricted, at beginning of year
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Cash and cash equivalents, including restricted, at end of year
|
|
99
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Less restricted cash and cash equivalents included in other current assets
|
|
11
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Cash and cash equivalents at end of year
|
|
$
|
88
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Supplemental cash flow disclosures:
|
|
|
|
|
|
|
|
|
|
||||||||
Interest paid
|
|
$
|
115
|
|
|
$
|
11
|
|
|
|
$
|
10
|
|
|
$
|
31
|
|
Income taxes paid (refunded), net
|
|
61
|
|
|
19
|
|
|
|
(15
|
)
|
|
63
|
|
||||
Supplemental schedule of non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
||||||||
Equipment acquired through capital leases
|
|
$
|
180
|
|
|
$
|
156
|
|
|
|
$
|
10
|
|
|
$
|
170
|
|
Dividends declared but not yet paid
|
|
8
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Stock issued for the acquisition of Vencore
|
|
578
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
Predecessor
|
||||||
|
|
Five Months Ended
|
|
Fiscal Year Ended
|
||||
(in millions)
|
|
March 31, 2017
|
|
October 31, 2016
|
||||
Revenue
|
|
$
|
10
|
|
|
$
|
136
|
|
Income before taxes
|
|
$
|
3
|
|
|
$
|
42
|
|
•
|
Defense and Intelligence - provides services to the DoD, intelligence community, branches of the U.S. Armed Forces, and other DoD agencies.
|
•
|
Civilian and Health Care - provides services to the Departments of Homeland Security, Justice, and Health and Human Services, as well as other federal civilian and state and local government agencies.
|
Property and Equipment
|
|
Estimated Useful Lives
|
Buildings
|
|
Up to 40 years
|
Computers and related equipment
|
|
4 to 5 years
|
Furniture and other equipment
|
|
2 to 15 years
|
Land
|
|
Not a depreciable asset
|
Leasehold improvements
|
|
Shorter of lease term or useful life
|
Intangible Assets
|
|
Estimated Useful Lives
|
Acquired backlog
|
|
1 year
|
Software
|
|
2 to 10 years
|
Developed technology
|
|
6 years
|
Program assets
|
|
4 to 14 years
|
Outsourcing contract costs
|
|
Contract life, excluding option years
|
(in millions)
|
|
As
Reported
|
|
Balances
Without
Adoption of
ASC 606
|
|
Effect of
Change
Higher/(Lower)
|
||||||
Assets:
|
|
|
|
|
|
|
||||||
Receivables, net
|
|
$
|
484
|
|
|
$
|
515
|
|
|
$
|
(31
|
)
|
Deferred contract costs
|
|
35
|
|
|
31
|
|
|
4
|
|
|||
Other assets
|
|
192
|
|
|
184
|
|
|
8
|
|
|||
Liabilities and Stockholders’ Equity:
|
|
|
|
|
|
|
||||||
Deferred revenue and advance contract payments
|
|
$
|
33
|
|
|
$
|
56
|
|
|
$
|
(23
|
)
|
Deferred tax liabilities
|
|
171
|
|
|
167
|
|
|
4
|
|
|||
Other long-term liabilities
|
|
271
|
|
|
279
|
|
|
(8
|
)
|
|||
Total stockholders’ equity
|
|
2,162
|
|
|
2,154
|
|
|
8
|
|
(in millions)
|
|
Amount
|
||
Preliminary fair value of equity purchase consideration received by Vencore Stockholders
(1)
|
|
$
|
578
|
|
Preliminary fair value of cash purchase consideration received by Vencore Stockholders
|
|
400
|
|
|
Preliminary fair value of cash consideration paid by USPS to extinguish certain existing Vencore indebtedness
|
|
994
|
|
|
Consideration transferred
|
|
$
|
1,972
|
|
(1)
|
Represents the fair value of consideration received by the Vencore HC Stockholder and the KeyPoint Stockholder for approximately
14%
ownership in the combined company. The fair value of the purchase consideration transferred was based on
18,877,244
shares of Perspecta common stock distributed to Vencore HC Stockholder and
4,396,097
shares of Perspecta common stock distributed to the KeyPoint Stockholder as of the close of business on the record date for the Mergers, at the closing price of
$24.86
per share on May 31, 2018.
|
(in millions)
|
|
Fair Value
|
||
Current assets
|
|
$
|
333
|
|
Property and equipment
|
|
35
|
|
|
Intangible assets
|
|
753
|
|
|
Other assets
|
|
40
|
|
|
Accounts payable, accrued payroll, accrued expenses, and other current liabilities
|
|
(194
|
)
|
|
Deferred revenue
|
|
(12
|
)
|
|
Deferred tax liabilities
|
|
(10
|
)
|
|
Other liabilities
|
|
(119
|
)
|
|
Net identifiable assets acquired
|
|
826
|
|
|
Goodwill
|
|
1,146
|
|
|
Consideration transferred
|
|
$
|
1,972
|
|
(in millions, except years)
|
|
Weighted-average Amortization Period (in years)
|
|
Fair Value
|
||
Program assets
|
|
13
|
|
$
|
625
|
|
Developed technology
|
|
6
|
|
105
|
|
|
Backlog
|
|
1
|
|
22
|
|
|
Favorable leases
|
|
4
|
|
1
|
|
|
Total intangible assets
|
|
12
|
|
$
|
753
|
|
|
|
Fiscal Year Ended March 31, 2019
Historical
Perspecta
(1)
|
|
