EX-99.1 2 dxcfy19q4pressrelease.htm EXHIBIT 99.1 Exhibit






Exhibit 99.1
 
Moved on Business Wire
 
May 23, 2019


DXC Technology Delivers Strong Fourth Quarter Results with
Sequential Growth in Revenue, Bookings, and Cash Flow

•
Q4 earnings per share from continuing operations was $1.01, including the cumulative impact of certain items of $(1.18) per share, reflecting restructuring costs, transaction, separation and integration-related costs, amortization of acquired intangible assets, and pension and OPEB actuarial and settlement losses
•
Q4 non-GAAP earnings per share was $2.19
•
FY19 earnings per share from continuing operations was $4.35, including the cumulative impact of certain items of $(3.99)
•
FY19 non-GAAP earnings per share from continuing operations was $8.34
•
Q4 net cash from operating activities was $748 million and FY19 net cash from operating activities was $1,783 million
•
Q4 adjusted free cash flow was $917 million and FY19 adjusted free cash flow was $2,105 million
•
FY19 capital returned to shareholders was $210 million in dividends and $1,339 million in share repurchases

TYSONS, Va., May 23, 2019 - DXC Technology (NYSE: DXC) today reported results for the three and twelve months ended March 31, 2019.
 
“DXC Technology closed out our fourth quarter, and our fiscal year, by delivering strong digital performance and sequential growth in revenue, bookings, and cash flow,” said Mike Lawrie, chairman, president and CEO. “We continued to enhance our portfolio of digital offerings, and we are re-skilling current employees to equip them with new digital capabilities and certifications. We have also hired thousands of new employees with advanced digital skills, and added more through acquisitions, to further scale our digital workforce. Our acquisition of Luxoft is expected to be completed as planned by the end of June, and this will further strengthen DXC’s ability to design and deploy transformative digital solutions for clients at scale.”

Financial Highlights - Fourth Quarter Fiscal 2019
•
Diluted earnings per share from continuing operations was $1.01 in the fourth quarter, including $(0.13) per share of restructuring costs, $(0.24) per share of transaction, separation and integration-related costs, $(0.37) per share of amortization of acquired intangible assets, and $(0.43) per share of pension and OPEB actuarial and settlement losses. This compares with $1.80 in the year ago period.
•
Non-GAAP diluted earnings per share from continuing operations was $2.19.
•
Revenue in the fourth quarter was $5,280 million compared with $5,584 million in the year ago period.
•
Income from continuing operations before income taxes was $354 million for the fourth quarter, including $(47) million of restructuring costs, $(96) million of transaction, separation and integration-related costs, $(138) million of amortization of acquired intangibles, and $(143) million of pension and OPEB actuarial and settlement losses. This compares with $588 million in the year ago period.
•
Non-GAAP income from continuing operations before income taxes was $778 million compared with $812 million in the year ago period.
•
Net income was $271 million for the fourth quarter, including $(35) million of restructuring costs, $(66) million of transaction, separation and integration-related costs, $(101) million of amortization of acquired intangibles, and $(116) million of pension and OPEB actuarial and settlement losses. This compares with $565 million in the prior year period.
•
Non-GAAP net income was $589 million.
•
Adjusted EBIT was $827 million in the fourth quarter compared with $882 million in the prior year. Adjusted EBIT margin was 15.7% compared with 15.8% in the year ago quarter.
•
Net cash provided by operating activities was $748 million in the fourth quarter, compared with $557 million in the year ago period.
•
Adjusted free cash flow was $917 million in the fourth quarter.

