Revenue

Revenue Recognition

The following table presents DXC's revenues disaggregated by geography, based on the location of incorporation of the DXC entity providing the related goods or services:



	Three Months Ended				Nine Months Ended
(in millions)	December 31, 2018		December 31, 2017 ⁽¹⁾		December 31, 2018		December 31, 2017 ⁽¹⁾
United States	$	1,917	$	1,980	$	5,667	$	6,046
United Kingdom	749		861		2,309		2,494
Australia	377		418		1,222		1,255
Other Europe	1,384		1,382		3,994		3,950
Other International	751		819		2,281		2,404
Total Revenues	$	5,178	$	5,460	$	15,473	$	16,149

⁽¹⁾Prior period amounts have not been recast under the modified retrospective transition method.

The revenue by geography pertains to both of the Company’s reportable segments. Refer to Note 19 - "Segment Information" for the Company’s segment disclosures.

Remaining Performance Obligations

Remaining performance obligations represent the aggregate amount of the transaction price in contracts allocated to performance obligations not delivered, or partially undelivered, as of the end of the reporting period. Remaining performance obligation estimates are subject to change and are affected by several factors, including terminations, changes in the scope of contracts, periodic revalidations, adjustments for revenue that has not materialized and adjustments for currency. As of December 31, 2018, approximately $29.0 billion of revenue is expected to be recognized from remaining performance obligations. The Company expects to recognize revenue on approximately 48% of these remaining performance obligations in Fiscal 2019 and Fiscal 2020, with the remainder of the balance recognized thereafter.

Contract Balances

The following table provides information about the balances of the Company's trade receivables and contract assets and contract liabilities:



	As of
(in millions)	December 31, 2018		April 1, 2018
Trade receivables, net	$	3,351	$	3,937
Contract assets	$	334	$	444
Contract liabilities	$	1,815	$	2,053

Change in contract liabilities were as follows:



(in millions)	Three months ended December 31, 2018			Nine months ended December 31, 2018
ASC 605 Balance, beginning of period ⁽¹⁾	$	—		$	2,434
Adjustment related to Topic 606 adoption ⁽¹⁾	—			(381		)
ASC 606 Balance, beginning of period	1,743			2,053
Deferred revenue	750			1,922
Recognition of deferred revenue	(682		)	(1,989		)
Currency translation adjustment	(29		)	(166		)
Other	33			(5		)
Balance, end of period	$	1,815		$	1,815

⁽¹⁾ ASC 606 was adopted at the beginning of fiscal 2019, as such there was no ASC 605 balance at the beginning of the period or cumulative adjustment related to Topic 606 adoption for the three months ended December 31, 2018.

The following table provides information about the Company’s capitalized costs to obtain and fulfill a contract:



(in millions)	As of December 31, 2018
Capitalized sales commission cost ⁽¹⁾	$	198
Transition and transformation contract costs, net ⁽²⁾	$	780

⁽¹⁾ Capitalized sales commission costs are included within other assets in the accompanying balance sheets. For the three and nine months ended December 31, 2018, amortization expense of $17 million and $51 million, respectively, related to the capitalized sales commission assets is included in selling, general, and administrative expenses in the accompanying statements of operations.

⁽²⁾ Transition and transformation contract costs, net reflect the Company’s setup costs incurred upon initiation of an outsourcing contract that are classified as intangible assets in the accompanying balance sheets. For the three and nine months ended December 31, 2018, amortization expense of $59 million and $188 million, respectively, is included within depreciation and amortization in the accompanying statements of operations.

Financial Statement Impact

The impact of adoption of ASC 606 on the selected captions of the Company's statements of operations and balance sheets was as follows:



Statement of Operations (Selected Captions)
	Three Months Ended December 31, 2018
(in millions)	As Reported			Amounts Without Adoption of ASC 606			Effect of Change Higher/(Lower)
Revenues	$	5,178		$	5,171		$	7
Costs of services	$	3,725		$	3,726		$	(1	)
Selling, general and administrative	$	491		$	506		$	(15	)
Interest income	$	(27	)	$	(30	)	$	(3	)
Income tax expense (benefit)	$	3		$	(5	)	$	8
Net income attributable to DXC common stockholders	$	462		$	450		$	12



Statement of Operations (Selected Captions)
	Nine Months Ended December 31, 2018
(in millions)	As Reported			Amounts Without Adoption of ASC 606			Effect of Change Higher/(Lower)
Revenues	$	15,473		$	15,452		$	21
Costs of services	$	11,110		$	11,114		$	(4	)
Selling, general and administrative	$	1,500		$	1,542		$	(42	)
Interest income	$	(92	)	$	(102	)	$	(10	)
Income tax expense	$	205		$	189		$	16
Net income attributable to DXC common stockholders	$	983		$	942		$	41



Balance Sheet (Selected Captions)
	As of December 31, 2018
(in millions)	As Reported			Amounts Without Adoption of ASC 606			Effect of Change Higher/(Lower)
Assets:
Receivables and contract assets, net of allowance for doubtful accounts	$	5,096		$	5,109		$	(13	)
Other current assets	$	325		$	372		$	(47	)
Deferred income taxes, net	$	407		$	421		$	(14	)
Other assets	$	2,393		$	2,463		$	(70	)

Liabilities:
Accrued expenses and other current liabilities	$	3,228		$	3,230		$	(2	)
Deferred revenue and advance contract payments	$	1,542		$	1,623		$	(81	)
Income taxes payable	$	122		$	102		$	20
Non-current deferred revenue	$	273		$	520		$	(247	)
Non-current income tax liabilities and deferred tax liabilities	$	1,171		$	1,150		$	21

Equity:
Retained earnings	$	274		$	122		$	152
Accumulated other comprehensive loss	$	(464	)	$	(459	)	$	(5	)

The adoption of ASC 606 did not materially impact the statement of cash flows.