Period from April 1, 2018 to May 31, 2018
Historical
Vencore HC and
KGS HC
|
|
Fiscal Year Ended March 31, 2019
|
||||||||||||||
(in millions, except per share amounts)
|
|
|
|
Effects of the Spin-Off
|
|
Effects of the Mergers
|
|
Pro Forma Combined for the Spin-Off and Mergers
|
||||||||||||
Revenue
|
|
$
|
4,030
|
|
|
$
|
244
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,274
|
|
Net income (loss)
|
|
$
|
72
|
|
|
$
|
(57
|
)
|
|
$
|
(7
|
)
|
|
$
|
20
|
|
|
$
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings per common share
(2)
:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
0.44
|
|
|
|
|
|
|
|
|
$
|
0.17
|
|
||||||
Diluted
|
|
$
|
0.44
|
|
|
|
|
|
|
|
|
$
|
0.17
|
|
|
|
Fiscal Year
Ended March 31, 2018
|
||||||||||||||||||
(in millions, except per share amounts)
|
|
Historical Perspecta
|
|
Historical Vencore HC and KGS HC
|
|
Effects of the Spin-Off
|
|
Effects of the Mergers
|
|
Pro Forma Combined for the Spin-Off and Mergers
|
||||||||||
Revenue
|
|
$
|
2,819
|
|
|
$
|
1,384
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,203
|
|
Net income (loss)
|
|
$
|
208
|
|
|
$
|
33
|
|
|
$
|
(1
|
)
|
|
$
|
(112
|
)
|
|
$
|
128
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings per common share
(3)
:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
1.46
|
|
|
|
|
|
|
|
|
$
|
0.77
|
|
||||||
Diluted
|
|
$
|
1.46
|
|
|
|
|
|
|
|
|
$
|
0.77
|
|
(in millions)
|
|
Fair Value
|
||
Cash and cash equivalents
|
|
$
|
—
|
|
Accounts receivable
|
|
403
|
|
|
Prepaid expenses
|
|
86
|
|
|
Other current assets
|
|
22
|
|
|
Total current assets
|
|
511
|
|
|
Property and equipment
|
|
183
|
|
|
Intangible assets
|
|
976
|
|
|
Other assets
|
|
28
|
|
|
Total assets acquired
|
|
1,698
|
|
|
Current capital lease obligations, accounts payable, accrued payroll, accrued expenses, and other current liabilities
|
|
418
|
|
|
Deferred revenue
|
|
71
|
|
|
Non-current capital lease liability
|
|
162
|
|
|
Non-current deferred tax liabilities
|
|
204
|
|
|
Other liabilities
|
|
15
|
|
|
Total liabilities assumed
|
|
870
|
|
|
Net identifiable assets acquired
|
|
828
|
|
|
Goodwill
|
|
2,022
|
|
|
Total estimated consideration transferred
|
|
$
|
2,850
|
|
(in millions)
|
|
Predecessor
Fiscal Year Ended
October 31, 2016
|
||
Revenue
|
|
$
|
2,732
|
|
Net income
|
|
$
|
103
|
|
|
|
Fiscal Year Ended March 31, 2019
|
||||||||||
(in millions)
|
|
Defense and
Intelligence
|
|
Civilian and
Health Care
|
|
Total
|
||||||
Cost-reimbursable
|
|
$
|
830
|
|
|
$
|
90
|
|
|
$
|
920
|
|
Fixed-price
|
|
1,365
|
|
|
916
|
|
|
2,281
|
|
|||
Time-and-materials
|
|
392
|
|
|
437
|
|
|
829
|
|
|||
Total
|
|
$
|
2,587
|
|
|
$
|
1,443
|
|
|
$
|
4,030
|
|
|
|
Fiscal Year Ended March 31, 2019
|
||||||||||
(in millions)
|
|
Defense and
Intelligence
|
|
Civilian and
Health Care |
|
Total
|
||||||
Prime contractor
|
|
$
|
2,431
|
|
|
$
|
1,343
|
|
|
$
|
3,774
|
|
Subcontractor
|
|
156
|
|
|
100
|
|
|
256
|
|
|||
Total
|
|
$
|
2,587
|
|
|
$
|
1,443
|
|
|
$
|
4,030
|
|
|
|
Fiscal Year Ended March 31, 2019
|
||||||||||
(in millions)
|
|
Defense and
Intelligence
|
|
Civilian and
Health Care |
|
Total
|
||||||
U.S. federal government, including independent agencies
|
|
$
|
2,574
|
|
|
$
|
1,185
|
|
|
$
|
3,759
|
|
Non-federal (state, local and other)
|
|
13
|
|
|
258
|
|
|
271
|
|
|||
Total
|
|
$
|
2,587
|
|
|
$
|
1,443
|
|
|
$
|
4,030
|
|
(in millions)
|
|
Balance Sheets Line Item
|
|
March 31, 2019
|
|
April 1, 2018
|
||||
Contract assets:
|
|
|
|
|
|
|
||||
Unbilled receivables
|
|
Receivables, net
|
|
$
|
301
|
|
|
$
|
193
|
|
Contract liabilities:
|
|
|
|
|
|
|
||||
Current portion of deferred revenue and advance contract payments
|
|
Deferred revenue and advance contract payments
|
|
$
|
33
|
|
|
$
|
27
|
|
Non-current portion of deferred revenue and advance contract payments
|
|
Other long-term liabilities
|
|
12
|
|
|
7
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
Fiscal Years Ended
|
|
|
Five Months Ended
March 31,
2017
|
|
Fiscal Year Ended
October 31,
2016
|
||||||||||
(in millions, except per share amounts)
|
|
March 31, 2019
|
|
March 31, 2018
|
|
|
|
||||||||||
Net income
|
|
$
|
72
|
|
|
$
|
208
|
|
|
|
$
|
36
|
|
|
$
|
80
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Common share information
(1)
:
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding for basic EPS
|
|
164.56
|
|
|
142.43
|
|
|
|
142.43
|
|
|
142.43
|
|
||||
Dilutive effect of stock options and equity awards
|
|
0.26
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Weighted average common shares outstanding for diluted EPS