1







Financial Highlights - Fiscal 2019
•
Diluted earnings per share from continuing operations was $4.35 in fiscal 2019, including $(1.25) per share of restructuring costs, $(1.06) per share of transaction, separation and integration-related costs, $(1.42) per share of amortization of acquired intangible assets, $(0.41) per share of pension and OPEB actuarial and settlement losses, and $0.16 per share of tax adjustment related to U.S. tax reform. This compares with $5.23 in the year ago period.
•
Non-GAAP diluted earnings per share from continuing operations was $8.34.
•
Revenue in fiscal 2019 was $20,753 million compared with $21,733 million in the year ago period.
•
Income from continuing operations before income taxes was $1,515 million for fiscal 2019, including $(465) million of restructuring costs, $(401) million of transaction, separation and integration-related costs, $(539) million of amortization of acquired intangibles, and $(143) million of pension and OPEB actuarial and settlement losses. This compares with $1,304 million in the year ago period.
•
Non-GAAP income from continuing operations before income taxes was $3,063 million compared with $2,758 million in the prior year.
•
Net income was $1,262 million for fiscal 2019, including $(353) million of restructuring costs, $(299) million of transaction, separation and integration-related costs, $(401) million of amortization of acquired intangibles, $(116) million of pension and OPEB actuarial and settlement losses, and $44 million of tax adjustment related to U.S. tax reform. This compares with $1,782 million in the prior year period.
•
Non-GAAP net income was $2,387 million.
•
Adjusted EBIT was $3,269 million in fiscal 2019 compared with $2,989 million in the prior year. Adjusted EBIT margin was 15.8% compared with 13.8% in the prior year.
•
Net cash provided by operating activities was $1,783 million in fiscal 2019, compared with $2,567 million in the prior year.
•
Adjusted free cash flow was $2,105 million in fiscal 2019.

Global Business Services (GBS)
GBS revenue was $2,191 million in the quarter compared to $2,361 million for the prior year. GBS revenues decreased 7.2% year-over-year, reflecting headwinds in the traditional applications business, including the impact of accelerated cloud adoption. GBS profit margin in the quarter was 20.4%, up from 19.4% in the prior year, reflecting ongoing workforce optimization. New business awards for GBS were $2,857 million in the fourth quarter.

Global Infrastructure Services (GIS)
GIS revenue was $3,089 million in the quarter compared to $3,223 million for the prior year. GIS revenues decreased 4.2% year-over-year. The GIS revenue reflects the ongoing migration out of legacy infrastructure environments, offset by growth in cloud infrastructure and digital workplace. GIS profit margin in the quarter was 14.1%, down from 14.6% in the prior year, reflecting investments in digital capabilities and assets. New business awards for GIS were $2,968 million in the fourth quarter.

Returning Capital to Shareholders
During the fourth quarter, DXC Technology returned $142 million to shareholders, consisting of $51 million of common stock dividends and $91 million in share repurchases.
Earnings Conference Call and Webcast
DXC Technology senior management will host a conference call and webcast today at 5 p.m. EDT. The dial-in number for domestic callers is (888) 394-8218. Callers who reside outside of the United States should dial +1 (323) 794-2588. The passcode for all participants is 9706900. The webcast audio and any presentation slides will be available on DXC Technology’s Investor Relations website.
A replay of the conference call will be available from approximately two hours after the conclusion of the call until May 30, 2019. The replay passcode is also 9706900. 



2







Non-GAAP Measures
In an effort to provide investors with supplemental financial information, in addition to the preliminary and unaudited financial information presented on a GAAP and pro forma basis, we have also disclosed in this press release preliminary non-GAAP information including: constant currency, earnings before interest and taxes ("EBIT"), EBIT margin, adjusted EBIT, adjusted EBIT margin, non-GAAP income before income taxes, non-GAAP net income, non-GAAP EPS and adjusted free cash flow. Reconciliations of the preliminary non-GAAP measures to the respective most directly comparable measures calculated on a GAAP or pro forma basis, as well as the rationale for management’s use of non-GAAP measures, are included below.

About DXC Technology
As the world's leading independent, end-to-end IT services company, DXC Technology (NYSE: DXC) leads digital transformations for clients by modernizing and integrating their mainstream IT, and by deploying digital solutions at scale to produce better business outcomes. The company’s technology independence, global talent, and extensive partner network enable 6,000 private and public-sector clients in 70 countries to thrive on change. DXC is a recognized leader in corporate responsibility. For more information, visit dxc.technology and explore thrive.dxc.technology, DXC’s digital destination for changemakers and innovators.


