Acquisitions (Tables)

6 Months Ended

Sep. 30, 2017

Schedule of Business Acquisitions, Consideration Exchanged

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



(in millions)	Amount
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	$	1,617
Computers and related equipment	1,123
Furniture and other equipment	45
Construction in progress	133
Total	$	2,918

The preliminary estimated purchase price is allocated as follows:



(in millions)	Estimated Fair Value
Cash and cash equivalents	$	974
Accounts receivable⁽¹⁾	4,059
Other current assets	538
Total current assets	5,571
Property and equipment	2,918
Intangible assets	6,194
Other assets	1,574
Total assets acquired	16,257
Accounts payable, accrued payroll, accrued expenses, and other current liabilities	(4,572		)
Deferred revenue	(1,105		)
Long-term debt, net of current maturities	(4,783		)
Long-term deferred tax liabilities and income tax payable	(1,659		)
Other liabilities	(1,304		)
Total liabilities assumed	(13,423		)
Net identifiable assets acquired	2,834
Add: Fair value of non-controlling interests	(61		)
Goodwill	7,077
Total estimated consideration transferred	$	9,850


⁽¹⁾	Includes adjustment received from HPE on September 25, 2017, in accordance with the provisions of the Separation and Distribution Agreement, as amended, of $175 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	$	5,200	10-13
Developed technology	141		10
Third-party purchased software	499		2-7
Deferred contract costs	354		n/a
Total	$	6,194

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	(13		)
Other long-term liabilities	(547		)
Net amount recorded	$	(2	)

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	$	(7,413	)
Fair value of plan assets	7,411
Funded status	$	(2	)

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	$	39

Benefit payments:
2018	$	225
2019	$	151
2020	$	163
2021	$	224
2022	$	180
2023 through 2027	$	1,132

Summary of Pro Forma Information

The Company's condensed consolidated statements of operations includes the following revenues and net income attributable to HPES since the Merger date:



(in millions)	Three Months Ended September 30, 2017		Six Months Ended September 30, 2017
Revenues	$	4,380	$	8,708
Net income	$	455	$	645

The following table provides unaudited pro forma results of operations for the Company for the three and six months ended September 30, 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 and six months ended September 30, 2016 and of HPES for the three and six months ended July 31, 2016.



(in millions, except per-share amounts)	Three Months Ended September 30, 2016⁽¹⁾			Six Months Ended September 30, 2016⁽¹⁾
Revenues	$	6,355		$	12,773
Net loss	(123		)	(404		)
Loss attributable to the Company	(130		)	(413		)

Loss per common share:
Basic	$	(0.46	)	$	(1.46	)
Diluted	$	(0.46	)	$	(1.46	)


⁽¹⁾	The unaudited pro forma information is based on legacy CSC results for the three and six months ended September 30, 2016 and legacy HPES results for the three and six months ended July 31, 2016.