|
|
164.82
|
|
|
142.43
|
|
|
|
142.43
|
|
|
142.43
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.44
|
|
|
$
|
1.46
|
|
|
|
$
|
0.25
|
|
|
$
|
0.56
|
|
Diluted
|
|
$
|
0.44
|
|
|
$
|
1.46
|
|
|
|
$
|
0.25
|
|
|
$
|
0.56
|
|
(in millions)
|
|
March 31, 2019
|
|
RSUs
|
|
0.54
|
|
(in millions)
|
|
March 31, 2019
|
|
March 31, 2018
|
||||
Billed trade receivables
|
|
$
|
183
|
|
|
$
|
135
|
|
Unbilled receivables
|
|
301
|
|
|
219
|
|
||
Receivables, gross
|
|
484
|
|
|
354
|
|
||
Allowance for doubtful accounts
|
|
—
|
|
|
—
|
|
||
Receivables, net
|
|
$
|
484
|
|
|
$
|
354
|
|
(in millions)
|
|
March 31, 2019
|
|
March 31, 2018
|
||||
U.S. federal government, including independent agencies
|
|
$
|
430
|
|
|
$
|
297
|
|
Non-federal (state, local and other)
|
|
54
|
|
|
57
|
|
||
Receivables, net
|
|
$
|
484
|
|
|
$
|
354
|
|
(in millions)
|
|
Accrued Restructuring as of March 31, 2018
|
|
Costs Expensed
|
|
Cash Paid
|
|
Accrued Restructuring as of March 31, 2019
|
||||||||
Fiscal 2019 Plan:
|
|
|
|
|
|
|
|
|
||||||||
Workforce reductions
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
Facilities costs
|
|
—
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
||||
Total
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
Fiscal 2018 Plan:
|
|
|
|
|
|
|
|
|
||||||||
Workforce reductions
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
Facilities costs
|
|
6
|
|
|
—
|
|
|
(2
|
)
|
|
4
|
|
||||
Total
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
4
|
|
(in millions)
|
|
Accrued Restructuring as of March 31, 2017
|
|
Costs Expensed,
Net of Reversals |
|
Cash Paid
|
|
Accrued Restructuring as of March 31, 2018
|
||||||||
Fiscal 2018 Plan:
|
|
|
|
|
|
|
|
|
||||||||
Workforce reductions
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
(5
|
)
|
|
$
|
1
|
|
Facilities costs
|
|
—
|
|
|
8
|
|
|
(2
|
)
|
|
6
|
|
||||
Total
|
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
(7
|
)
|
|
$
|
7
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
March 31, 2019
|
|
March 31, 2018
|
||||
Land, buildings and leasehold improvements
|
|
$
|
58
|
|
|
$
|
72
|
|
Computers and related equipment
|
|
409
|
|
|
283
|
|
||
Furniture and other equipment
|
|
49
|
|
|
1
|
|
||
Total property and equipment, gross
|
|
516
|
|
|
356
|
|
||
Less: accumulated depreciation
|
|
(148
|
)
|
|
(66
|
)
|
||
Property and equipment, net
|
|
$
|
368
|
|
|
$
|
290
|
|
(in millions)
|
|
March 31, 2019
|
|
March 31, 2018
|
||||
Computers and related equipment under capital lease
|
|
$
|
377
|
|
|
$
|
274
|
|
Less: accumulated depreciation
|
|
(130
|
)
|
|
(57
|
)
|
||
Property and equipment under capital lease, net
|
|
$
|
247
|
|
|
$
|
217
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
Fiscal Years Ended
|
|
|
Five Months Ended
March 31,
2017
|
|
Fiscal Year Ended
October 31,
2016
|
||||||||||
(in millions)
|
|
March 31, 2019
|
|
March 31, 2018
|
|
|
|
||||||||||
Depreciation expense for owned property and equipment
|
|
$
|
9
|
|
|
$
|
12
|
|
|
|
$
|
6
|
|
|
$
|
14
|
|
Depreciation expense for property and equipment under capital lease
|
|
117
|
|
|
57
|
|
|
|
62
|
|
|
153
|
|
||||
Total depreciation expense
|
|
$
|
126
|
|
|
$
|
69
|
|
|
|
$
|
68
|
|
|
$
|
167
|
|
(in millions)
|
|
Defense and Intelligence
|
|
Civilian and Health Care
|
|
Total
|
||||||
Balance as of March 31, 2017
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Additions
|
|
977
|
|
|
1,045
|
|
|
2,022
|
|
|||
Balance as of March 31, 2018
|
|
977
|
|
|
1,045
|
|
|
2,022
|
|
|||
Additions
|
|
1,074
|
|
|
83
|
|
|
1,157
|
|
|||
Balance as of March 31, 2019
|
|
$
|
2,051
|
|
|
$
|
1,128
|
|
|
$
|
3,179
|
|
|
|
March 31, 2019
|
||||||||||
(in millions)
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
||||||
Program assets
|
|
$
|
1,525
|
|
|
$
|
(194
|
)
|
|
$
|
1,331
|
|
Software
|
|
87
|
|
|
(58
|
)
|
|
29
|
|
|||
Developed technology
|
|
105
|
|
|
(22
|
)
|
|
83
|
|
|||
Backlog
|
|
22
|
|
|
(18
|
)
|
|
4
|
|
|||
Outsourcing contract costs
|
|
25
|
|
|
(7
|
)
|
|
18
|
|
|||
Favorable leases
|
|
1
|
|
|
—
|
|
|
1
|
|
|||
Total intangible assets
|
|
$
|
1,765
|
|
|
$
|
(299
|
)
|
|
$
|
1,466
|
|
|
|
March 31, 2018
|
||||||||||
(in millions)
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Carrying Value
|
||||||
Program assets
|
|
$
|
900
|
|
|
$
|
(69
|
)
|
|
$
|
831
|
|
Software
|
|
75
|
|
|
(28
|
)
|
|
47
|
|
|||
Outsourcing contract costs
|
|
20
|
|
|
(1
|
)
|
|
19
|
|
|||
Total intangible assets
|
|
$
|
995
|
|
|
$
|
(98
|
)
|
|
$
|
897
|
|
Fiscal Year
|
|
(in millions)
|
||
2020
|
|
$
|
199
|
|
2021
|
|
181
|
|
|