All statements in this press release that do not directly and exclusively relate to historical facts constitute “forward-looking statements.” These statements represent current expectations and beliefs, and no assurance can be given that the results described in such statements will be achieved. Such statements are subject to numerous assumptions, risks, uncertainties and other factors that could cause actual results to differ materially from those described in such statements, many of which are outside of our control. For a written description of these factors, see the section titled “Risk Factors” in DXC's Quarterly Reports on Form 10-Q for the quarters ended June 30, 2018, September 30, 2018, December 31, 2018 and any updating information in subsequent SEC filings, including DXC's upcoming Form 10-K for the fiscal year ended March 31, 2019. No assurance can be given that any goal or plan set forth in any forward-looking statement can or will be achieved, and readers are cautioned not to place undue reliance on such statements which speak only as of the date they are made. We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events except as required by law.


# # #

Contact:
Richard Adamonis, Corporate Media Relations, +1-862-228-3481, radamonis@dxc.com
Jonathan Ford, Investor Relations, +1-703-245-9700, jonathan.ford@dxc.com


3






Consolidated Statements of Operations
(preliminary and unaudited)
 
 
Three Months Ended
 
Twelve Months Ended
(in millions, except per-share amounts)
 
March 31, 2019
 
March 31, 2018
 
March 31, 2019
 
March 31, 2018
 
 
 
 
 
 
 
 
 
Revenues
 
$
5,280

 
$
5,584

 
$
20,753

 
$
21,733

 
 
 
 
 
 
 
 
 
Costs of services
 
3,836

 
4,087

 
14,946

 
16,317

Selling, general and administrative
 
459

 
406

 
1,959

 
1,890

Depreciation and amortization
 
505

 
531

 
1,968

 
1,795

Restructuring costs
 
47

 
204

 
465

 
789

Interest expense
 
85

 
100

 
334

 
320

Interest income
 
(36
)
 
(30
)
 
(128
)
 
(89
)
Other expense (income), net
 
30

 
(302
)
 
(306
)
 
(593
)
Total costs and expenses
 
4,926

 
4,996

 
19,238

 
20,429

 
 
 
 
 
 
 
 
 
Income, before income taxes
 
354

 
588

 
1,515

 
1,304

Income tax expense (benefit)
 
83

 
61

 
288

 
(242
)
Income from continuing operations
 
271

 
527

 
1,227

 
1,546

Income from discontinued operations, net of taxes
 
—

 
38

 
35

 
236

Net income
 
271

 
565

 
1,262

 
1,782

Less: net (loss) income attributable to non-controlling interest, net of tax
 
(3
)
 
5

 
5

 
31

Net income attributable to DXC common stockholders
 
$
274

 
$
560

 
$
1,257

 
$
1,751

 
 
 
 
 
 
 
 
 
Income per common share:
 
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
 
Continuing operations
 
$
1.02

 
$
1.83

 
$
4.40

 
$
5.32

Discontinued operations
 
—

 
0.13

 
0.13

 
0.83

 
 
$
1.02

 
$
1.96

 
$
4.53

 
$
6.15

Diluted:
 
 
 
 
 
 
 
 
Continuing operations
 
$
1.01

 
$
1.80

 
$
4.35

 
$
5.23

Discontinued operations
 
—

 
0.13

 
0.12

 
0.81

 
 
$
1.01

 
$
1.93

 
$
4.47

 
$
6.04

 
 
 
 
 
 
 
 
 
Cash dividend per common share
 
$
0.19

 
$
0.18

 
$
0.76

 
$
0.72

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding for:
 
 
 
 
 
 
 
 
   Basic EPS
 
268.59

 
285.64

 
277.54

 
284.93

   Diluted EPS
 
270.82

 
290.20

 
281.43

 
289.77



4






Selected Consolidated Balance Sheet Data
(preliminary and unaudited)
 
 
As of
(in millions)
 
March 31, 2019
 
March 31, 2018
Assets
 
 
 
 
Cash and cash equivalents
 
$
2,899

 
$
2,593

Receivables, net
 
5,218

 
5,481

Prepaid expenses
 
627

 
496

Other current assets
 
345

 
469

Assets of discontinued operations
 
—

 
581

Total current assets
 
9,089

 
9,620

 
 
 
 
