Revenue (Tables)

9 Months Ended

Dec. 31, 2018

Revenue from Contract with Customer [Abstract]

Summary of Revenue Disaggregated by Geography

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.

Summary of Contract Assets and Liabilities

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.

Summary of Capitalized Contract Costs

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.

Schedule of Recently Adopted Accounting Pronouncements and New Accounting Pronouncements

Effective April 1, 2018, DXC adopted the following Accounting Standards Updates ("ASU") issued by the Financial Accounting Standards Board:



Date Issued and ASU	Date Adopted and Method	Description	Impact
May 2014 ASU 2014-09 “Revenue from Contracts with Customers (Topic 606)"	April 1, 2018 Modified-retrospective	The core principle of this update, and the subsequent amendments, is that revenue is recognized when the transfer of goods or services to customers occurs in an amount that reflects the consideration to which DXC expects to be entitled in exchange for those goods or services. The guidance also addresses the timing of recognition of certain costs incurred to obtain or fulfill a customer contract. Further, it requires the disclosure of sufficient information to enable readers of DXC’s financial statements to understand the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, and information regarding significant judgments and changes in judgments made. This update provides two methods of adoption: full retrospective and modified retrospective. Under the full retrospective method, the standard would be applied to all periods presented with previously disclosed periods restated under the new guidance. Under the modified retrospective method, prior periods would not be restated but rather a cumulative catch-up adjustment would be recorded on the adoption date.	The Company adopted this standard using the modified retrospective method. The Company has applied the standard to only those contracts that were not completed at the adoption date. The adoption resulted in the following impacts. The Company recorded a net increase to opening retained earnings, net of income taxes, of approximately $114 million as of April 1, 2018 due to the cumulative impact of adopting Topic 606, with the impact primarily related to the capitalization of certain sales commissions of approximately $158 million offset by a reduction in income tax assets and liabilities of approximately $40 million. In addition, the Company has recorded a reduction in contract liabilities of approximately $381 million and other current assets and other assets of $385 million, primarily related to the net down of certain long-term contract asset and contract liability balances and the change in timing of revenue and costs recognized related to the Company's software contracts. Refer to Note 12 - “Revenue” for further discussion of the impact of adoption and other required disclosures.



March 2017 ASU 2017-07 “Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost"	April 1, 2018 Retrospective	This update is intended to improve the presentation of net periodic pension cost and net periodic post-retirement benefit cost in an entity's financial statements by requiring the service cost component be disaggregated from other components of net benefit costs and presented in the same line item or items as other compensation costs for the employees. Additionally, only the service cost component of net benefit cost is eligible for capitalization when applicable. This update must be applied retrospectively.	DXC reclassified non-service cost components of net periodic pension (income) expense from "costs of services" and "selling, general and administrative" to "other income, net" in the statements of operations for the three and nine months ended December 31, 2017. The aggregate service cost component of net periodic pension income remaining in "costs of services" and "selling, general and administrative" is $30 million and $96 million, for the three and nine months ended December 31, 2017, respectively.
August 2016 ASU 2016-15 “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments"	April 1, 2018 Retrospective	This update addressed eight cash flow classification issues that have created diversity in practice, providing definitive guidance on classification of certain cash receipts and payments. This update must be adopted retrospectively for all periods presented but may be applied prospectively if retrospective application would be impracticable	ASU 2016-15 requires the company to classify cash receipts related to its beneficial interests in securitization transactions, which is the deferred purchase price (the “DPP”) recorded in connection with the Company's Receivables Securitization Facility, within investing activities in its statements of cash flows. The Company adopted ASU 2016-15 effective April 1, 2018, and retrospectively adjusted prior fiscal periods, using each month’s transactional activity as the unit of account in determining the portions of transferred trade receivables as operating activities and investing activities. As disclosed in prior quarters the Company was evaluating the unit of account used in implementing ASU 2016-15. During the third quarter of fiscal 2019, the Company completed its evaluation and determined that it was necessary to change the unit of account from each month's transactional activity to each day's transactional activity. The Company reflected this change on a retrospective basis as further discussed in Note 21 - "Reconciliation of Previously Reported Amounts to Recast Financial Statements. See Note 6 - "Sale of Receivables" for more information about the Receivables Securitization Facility.
November 2016 ASU 2016-18 “Statement of Cash Flows (Topic 230): Restricted Cash (A Consensus of the FASB Emerging Issues Task Force")	April 1, 2018 Retrospective	This update requires that amounts described as restricted cash or restricted cash equivalents must be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. This update must be applied retrospectively.	DXC reclassified restricted cash to beginning-of-period and end-of-period cash and cash equivalents on the statement of cash flows.

See Note 21 - "Reconciliation of Previously Reported Amounts to Recast Financial Statements" for the financial statement impact of the adoption of these ASU's.

The following ASUs were recently issued but have not yet been adopted by DXC:



Date Issued and ASU	DXC Effective Date	Description	Impact
February 2016 ASU 2016-02 "Leases (Topic 842)"	Fiscal 2020	This update is intended to increase transparency and comparability among organizations by recognizing virtually all lease assets and lease liabilities on the balance sheet and disclosing key information about lease arrangements. Early adoption of this update is permitted. This update must be adopted using a modified retrospective transition at the beginning of the earliest period presented or at the adoption date recognizing a cumulative adjustment to the opening balance of retained earnings in the period of adoption and provides for certain practical expedients.	DXC is currently evaluating the effect the adoption of this standard will have on its existing accounting policies and the financial statements in future reporting periods. The Company expects there will be a material increase in assets and liabilities on its balance sheets at adoption due to the recording of right-of-use assets and corresponding lease liabilities for lease obligations that are currently classified as operating leases. The Company is in the process of implementing changes to its systems, processes and controls, including the implementation of a lease accounting software solution to comply with the new standard. DXC expects to adopt certain transition expedients permitted under Topic 842, as follows: DXC expects to adopt this standard on a modified retrospective basis beginning on the adoption date, with comparative period disclosures following ASC 840 requirements. DXC does not expect to reassess lease determination, lease classification or indirect cost capitalization for leases that commenced prior to the adoption date. DXC does not expect to recognize on the balance sheet leases that both (i) have a ‘lease term’ of 12 months or less and (ii) do not contain a ‘reasonably certain’ purchase option.
August 2017 ASU 2017-12 "Derivatives & Hedging (Topic 815)"	Fiscal 2020 with early adoption expected in the fourth quarter of Fiscal 2019	This update is intended to improve the financial reporting of hedge relationships to better portray the economic results of an entity's risk management activities in its financial statements, by revising and expanding items eligible for hedge accounting, simplifying hedge effectiveness testing and changing the timing of recognition and presentation of certain hedge items. Early adoption is permitted.	DXC does not expect the adoption of this standard to have a material impact on its financial statements. DXC expects to adopt this standard on a modified retrospective basis.

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	)