2022
|
|
157
|
|
|
2023
|
|
145
|
|
|
2024
|
|
134
|
|
|
Thereafter
|
|
650
|
|
|
Total future amortization
|
|
$
|
1,466
|
|
|
|
Interest Rates
|
|
Maturities
|
|
(in millions)
|
||
Revolving Credit Facility
|
|
LIBOR + 1.50%
|
|
May 2023
|
|
$
|
—
|
|
Term Loan A Facilities (Tranche 1)
|
|
LIBOR + 1.375%
|
|
May 2021
|
|
246
|
|
|
Term Loan A Facilities (Tranche 2)
|
|
LIBOR + 1.50%
|
|
May 2023
|
|
1,588
|
|
|
Term Loan B Facility
|
|
LIBOR + 2.25%
|
|
May 2025
|
|
497
|
|
|
Subtotal senior secured credit facilities
|
|
|
|
|
|
2,331
|
|
|
Senior unsecured EDS Notes
|
|
7.45%
|
|
October 2029
|
|
66
|
|
|
Total debt
|
|
|
|
|
|
2,397
|
|
|
Less: current maturities of long-term debt, net
(1)
|
|
|
|
|
|
(80
|
)
|
|
Less: unamortized debt issuance costs and premiums
(2)
|
|
|
|
|
|
(20
|
)
|
|
Total long-term debt, net of current maturities
|
|
|
|
|
|
$
|
2,297
|
|
Fiscal Year
|
|
(in millions)
|
||
2020
|
|
$
|
88
|
|
2021
|
|
88
|
|
|
2022
|
|
334
|
|
|
2023
|
|
88
|
|
|
2024
|
|
1,263
|
|
|
Thereafter
|
|
536
|
|
|
Total
|
|
$
|
2,397
|
|
Fiscal Year
|
|
(in millions)
|
||
2020
|
|
$
|
153
|
|
2021
|
|
98
|
|
|
2022
|
|
62
|
|
|
2023
|
|
20
|
|
|
2024
|
|
3
|
|
|
Total minimum lease payments
|
|
336
|
|
|
Less: amount representing interest and executory costs
|
|
(31
|
)
|
|
Present value of net minimum lease payments
|
|
305
|
|
|
Less: current capital lease liability
|
|
(137
|
)
|
|
Non-current capital lease liability
|
|
$
|
168
|
|
|
|
Fiscal Year Ended March 31, 2019
|
||||||
(in millions)
|
|
Defined Benefit Pension Plan
|
|
Retiree Medical Plan
|
||||
Projected benefit obligation at beginning of year
|
|
$
|
—
|
|
|
$
|
—
|
|
Benefit obligation assumed as a result of the Mergers
|
|
482
|
|
|
7
|
|
||
Service cost
|
|
—
|
|
|
—
|
|
||
Interest cost
|
|
16
|
|
|
—
|
|
||
Actuarial loss
|
|
13
|
|
|
1
|
|
||
Plan participant contributions
|
|
—
|
|
|
1
|
|
||
Actual benefits paid
|
|
(20
|
)
|
|
(2
|
)
|
||
Projected benefit obligation at end of year
|
|
491
|
|
|
7
|
|
||
|
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
|
—
|
|
|
—
|
|
||
Assets assumed as a result of the Mergers
|
|
405
|
|
|
14
|
|
||
Actual return on plan assets
|
|
3
|
|
|
—
|
|
||
Plan participant contributions
|
|
—
|
|
|
1
|
|
||
Benefits paid
|
|
(20
|
)
|
|
(2
|
)
|
||
Fair value of plan assets at end of year
|
|
388
|
|
|
13
|
|
||
(Unfunded) funded status at end of year
|
|
$
|
(103
|
)
|
|
$
|
6
|
|
|
|
As of March 31, 2019
|
||||||
(in millions)
|
|
Defined Benefit Pension Plan
|
|
Retiree Medical Plan
|
||||
Other assets
|
|
$
|
—
|
|
|
$
|
6
|
|
Other long-term liabilities
|
|
103
|
|
|
—
|
|
|
|
Fiscal Year Ended March 31, 2019
|
||||||
(in millions)
|
|
Defined Benefit Pension Plan
|
|
Retiree Medical Plan
|
||||
Service cost
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest cost
|
|
16
|
|
|
—
|
|
||
Expected return on plan assets
|
|
(24
|
)
|
|
(1
|
)
|
||
Recognition of net actuarial loss
|
|
35
|
|
|
—
|
|
||
Net periodic benefit cost
|
|
$
|
27
|
|
|
$
|
(1
|
)
|
|
|
Defined Benefit Pension Plan
|
|
Retiree Medical Plan
|
||
Discount rate
|
|
4.1
|
%
|
|
4.0
|
%
|
Expected long-term rate of return on assets
|
|
7.8
|
%
|
|
6.7
|
%
|
Asset Category
|
|
Defined Benefit Pension Plan
|
|
Retiree Medical Plan
|
||
Cash
|
|
2.5
|
%
|
|
5.0
|
%
|
Equity funds
|
|
30.0
|
%
|
|
50.0
|
%
|
Fixed income
|
|
22.5
|
%
|
|
45.0
|
%
|
Real estate funds
|
|
10.0
|
%
|
|
—
|
%
|
Other
|
|
35.0
|
%
|
|
—
|
%
|
|
|
March 31, 2019
|
||||||||||||||
(in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Investments measured at fair value:
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
12
|
|
Equity funds
|
|
18
|
|
|
104
|
|
|
—
|
|
|
122
|
|
||||
Fixed income
|
|
—
|
|
|
35
|
|
|
—
|
|
|
35
|
|
||||
Real estate funds
|
|
—
|
|
|
—
|
|
|
53
|
|
|
53
|
|
||||
Hedge funds
|
|
—
|
|
|
—
|
|
|
25
|
|
|
25
|
|
||||
Total investments measured at fair value
|
|
$
|
18
|
|
|
$
|
151
|
|
|
$
|
78
|
|
|
247
|
|
|
Investments measured at NAV:
|
|
|
|
|
|
|
|
|
||||||||
Equity funds
|
|
|
|
|
|
|
|
20
|
|
|||||||
Fixed income
|
|
|
|
|
|
|
|
32
|
|
|||||||
Hedge funds
|
|
|
|
|
|
|
|
102
|
|
|||||||
Total investments measured at NAV
|
|
|
|
|
|
|
|
154
|
|
|||||||
Total investments
|
|
|
|
|
|
|
|
$
|
401
|
|
(in millions)
|
|
Real Estate Funds
|
|
Hedge Funds
|
|
Total
|
||||||
Balance as of April 1, 2018
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Assets assumed as a result of the Mergers
|
|
49
|
|
|
28
|
|
|
77
|
|
|||
Actual return on plan assets held at the reporting date
|
|
5
|
|
|
(3
|
)
|
|
2
|
|