 
Intangible assets, net
 
5,939

 
6,376

Goodwill
 
7,606

 
7,619

Deferred income taxes, net
 
329

 
373

Property and equipment, net
 
3,179

 
3,363

Other assets
 
3,358

 
3,207

Assets of discontinued operations - non-current
 
—

 
3,363

Total Assets
 
$
29,500

 
$
33,921

 
 
 
 
 
Liabilities
 
 
 
 
Short-term debt and current maturities of long-term debt
 
$
1,942

 
$
1,918

Accounts payable
 
1,666

 
1,513

Accrued payroll and related costs
 
652

 
744

Accrued expenses and other current liabilities
 
3,355

 
3,120

Deferred revenue and advance contract payments
 
1,630

 
1,641

Income taxes payable
 
91

 
127

Liabilities of discontinued operations
 
—

 
789

Total current liabilities
 
9,336

 
9,852

 
 
 
 
 
Long-term debt, net of current maturities
 
5,470

 
6,092

Non-current deferred revenue
 
256

 
795

Non-current pension obligations
 
790

 
879

Non-current income tax liabilities and deferred tax liabilities
 
1,219

 
1,166

Other long-term liabilities
 
695

 
844

Liabilities of discontinued operations - long-term
 
—

 
456

Total Liabilities
 
17,766

 
20,084

 
 
 
 
 
Total Equity
 
11,734

 
13,837

 
 
 
 
 
Total Liabilities and Equity
 
$
29,500

 
$
33,921



5






Consolidated Statements of Cash Flows
(preliminary and unaudited)
 
 
Twelve Months Ended
(in millions)
 
March 31, 2019
 
March 31, 2018
Cash flows from operating activities:
 
 
 
 
Net income
 
$
1,262

 
$
1,782

Adjustments to reconcile net income to net cash provided by operating activities:
 


 


Depreciation and amortization
 
2,023

 
2,014

Pension & other post-employment benefits, actuarial & settlement losses (gains)
 
143

 
(220
)
Share-based compensation
 
74

 
93

Deferred taxes
 
97

 
(842
)
(Gain) loss on dispositions
 
(163
)
 
4

Provision for losses on accounts receivable
 
(10
)
 
45

Unrealized foreign currency exchange losses
 
30

 
22

Impairment losses and contract write-offs
 
—

 
41

Amortization of debt issuance costs and (premium) discount
 
(10
)
 
(4
)
Cash surrender value in excess of premiums paid
 
(11
)
 
(11
)
Other non-cash charges, net
 
11

 
4

Changes in assets and liabilities, net of effects of acquisitions and dispositions:
 
 
 
 
Increase in receivables
 
(947
)
 
(464
)
Increase in prepaid expenses and other current assets
 
(632
)
 
(196
)
(Decrease) increase in accounts payable and accruals
 
(52
)
 
(96
)
(Decrease) increase in income taxes payable and income tax liability
 
(107
)
 
303

(Decrease) increase in advance contract payments and deferred revenue
 
(74
)
 
130

Other operating activities, net
 
149

 
(38
)
Net cash provided by operating activities
 
1,783

 
2,567

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Purchases of property and equipment
 
(297
)
 
(224
)
Payments for transition and transformation contract costs
 
(394
)
 
(328
)
Software purchased and developed
 
(261
)
 
(211
)
Cash acquired through HPES Merger
 
—

 
938

Payments for acquisitions, net of cash acquired
 
(365
)
 
(203
)
Business dispositions
 
(65
)
 
—

Cash collections related to deferred purchase price receivable
 
1,084

 
685

Proceeds from sale of assets
 
357

 
58

Other investing activities, net
 
10

 
4

Net cash provided by (used in) investing activities
 
69

 
719

 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Borrowings of commercial paper
 
2,747

 
2,413

Repayments of commercial paper
 
(2,840
)
 
(2,297
)
Repayment of borrowings under lines of credit
 
—

 
(737
)
Borrowings on long-term debt, net of discount
 
1,646

 
621

Principal payments on long-term debt
 
(2,625
)
 
(1,547
)
Payments on capital leases and borrowings for asset financing
 
(944
)
 
(1,060
)
Borrowings for USPS spin transaction
 
1,114

 
—

Proceeds from bond issuance
 
753

 
989

Proceeds from stock options and other common stock transactions
 
47

 
138

Taxes paid related to net share settlements of share-based compensation awards
 
(54
)
 
