Acquisitions (Tables)

3 Months Ended

Jun. 30, 2017

Schedule of Business Acquisitions, Consideration Exchanged

Under the acquisition method of accounting, total consideration exchanged was:



Preliminary fair value of purchase consideration received by HPE stockholders⁽¹⁾	$	9,782
Preliminary fair value of HPES options assumed by CSC⁽²⁾	68
Total estimated consideration transferred	$	9,850

(1)Represents the fair value of consideration received by HPE stockholders to give them 50.1% ownership in the combined company. The fair value of the purchase consideration transferred was based on a total of 141,865,656 shares of DXC common stock distributed to HPE stockholders as of the close of business on the record date (141,741,712 after effect of 123,944 cancelled shares) at CSC's closing price of $69.01 per share on March 31, 2017.

(2)Represents the fair value of certain stock-based awards of HPES employees that were unexercised on March 31, 2017, which HPE, HPES and CSC agreed would be converted to DXC stock-based awards.

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The acquired property and equipment are summarized in the following table:



(in millions)	Amount
Land, buildings, and leasehold improvements	$	1,806
Computers and related equipment	504
Furniture and other equipment	37
Construction in progress	135
Total	$	2,482

The preliminary estimated purchase price is allocated as follows:



(in millions)	Estimated Fair Value
Cash and cash equivalents	$	974
Accounts receivable⁽¹⁾	3,965
Other current assets	769
Total current assets	5,708
Property and equipment	2,482
Intangible assets	5,085
Other assets	1,694
Total assets acquired	14,969
Accounts payable, accrued payroll, accrued expenses, and other current liabilities	(3,843		)
Deferred revenue	(879		)
Long-term debt, net of current maturities	(3,997		)
Long-term deferred tax liabilities and income tax payable	(1,553		)
Other liabilities	(1,551		)
Total liabilities assumed	(11,823		)
Net identifiable assets acquired	3,146
Add: Fair value of non-controlling interests	(61		)
Goodwill	6,765
Total estimated consideration transferred	$	9,850


⁽¹⁾	Includes preliminary adjustments related to the Separation and Distribution Agreement, as amended, of $163 million.

Schedule of Finite-Lived Intangible Assets Acquired

The acquired identifiable intangible assets are summarized in the following table:



(in millions)	Amount		Estimated Useful Lives (Years)
Customer relationships	$	3,950	13
Developed technology	440		7
Third-party purchased software	499		4-7
Trade names	110		4
Other intangibles	86		7
Total	$	5,085

Schedule of Amounts Recognized in Balance Sheet

The following table summarizes the balance sheet impact of the pension plans assumed from HPES as a result of the Merger.



(in millions)	Amount
Other assets	$	558
Accrued expenses and other current liabilities	(16		)
Other long-term liabilities	(563		)
Net amount recorded	$	(21	)

Changes in Projected Benefit Obligations, Fair Value of Plan Assets, and Funded Status of Plan

The following table summarizes the projected benefit obligation, fair value of the plan assets and the funded status assumed from HPES as a result of the Merger.



(in millions)	Amount
Projected benefit obligation	$	(7,432	)
Fair value of plan assets	7,411
Funded status	$	(21	)

Schedule of Allocation of Plan Assets

The following table summarizes the plan asset allocations by asset category for HPES pension plans assumed by the Company as a result of the Merger.



Equity securities	22	%
Debt securities⁽¹⁾	72	%
Alternatives	5	%
Cash and other	1	%
Total	100	%

⁽¹⁾ Includes liability-driven investments

Schedule of Expected Benefit Payments

The following table summarizes the estimated future benefit payments due to the pension and benefit plans assumed from HPES as a result of the Merger.



(in millions)	Amount
Employer contributions:
2018	$	37

Benefit payments:
2018	$	222
2019	$	147
2020	$	158
2021	$	168
2022	$	180
2023 through 2027	$	1,132

Summary of Pro Forma Information

The following table provides unaudited pro forma results of operations for the Company for the three months ended July 1, 2016, as if the Merger had been consummated on April 2, 2016, the first day of DXC's fiscal year ended March 31, 2017. These unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies. In addition, the unaudited pro forma adjustments are preliminary and are subject to change as additional information becomes available and as additional analyses are performed during the measurement period. Accordingly, the Company presents these unaudited pro forma results for informational purposes only, and they are not necessarily indicative of what the actual results of operations of DXC would have been if the Merger had occurred at the beginning of the period presented, nor are they indicative of future results of operations.

CSC reported its results based on a fiscal year convention that comprised four thirteen-week quarters. HPES reported its results on a fiscal year basis ended October 31. As a consequence of CSC and HPES having different fiscal year-end dates, all references to the unaudited pro forma statement of operations include the results of operations of CSC for the three months ended July 1, 2016 and of HPES for the three months ended April 30, 2016.



(in millions, except per-share amounts)	Three Months Ended July 1, 2016⁽¹⁾
Revenues	$	6,418
Net loss	(281		)
Loss attributable to the Company	(283		)

Loss per common share:
Basic	$	(1.00	)
Diluted	$	(1.00	)


⁽¹⁾	The unaudited pro forma information is based on legacy CSC results for the three months ended July 1, 2016 and legacy HPES results for the three months ended April 30, 2016.