|||
Purchases, sales and settlements
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Balance as of March 31, 2019
|
|
$
|
53
|
|
|
$
|
25
|
|
|
$
|
78
|
|
Fiscal Year
(in millions)
|
|
Defined Benefit Pension Plan
|
|
Retiree Medical Plan
|
||||
Employer contributions:
|
|
|
|
|
||||
2020
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
||||
Benefit payments:
|
|
|
|
|
||||
2020
|
|
$
|
24
|
|
|
$
|
1
|
|
2021
|
|
24
|
|
|
—
|
|
||
2022
|
|
24
|
|
|
1
|
|
||
2023
|
|
25
|
|
|
—
|
|
||
2024
|
|
26
|
|
|
—
|
|
||
2025 - 2029
|
|
140
|
|
|
2
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
Fiscal Years Ended
|
|
|
Five Months Ended
|
|
Fiscal Year Ended
|
||||||||||
(in millions)
|
|
March 31, 2019
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
October 31, 2016
|
||||||||
U.S. federal taxes:
|
|
|
|
|
|
|
|
|
|
||||||||
Current
|
|
$
|
13
|
|
|
$
|
16
|
|
|
|
$
|
(15
|
)
|
|
$
|
54
|
|
Deferred
|
|
8
|
|
|
(38
|
)
|
|
|
35
|
|
|
(12
|
)
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
State taxes:
|
|
|
|
|
|
|
|
|
|
||||||||
Current
|
|
19
|
|
|
3
|
|
|
|
—
|
|
|
9
|
|
||||
Deferred
|
|
—
|
|
|
10
|
|
|
|
3
|
|
|
(2
|
)
|
||||
Total income tax expense (benefit)
|
|
$
|
40
|
|
|
$
|
(9
|
)
|
|
|
$
|
23
|
|
|
$
|
49
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||
|
|
Fiscal Years Ended
|
|
|
Five Months Ended
|
|
Fiscal Year Ended
|
||||||
|
|
March 31, 2019
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
October 31, 2016
|
||||
U.S. federal statutory rate
|
|
21
|
%
|
|
32
|
%
|
|
|
35
|
%
|
|
35
|
%
|
State income taxes, net of federal impact
|
|
5
|
%
|
|
4
|
%
|
|
|
4
|
%
|
|
4
|
%
|
Non-deductible transaction costs
|
|
3
|
%
|
|
4
|
%
|
|
|
—
|
%
|
|
—
|
%
|
Remeasurement of state deferred income tax items
|
|
5
|
%
|
|
—
|
%
|
|
|
—
|
%
|
|
—
|
%
|
State valuation allowance
|
|
3
|
%
|
|
—
|
%
|
|
|
—
|
%
|
|
—
|
%
|
Research and development credit
|
|
(3
|
)%
|
|
—
|
%
|
|
|
(1
|
)%
|
|
(1
|
)%
|
Unrecognized tax benefits
|
|
1
|
%
|
|
—
|
%
|
|
|
—
|
%
|
|
—
|
%
|
Interest on federal tax refund, net of tax expense
|
|
(2
|
)%
|
|
—
|
%
|
|
|
—
|
%
|
|
—
|
%
|
Impact of Tax Act
|
|
1
|
%
|
|
(44
|
)%
|
|
|
—
|
%
|
|
—
|
%
|
Other items, net
|
|
2
|
%
|
|
(1
|
)%
|
|
|
1
|
%
|
|
—
|
%
|
Effective tax rate
|
|
36
|
%
|
|
(5
|
)%
|
|
|
39
|
%
|
|
38
|
%
|
(in millions)
|
|
March 31, 2019
|
|
March 31, 2018
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Loss carryovers
|
|
$
|
91
|
|
|
$
|
—
|
|
Employee and retiree benefits
|
|
54
|
|
|
1
|
|
||
Accrued liabilities
|
|
22
|
|
|
8
|
|
||
Capital lease obligations
|
|
16
|
|
|
41
|
|
||
Interest expense carryforward
|
|
11
|
|
|
—
|
|
||
Deferred service revenue
|
|
2
|
|
|
16
|
|
||
Restructuring
|
|
1
|
|
|
2
|
|
||
Other
|
|
1
|
|
|
—
|
|
||
Deferred tax assets, gross
|
|
198
|
|
|
68
|
|
||
Valuation allowance
|
|
(13
|
)
|
|
—
|
|
||
Deferred tax assets, net of valuation allowance
|
|
185
|
|
|
68
|
|
||
Deferred tax liabilities:
|
|
|
|
|
||||
Purchased intangible assets
|
|
312
|
|
|
224
|
|
||
Fixed assets
|
|
30
|
|
|
12
|
|
||
Deferred service cost
|
|
1
|
|
|
4
|
|
||
Other receivables
|
|
—
|
|
|
4
|
|
||
Deferred tax liabilities
|
|
343
|
|
|
244
|
|
||
Net deferred tax liabilities
|
|
$
|
158
|
|
|
$
|
176
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
Fiscal Years Ended
|
|
|
Five Months Ended
|
|
Fiscal Year Ended
|
||||||||||
(in millions)
|
|
March 31, 2019
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
October 31, 2016
|
||||||||
Balance at beginning of year
|
|
$
|
8
|
|
|
$
|
8
|
|
|
|
$
|
7
|
|
|
$
|
7
|
|
Decrease for transfers to Parent
|
|
(2
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Increase for transfers from Parent
|
|
45
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Increase for current year tax positions
|
|
1
|
|
|
—
|
|
|
|
1
|
|
|
—
|
|
||||
Balance at end of year
|
|
$
|
52
|
|
|
$
|
8
|
|
|
|
$
|
8
|
|
|
$
|
7
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
(in millions)
|
|
Two Months Ended May 31, 2018
|
|
Fiscal Year Ended
March 31, 2018
|
|
|
Five Months Ended
March 31, 2017
|
|
Fiscal Year Ended
October 31, 2016
|
||||||||
Cash pooling and general financing activities
|
|
$
|
(176
|
)
|
|
$
|
(506
|
)
|
|
|
$
|
(1
|
)
|
|
$
|
(512
|
)
|
Corporate allocations
|
|
24
|
|
|
158
|
|
|
|
58
|
|
|
152
|
|
||||
Income taxes
|
|
7
|
|
|
19
|
|
|
|
(15
|
)
|
|
63
|
|
||||
Transfers (to) from Parent, net
|
|
$
|
(145
|
)
|
|
$
|
(329
|
)
|
|
|
$
|
42
|
|
|
$
|
(297
|
)
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
Fiscal Years Ended
|