(76
)
Repurchase of common stock
 
(1,344
)
 
(132
)
Dividend payments
 
(210
)
 
(174
)
Other financing activities, net
 
47

 
(28
)
Net cash (used in) provided by financing activities
 
(1,663
)
 
(1,890
)
Effect of exchange rate changes on cash and cash equivalents
 
(19
)
 
65

Net increase in cash and cash equivalents
 
170

 
1,461

Cash and cash equivalents at beginning of year
 
2,729

 
1,268

Cash and cash equivalents at end of year
 
$
2,899

 
$
2,729


6







Segment Results

The following tables summarize segment revenue for the three and twelve months ended March 31, 2019 as compared to the three and twelve months ended March 31, 2018:

Segment Revenue
 
 
 
 
 
 
 
 
 
 
Three Months Ended
(in millions)
 
March 31, 2019
 
March 31, 2018
 
% Change
 
% Change in Constant Currency
GBS
 
$
2,191

 
$
2,361

 
(7.2
)%
 
(3.1
)%
GIS
 
3,089

 
3,223

 
(4.2
)%
 
0.6
 %
Total Revenues
 
$
5,280

 
$
5,584

 
(5.4
)%
 
(1.0
)%

Segment Revenue
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended
(in millions)
 
March 31, 2019
 
March 31, 2018
 
% Change
 
% Change in Constant Currency
GBS
 
$
8,684

 
$
9,254

 
(6.2
)%
 
(4.7
)%
GIS
 
12,069

 
12,479

 
(3.3
)%
 
(1.6
)%
Total Revenues
 
$
20,753

 
$
21,733

 
(4.5
)%
 
(2.9
)%


Segment Profit

We define segment profit as segment revenue less costs of services, segment selling, general and administrative, depreciation and amortization, and other income (excluding the movement in foreign currency exchange rates on our foreign currency denominated assets and liabilities and the related economic hedges). We do not allocate to our segments certain operating expenses managed at the corporate level. These unallocated costs include certain corporate function costs, stock-based compensation expense, pension and OPEB actuarial and settlement gains and losses, restructuring costs, transaction, separation and integration-related costs and amortization of acquired intangible assets.



7






Segment Profit
 
 
 
 
 
 
Three Months Ended
(in millions)
 
March 31, 2019
 
March 31, 2018
GBS profit
 
$
447

 
$
459

GIS profit
 
436

 
472

All other loss
 
(56
)
 
(49
)
Interest income
 
36

 
30

Interest expense
 
(85
)
 
(100
)
Restructuring costs
 
(47
)
 
(204
)
Transaction, separation and integration-related costs
 
(96
)
 
(86
)
Amortization of acquired intangibles
 
(138
)
 
(137
)
Pension and OPEB actuarial and settlement (losses) gains
 
(143
)
 
203

Income from continuing operations before taxes
 
$
354

 
$
588

 
 
 
 
 
Segment profit margins
 
 
 
 
GBS
 
20.4
%
 
19.4
%
GIS
 
14.1
%
 
14.6
%


Segment Profit
 
 
 
 
 
 
Twelve Months Ended
(in millions)
 
March 31, 2019
 
March 31, 2018
GBS profit
 
$
1,645

 
$
1,525

GIS profit
 
1,911

 
1,643

All other loss
 
(287
)
 
(179
)
Interest income
 
128

 
89

Interest expense
 
(334
)
 
(320
)
Restructuring costs
 
(465
)
 
(789
)
Transaction, separation and integration-related costs
 
(401
)
 
(359
)
Amortization of acquired intangibles
 
(539
)
 
(526
)
Pension and OPEB actuarial and settlement (losses) gains
 
(143
)
 
220

Income from continuing operations before taxes
 
$
1,515

 
$
1,304

 
 
 
 
 
Segment profit margins
 
 
 
 
GBS
 
18.9
%
 
16.5
%
GIS
 
15.8
%
 
13.2
%


8







Non-GAAP Financial Measures

We present non-GAAP financial measures of performance which are derived from the unaudited condensed consolidated statements of operations and unaudited pro forma combined company statement of operations of DXC. These non-GAAP financial measures include earnings before interest and taxes (“EBIT”), EBIT margin, adjusted EBIT, adjusted EBIT margin, non-GAAP income before income taxes, non-GAAP net income, non-GAAP EPS and adjusted free cash flow.