|
|
Five Months Ended
|
|
Fiscal Year Ended
|
||||||||||
(in millions)
|
|
March 31, 2019
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
October 31, 2016
|
||||||||
Stock-based compensation expense
|
|
$
|
11
|
|
|
$
|
6
|
|
|
|
$
|
7
|
|
|
$
|
20
|
|
Income tax benefit
|
|
3
|
|
|
2
|
|
|
|
3
|
|
|
8
|
|
||||
Stock-based compensation expense, net of tax
|
|
$
|
8
|
|
|
$
|
4
|
|
|
|
$
|
4
|
|
|
$
|
12
|
|
|
|
Fiscal Year Ended
|
|||||
|
|
March 31, 2019
|
|||||
(in thousands, except per share amounts)
|
|
Shares
|
|
Weighted Average Grant Date Fair Value Per Share
|
|||
Outstanding at beginning of year
|
|
67
|
|
|
$
|
61
|
|
DXC awards replaced by Perspecta awards due to Spin-Off
(1)
|
|
(67
|
)
|
|
61
|
|
|
Perspecta awards replacing DXC awards due to Spin-Off
(1)
|
|
225
|
|
|
17
|
|
|
Granted
|
|
1,301
|
|
|
23
|
|
|
Vested
|
|
(128
|
)
|
|
12
|
|
|
Forfeited
|
|
(55
|
)
|
|
24
|
|
|
Outstanding at end of Year
|
|
1,343
|
|
|
$
|
23
|
|
|
|
Fiscal Year Ended
|
|||||
|
|
March 31, 2019
|
|||||
(in thousands, except per share amounts)
|
|
Shares
|
|
Weighted Average Grant Date Fair Value Per Share
|
|||
Outstanding at beginning of year
|
|
15
|
|
|
$
|
79
|
|
DXC awards replaced by Perspecta awards due to Spin-Off
(1)
|
|
(15
|
)
|
|
79
|
|
|
Perspecta awards replacing DXC awards due to Spin-Off
(1)
|
|
49
|
|
|
22
|
|
|
Granted
|
|
521
|
|
|
25
|
|
|
Vested
|
|
—
|
|
|
—
|
|
|
Forfeited
|
|
(12
|
)
|
|
24
|
|
|
Outstanding at end of Year
|
|
558
|
|
|
$
|
24
|
|
|
|
Predecessor
|
||||||
|
|
Five Months Ended
|
|
Fiscal Year Ended
|
||||
|
|
March 31, 2017
|
|
October 31, 2016
|
||||
Weighted average fair value
(1)
|
|
$
|
4
|
|
|
$
|
4
|
|
Expected volatility
(2)
|
|
31.1
|
%
|
|
31.1
|
%
|
||
Risk-free interest rate
(3)
|
|
1.7
|
%
|
|
1.7
|
%
|
||
Expected dividend yield
(4)
|
|
1.5
|
%
|
|
1.5
|
%
|
||
Expected term in years
(5)
|
|
5.4
|
|
|
5.4
|
|
|
|
Fiscal Year Ended
|
|||||||||||
|
|
March 31, 2019
|
|||||||||||
(in millions, except shares in thousands and per share amounts in ones)
|
|
Shares
|
|
Weighted Average Exercise Price Per Share
|
|
Weighted Average Remaining Contractual Term in Years
|
|
Aggregate Intrinsic Value
|
|||||
Outstanding at beginning of year
|
|
148
|
|
|
$
|
45
|
|
|
|
|
|
||
DXC awards replaced by Perspecta awards due to Spin-Off
(1)
|
|
(148
|
)
|
|
45
|
|
|
|
|
|
|||
Options converted to RSUs due to Spin-Off and Mergers
(1)
|
|
181
|
|
|
12
|
|
|
|
|
|
|||
Exercised
|
|
(18
|
)
|
|
12
|
|
|
|
|
|
|||
Forfeited
|
|
(1
|
)
|
|
11
|
|
|
|
|
|
|||
Outstanding, vested and exercisable at end of year
|
|
162
|
|
|
$
|
12
|
|
|
3
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
Fiscal Years Ended
|
|
|
Five Months Ended
|
|
Fiscal Year Ended
|
||||||||||
(in millions)
|
|
March 31, 2019
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
October 31, 2016
|
||||||||
Defense and Intelligence
|
|
$
|
2,587
|
|
|
$
|
1,416
|
|
|
|
$
|
488
|
|
|
$
|
1,153
|
|
Civilian and Health Care
|
|
1,443
|
|
|
1,403
|
|
|
|
585
|
|
|
1,579
|
|
||||
Total revenue
|
|
$
|
4,030
|
|
|
$
|
2,819
|
|
|
|
$
|
1,073
|
|
|
$
|
2,732
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
Fiscal Years Ended
|
|
|
Five Months Ended
|
|
Fiscal Year Ended
|
||||||||||
(in millions)
|
|
March 31, 2019
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
October 31, 2016
|
||||||||
Defense and Intelligence
|
|
$
|
331
|
|
|
$
|
168
|
|
|
|
$
|
35
|
|
|
$
|
51
|
|
Civilian and Health Care
|
|
196
|
|
|
222
|
|
|
|
75
|
|
|
183
|
|
||||
Total segment profit
|
|
$
|
527
|
|
|
$
|
390
|
|
|
|
$
|
110
|
|
|
$
|
234
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
Fiscal Years Ended
|
|
|
Five Months Ended
|
|
Fiscal Year Ended
|
||||||||||
(in millions)
|
|
March 31, 2019
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
October 31, 2016
|
||||||||
Segment profit
|
|
$
|
527
|
|
|
$
|
390
|
|
|
|
$
|
110
|
|
|
$
|
234
|
|
Not allocated to segments:
|
|
|
|
|
|
|
|
|
|
||||||||
Stock-based compensation
|
|
(11
|
)
|
|
(6
|
)
|
|
|
(7
|
)
|
|
(20
|
)
|
||||
Amortization of acquired intangible assets
|
|
(165
|
)
|
|
(69
|
)
|
|
|
—
|
|
|
—
|
|
||||
Restructuring costs
|
|
(4
|
)
|
|
(14
|
)
|
|
|
—
|
|
|
(20
|
)
|
||||
Separation and integration-related costs
|
|
(106
|
)
|
|
(90
|
)
|
|
|
(34
|
)
|
|
(34
|
)
|
||||
Interest expense, net
|
|
(121
|
)
|
|
(12
|
)
|
|
|
(10
|
)
|
|
(31
|
)
|
||||
Other unallocated, net
|
|
(8
|
)
|
|
—
|
|
|
|
—
|
|
|
—
|
|
||||
Income before taxes
|
|
$
|
112
|
|
|
$
|
199
|
|
|
|
$
|
59
|
|
|
$
|
129
|
|
|
|
Successor
|
|
|
Predecessor
|
||||||||||||
|
|
Fiscal Years Ended
|
|
|
Five Months Ended
|
|
Fiscal Year Ended
|
||||||||||
(in millions)
|
|
March 31, 2019
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
October 31, 2016
|
||||||||
Defense and Intelligence
|
|
$
|
74
|
|
|
$
|
34
|
|
|
|
$
|
34
|
|
|
$
|
95
|
|
Civilian and Health Care
|
|
91
|
|
|
64
|
|
|
|
39
|
|
|
130
|
|
||||
Amortization of acquired intangible assets
|
|
165
|
|
|
69
|
|
|
|
—
|
|
|
—
|
|
||||
Total depreciation and amortization
|
|
$
|
330
|
|
|
$
|
167
|
|
|
|
$
|
73
|
|
|
$
|
225
|
|
Fiscal Year
(in millions)
|
|
Real Estate
|
|
Equipment
|
|
Total
|
||||||
2020
|
|
$
|
40
|
|
|
$
|
17
|
|
|
$
|
57
|
|
2021
|
|
31
|
|
|
5
|
|
|
36
|
|
|||
2022
|
|
19
|
|
|
—
|
|
|
19
|
|
|||
2023
|
|
14
|
|
|
—
|
|
|
14
|
|
|||
2024
|
|
5
|
|
|
—
|
|
|
5
|
|
|||
Thereafter
|
|
5
|
|
|
—
|
|
|
5
|
|
|||
Minimum fixed rentals
|
|
114
|
|
|
22
|
|
|
136
|
|
|||
Less: sublease rental income
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
|||
Total
|
|
$
|
109
|
|
|
$
|
22
|
|
|
$
|
131
|
|
|
|
Fiscal Year Ended March 31, 2019
|
||||||||||||||
(in millions)
|
|
1
st
Quarter
|
|
2
nd
Quarter
|
|
3
rd
Quarter
|
|
4
th
Quarter
|
||||||||
Revenue
|
|
$
|
793
|
|
|
$
|
1,068
|
|
|
$
|
1,075
|
|
|
$
|
1,094
|
|
|
|
|
|
|
|
|
|
|
||||||||
Costs of services
|
|
597
|
|
|
813
|
|
|
816
|
|
|
817
|
|
||||
Selling, general and administrative
|
|
61
|
|
|
89
|
|
|
76
|
|
|
74
|
|
||||
Depreciation and amortization
|
|
64
|
|
|
74
|
|
|
76
|
|
|
116
|
|
||||
Restructuring costs
|
|
—
|
|
|
2
|
|
|
1
|
|
|
7
|
|
||||
Separation and integration-related costs
|
|
44
|
|
|
21
|
|
|
19
|
|
|
22
|
|
||||
Interest expense, net
|
|
10
|
|
|
37
|
|
|
37
|
|
|
37
|
|
||||
Other (income) expense, net
|
|
(24
|
)
|
|
(4
|
)
|
|
2
|
|
|
34
|
|
||||
Total costs and expenses
|
|
752
|
|
|
1,032
|
|
|
1,027
|
|
|
1,107
|
|
||||
Income (loss) before taxes
|
|
41
|
|
|
36
|
|
|
48
|
|
|
(13
|
)
|
||||
Income tax expense
|
|
12
|
|
|
12
|
|
|
10
|
|
|
6
|
|
||||
Net income (loss)
|
|
$
|
29
|
|
|
$
|
24
|
|
|
$
|
38
|
|
|
$
|
(19
|
)
|
Earnings (loss) per common share
(1)
:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.18
|
|
|
$
|
0.15
|
|
|
$
|
0.23
|
|
|
$
|
(0.12
|
)
|
Diluted
|
|
$
|
0.17
|
|
|
$
|
0.14
|
|
|
$
|
0.23
|
|
|
$
|
(0.12
|
)
|
Cash dividends per common share
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
$
|
0.05
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Fiscal Year
Ended March 31, 2018
|
||||||||||||||
(in millions)
|
|
1
st
Quarter
|
|
2
nd
Quarter
|
|
3
rd
Quarter
|
|
4
th
Quarter
|
||||||||
Revenue
|
|
$
|
676
|
|
|
$
|
706
|
|
|
$
|
722
|
|
|
$
|
715
|
|
|
|
|
|
|
|
|
|
|
||||||||
Costs of services
|
|
525
|
|
|
557
|
|
|
550
|
|
|
523
|
|
||||
Selling, general and administrative
|
|
46
|
|
|
35
|
|
|
51
|
|
|
50
|
|
||||
Depreciation and amortization
|
|
37
|
|
|
33
|
|
|
46
|
|
|
51
|
|
||||
Restructuring costs
|
|
3
|
|
|
4
|
|
|
3
|
|
|
4
|
|
||||
Separation and integration-related costs
|
|
11
|
|
|
6
|
|
|
27
|
|
|
46
|
|
||||
Interest expense, net
|
|
2
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||
Total costs and expenses
|
|
624
|
|
|
640
|
|
|
677
|
|
|
679
|
|
||||
Income before taxes
|
|
52
|
|
|
66
|
|
|
45
|
|
|
36
|
|
||||
Income tax expense (benefit)
|
|
20
|
|
|
26
|
|
|
(59
|
)
|
|
4
|
|
||||
Net income
|
|
$
|
32
|
|
|
$
|
40
|
|
|
$
|
104
|
|
|
$
|
32
|
|
Earnings per common share
(1)(2)
:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.22
|
|
|
$
|
0.28
|
|
|
$
|
0.73
|
|
|
$
|
0.22
|
|
Diluted
|
|
$
|
0.22
|
|
|
$
|
0.28
|
|
|
$
|
0.73
|
|
|
$
|
0.22
|
|
Cash dividends per common share
(2)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
|
Weighted-average exercise price of outstanding options, warrants and rights
|
|
Number of securities remaining available for future issuance under equity compensation plans excluding securities reflected in column (a)
|
||||
Plan Category
|
|
(a)
(1)
|
|
(b)
|
|
(c)
|
||||
Equity compensation plans approved by security holders
|
|
2,063,224
|
|
|
$
|
12.14
|
|
|
7,600,307
|
|
Equity compensation plans not approved by security holders
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
|
2,063,224
|
|
|
$
|
12.14
|
|
|
7,600,307
|
|
Exhibit
Number |
Description of Exhibit
|
2.1
|
|
2.2
|
|
2.3
|
|
2.4
|
|
2.5
|
|
2.6
|
|
2.7
|
|
2.8
|
|
3.1
|
|
3.2
|
|
4.1
|
|
10.1
|
|
10.2
|
|
10.3*
|
101.CAL
|
XBRL Taxonomy Extension Calculation
|
101.DEF
|
XBRL Taxonomy Extension Definition
|
101.LAB
|
XBRL Taxonomy Extension Labels
|
101.PRE
|
XBRL Taxonomy Extension Presentation
|
|
|
|
PERSPECTA INC.