We present these non-GAAP financial measures to provide investors with meaningful supplemental financial information, in addition to the financial information presented on a GAAP or pro forma combined company basis. Non-GAAP financial measures exclude certain items from GAAP and pro forma combined company results which DXC management believes are not indicative of core operating performance. DXC management believes these non-GAAP measures provide investors supplemental information about the financial performance of DXC exclusive of the impacts of corporate wide strategic decisions. DXC management believes that adjusting for these items provides investors with additional measures to evaluate the financial performance of our core business operations on a comparable basis from period to period. DXC management believes the non-GAAP measures provided are also considered important measures by financial analysts covering DXC as equity research analysts continue to publish estimates and research notes based on our non-GAAP commentary, including our guidance around non-GAAP EPS.

There are limitations to the use of the non-GAAP financial measures presented in this report. One of the limitations is that they do not reflect complete financial results. We compensate for this limitation by providing a reconciliation between our non-GAAP financial measures and the respective most directly comparable financial measure calculated and presented in accordance with GAAP or on a pro forma combined company basis. Additionally, other companies, including companies in our industry, may calculate non-GAAP financial measures differently than we do, limiting the usefulness of those measures for comparative purposes between companies.

Reconciliation of Non-GAAP Financial Measures

Non-GAAP adjustments to our performance measures include:

•
Restructuring costs - reflects restructuring costs, net of reversals, related to workforce optimization and real estate charges.
•
Transaction, separation and integration-related costs - reflects costs related to integration planning, financing, and advisory fees associated with the HPES merger and other acquisitions and costs related to the separation of USPS.
•
Amortization of acquired intangible assets - reflects amortization of intangible assets acquired through business combinations.
•
Pension and OPEB actuarial and settlement gains and losses - reflects pension and OPEB actuarial and settlement gains and losses.
•
Tax adjustment - reflects the estimated non-recurring benefit of the Tax Cuts and Jobs Act of 2017 for fiscal 2019 and the application of an approximate 28% tax rate for fiscal 2018, which is within the targeted effective tax rate range for the prior year.


9






EBIT and Adjusted EBIT

Reconciliations of net income to adjusted EBIT are as follows:
 
 
Three Months Ended
 
Twelve Months Ended
(in millions)
 
March 31, 2019
 
March 31, 2018
 
March 31, 2019
 
March 31, 2018
Net income
 
$
271

 
$
565

 
$
1,262

 
$
1,782

Income from discontinued operations, net of taxes
 
—

 
(38
)
 
(35
)
 
(236
)
Income tax expense (benefit)
 
83

 
61

 
288

 
(242
)
Interest income
 
(36
)
 
(30
)
 
(128
)
 
(89
)
Interest expense
 
85

 
100

 
334

 
320

EBIT
 
403

 
658

 
1,721

 
1,535

Restructuring costs
 
47

 
204

 
465

 
789

Transaction, separation and integration-related costs
 
96

 
86

 
401

 
359

Amortization of acquired intangible assets
 
138

 
137

 
539

 
526

Pension and OPEB actuarial and settlement losses (gains)
 
143

 
(203
)
 
143

 
(220
)
Adjusted EBIT
 
$
827

 
$
882

 
$
3,269

 
$
2,989

 
 
 
 
 
 
 
 
 
Adjusted EBIT margin
 
15.7
%
 
15.8
%
 
15.8
%
 
13.8
%
EBIT margin
 
7.6
%
 
11.8
%
 
8.3
%
 
7.1
%


Adjusted Free Cash Flow

A reconciliation of net cash provided by operating activities to adjusted free cash flow is as follows:
 
 
Three Months Ended
 
Twelve Months Ended
(in millions)
 
March 31, 2019
 
March 31, 2019
Net cash provided by operating activities
 
$
748

 
$
1,783

Net cash provided by investing activities
 
109

 
69

Acquisitions, net of cash acquired
 
33

 
365

Business dispositions
 
—

 
65

Payments on capital leases and other long-term asset financings
 
(234
)
 
(944
)
Payments on transaction, separation and integration-related costs
 
96

 
373

Payments on restructuring costs
 
140

 
562

Sale of accounts receivables
 
25

 
(168
)
Adjusted free cash flow
 
$
917

 
$
2,105







10






Non-GAAP Results

A reconciliation of reported results to non-GAAP results is as follows:
 
 
Three Months Ended March 31, 2019
(in millions, except per-share amounts)
 
As Reported
 
Restructuring Costs
 
Transaction, Separation and Integration-Related Costs
 
Amortization of Acquired Intangible Assets
 
Pension and OPEB Actuarial and Settlement Losses
 
Non-GAAP Results
Costs of services (excludes depreciation and amortization and restructuring costs)
 
$
3,836

 
$
—

 
$
—

 
$
—

 
$
—

 
$
3,836

 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative (excludes depreciation and amortization and restructuring costs)
 
459

 
—

 
(96
)
 
—

 
—

 
363

 
 
 
 
 
 
 
 
 
 
 
 
 
Income before taxes
 
$
354

 
$
47

 
$
96

 
$
138

 
$
143

 
$
778

Income tax expense
 
83

 
12

 
30

 
37

 
27

 
189

Income from continuing operations
 
$
271

 
$
35

 
$
66

 
$
101

 
$
116

 
$
589

Discontinued operations, net of taxes
 
—

 
—

 
—

 
—

 
—

 
—

Net income
 
$
271

 
$
35

 
$
66

 
$
101

 
$
116

 
$
589

Less: net loss attributable to noncontrolling interest, net of tax
 
(3
)
 
—

 
—

 
—

 
—

 
(3
)
Net income attributable to DXC common stockholders
 
$
274

 
$
35

 
$
66

 
$
101

 
$
116

 
$
592

 
 
 
 
 
 
 
 
 
 
 
 
 
Effective tax rate
 
23.4
%
 
 
 
 
 
 
 
 
 
24.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS
 
$
1.02

 
$
0.13

 
$
0.25

 
$
0.38

 
$
0.43

 
$
2.20

Diluted EPS
 
$
1.01

 
$
0.13

 
$
0.24

 
$
0.37

 
$
0.43

 
$
2.19

 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding for:
 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS
 
268.59

 
268.59

 
268.59

 
268.59

 
268.59

 
268.59

Diluted EPS
 
270.82

 
270.82

 
270.82

 
270.82

 
270.82

 
270.82















11






 
 
Twelve Months Ended March 31, 2019
(in millions, except per-share amounts)
 
As Reported
 
Restructuring Costs
 
Transaction, Separation and Integration-Related Costs
 
Amortization of Acquired Intangible Assets
 
Pension and OPEB Actuarial and Settlement Losses
 
Tax Adjustment
 
Non-GAAP Results
Costs of services (excludes depreciation and amortization and restructuring costs)
 
$
14,946

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
14,946

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative (excludes depreciation and amortization and restructuring costs)
 
1,959

 
—

 
(401
)
 
—

 
—

 
—

 
1,558

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income before taxes
 
$
1,515

 
$
465

 
$
401

 
$
539

 
$
143

 
$
—

 
$
3,063

Income tax expense
 
288

 
112

 
102

 
138

 
27

 
44

 
711

Income from continuing operations
 
$
1,227

 
$
353

 
$
299

 
$
401

 
$
116

 
$
(44
)
 
$
2,352

Discontinued operations, net of taxes
 
35

 
—

 
—

 
—

 
—

 
—

 
35

Net income
 
$
1,262

 
$
353

 
$
299

 
$
401

 
$
116

 
$
(44
)
 
$
2,387

Less: net income attributable to noncontrolling interest, net of tax
 
5

 
—

 
—

 
—

 
—

 
—

 
5

Net income attributable to DXC common stockholders
 
$
1,257

 
$
353

 
$
299

 
$
401

 
$
116

 
$
(44
)
 
$
2,382

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective tax rate
 
19.0
%
 
 
 
 
 
 
 
 
 
 
 