|
|
|
|
|
Dated:
|
June 6, 2019
|
By:
|
/s/ John P. Kavanaugh
|
|
|
Name:
|
John P. Kavanaugh
|
|
|
Title:
|
Senior Vice President and Chief Financial Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ John M. Curtis
|
|
President, Chief Executive Officer and Director
|
|
June 6, 2019
|
John M. Curtis
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ John P. Kavanaugh
|
|
Senior Vice President and Chief Financial Officer
|
|
June 6, 2019
|
John P. Kavanaugh
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/ William G. Luebke
|
|
Senior Vice President and Corporate Controller
|
|
June 6, 2019
|
William G. Luebke
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/ J. Michael Lawrie
|
|
Chairman
|
|
June 6, 2019
|
J. Michael Lawrie
|
|
|
|
|
|
|
|
|
|
/s/ Sanju K. Bansal
|
|
Director
|
|
June 6, 2019
|
Sanju K. Bansal
|
|
|
|
|
|
|
|
|
|
/s/ Sondra L. Barbour
|
|
Director
|
|
June 6, 2019
|
Sondra L. Barbour
|
|
|
|
|
|
|
|
|
|
/s/ Lisa S. Disbrow
|
|
Director
|
|
June 6, 2019
|
Lisa S. Disbrow
|
|
|
|
|
|
|
|
|
|
/s/ Glenn A. Eisenberg
|
|
Director
|
|
June 6, 2019
|
Glenn A. Eisenberg
|
|
|
|
|
|
|
|
|
|
/s/ Pamela O. Kimmet
|
|
Director
|
|
June 6, 2019
|
Pamela O. Kimmet
|
|
|
|
|
|
|
|
|
|
/s/ Ramzi M. Musallam
|
|
Director
|
|
June 6, 2019
|
Ramzi M. Musallam
|
|
|
|
|
|
|
|
|
|
/s/ Philip O. Nolan
|
|
Director
|
|
June 6, 2019
|
Philip O. Nolan
|
|
|
|
|
|
|
|
|
|
/s/ Paul N. Saleh
|
|
Director
|
|
June 6, 2019
|
Paul N. Saleh
|
|
|
|
|
|
|
|
|
|
/s/ Michael E. Ventling
|
|
Director
|
|
June 6, 2019
|
Michael E. Ventling
|
|
|
|
|
Entity Name
|
|
US Jurisdiction
|
Perspecta Inc. - Incorporated 10/10/2017
|
|
Nevada
|
Perspecta HC LLC - Formed 8/27/2008
|
|
Delaware
|
NHIC, Corp - Incorporated 6/27/2006
|
|
Texas
|
Perspecta Enterprise Solutions LLC - Formed 3/25/1994
|
|
Delaware
|
SafeGuard Services LLC - Formed 11/23/2005
|
|
Delaware
|
Perspecta State & Local Inc. - Incorporated 6/26/1997
|
|
Illinois
|
Ultra Second VMS LLC - Formed 10/9/2017
|
|
Delaware
|
Perspecta Engineering Inc. - Incorporated 10/11/2010
|
|
Delaware
|
Perspecta Services & Solutions Inc. - Incorporated 9/23/2005
|
|
Delaware
|
PhaseOne Communications, Inc. - Incorporated 11/22/1999
|
|
Delaware
|
Perspecta Labs Inc. - Incorporated 7/13/2011
|
|
Delaware
|
HVH Precision Analytics LLC - Formed 11/12/2016
|
|
Delaware
|
KGS Holding Corp. - Incorporated 3/30/2009
|
|
Delaware
|
Perspecta Risk Decision Inc. - Incorporated 11/1/2000
|
|
Delaware
|
QWK Integrated Solutions, LLC - Formed 3/1/2012
|
|
Alabama
|
Dominion Technology Resources, Inc. - Incorporated 3/13/2002
|
|
Virginia
|
Perspecta Aerospace & Defense Inc. - Incorporated 12/11/2002
|
|
Nevada
|
Analex Corporation - Incorporated 10/15/2001
|
|
Delaware
|
Apogen Technologies, Inc. - Incorporated 10/4/2002
|
|
Delaware
|
Planning Systems Incorporated - Incorporated 9/1/1972
|
|
Maryland
|
Neptune Sciences, Inc - Incorporated 1/17/1991
|
|
Louisiana
|
Westar Display Technologies, Inc. - Incorporated 3/20/2001
|
|
Nevada
|
SimAuthor, Inc. - Incorporated 1/22/1997
|
|
Colorado
|
Pimsol, LLC - Formed 6/20/2002
|
|
Alabama
|
ComGlobal Systems, Incorporated - Incorporated 1/6/2005
|
|
California
|
Beta Analytics, Incorporated - Incorporated 1/4/1984
|
|
Maryland
|
Science and Engineering Associates, Inc - Incorporated 2/28/1980
|
|
New Mexico
|
ITS Services, Inc. - Incorporated 6/26/1991
|
|
Virginia
|
3H Technology, L.L.C. - Formed 3/25/1997
|
|
Delaware
|
3H Technology Federal Corp. - Formed 9/5/2003
|
|
Delaware
|
1.
|
I have reviewed this Annual Report on Form 10-K of Perspecta Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
|
Date:
|
June 6, 2019
|
|
|
/s/ John M. Curtis
|
|
|
|
|
John M. Curtis
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-K of Perspecta Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
|
|
|
Date:
|
June 6, 2019
|
|
|
/s/ John P. Kavanaugh
|
|
|
|
|
John P. Kavanaugh
|
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer)
|
a)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
b)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
June 6, 2019
|
|
/s/ John M. Curtis
|
|
|
|
John M. Curtis
|
|
|
|
President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer)
|
a)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
b)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
|
Date:
|
June 6, 2019
|
|
/s/ John P. Kavanaugh
|
|
|
|
John P. Kavanaugh
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|