23.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS
 
$
4.40

 
$
1.27

 
$
1.08

 
$
1.44

 
$
0.42

 
$
(0.16
)
 
$
8.46

Diluted EPS
 
$
4.35

 
$
1.25

 
$
1.06

 
$
1.42

 
$
0.41

 
$
(0.16
)
 
$
8.34

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding for:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS
 
277.54

 
277.54

 
277.54

 
277.54

 
277.54

 
277.54

 
277.54

Diluted EPS
 
281.43

 
281.43

 
281.43

 
281.43

 
281.43

 
281.43

 
281.43



12







 
 
Three Months Ended March 31, 2018
(in millions, except per-share amounts)
 
As Reported
 
Restructuring Costs
 
Transaction, Separation and Integration-Related Costs
 
Amortization of Acquired Intangible Assets
 
Pension and OPEB Actuarial and Settlement Gains
 
Tax Adjustment
 
Non-GAAP Results
Costs of services (excludes depreciation and amortization and restructuring costs)
 
$
4,087

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
4,087

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative (excludes depreciation and amortization and restructuring costs)
 
406

 
—

 
(86
)
 
—

 
—

 
—

 
320

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income before taxes
 
$
588

 
$
204

 
$
86

 
$
137

 
$
(203
)
 
$
—

 
$
812

Income tax expense
 
61

 
—

 
—

 
—

 
—

 
166

 
227

Income from continuing operations
 
$
527

 
$
204

 
$
86

 
$
137

 
$
(203
)
 
$
(166
)
 
$
585

Discontinued operations, net of taxes
 
38

 
—

 
—

 
—

 
—

 
—

 
38

Net income
 
$
565

 
$
204

 
$
86

 
$
137

 
$
(203
)
 
$
(166
)
 
$
623

Less: net income attributable to noncontrolling interest, net of tax
 
5

 
—

 
—

 
—

 
—

 
—

 
5

Net income attributable to DXC common stockholders
 
$
560

 
$
204

 
$
86

 
$
137

 
$
(203
)
 
$
(166
)
 
$
618

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective tax rate
 
10.4
%
 
 
 
 
 
 
 
 
 
 
 
28.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS
 
$
1.83

 
$
0.71

 
$
0.30

 
$
0.48

 
$
(0.71
)
 
$
(0.58
)
 
$
2.03

Diluted EPS
 
$
1.80

 
$
0.70

 
$
0.30

 
$
0.47

 
$
(0.70
)
 
$
(0.57
)
 
$
2.00

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding for:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS
 
285.64

 
285.64

 
285.64

 
285.64

 
285.64

 
285.64

 
285.64

Diluted EPS
 
290.20

 
290.20

 
290.20

 
290.20

 
290.20

 
290.20

 
290.20




13






 
 
Twelve Months Ended March 31, 2018
(in millions, except per-share amounts)
 
As Reported
 
Restructuring Costs
 
Transaction, Separation and Integration-Related Costs
 
Amortization of Acquired Intangible Assets
 
Pension and OPEB Actuarial and Settlement Gains
 
Tax Adjustment
 
Non-GAAP Results
Costs of services (excludes depreciation and amortization and restructuring costs)
 
$
16,317

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
16,317

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative (excludes depreciation and amortization and restructuring costs)
 
1,890

 
—

 
(359
)
 
—

 
—

 
—

 
1,531

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income before taxes
 
$
1,304

 
$
789

 
$
359

 
$
526

 
$
(220
)
 
$
—

 
$
2,758

Income tax (benefit) expense
 
(242
)
 
—

 
—

 
—

 
—

 
1,013

 
771

Income from continuing operations
 
$
1,546

 
$
789

 
$
359

 
$
526

 
$
(220
)
 
$
(1,013
)
 
$
1,987

Discontinued operations, net of taxes
 
236

 
—

 
—

 
—

 
—

 
—

 
236

Net income
 
$
1,782

 
$
789

 
$
359

 
$
526

 
$
(220
)
 
$
(1,013
)
 
$
2,223

Less: net income attributable to noncontrolling interest, net of tax
 
31

 
—

 
—

 
—

 
—

 
—

 
31

Net income attributable to DXC common stockholders
 
$
1,751

 
$
789

 
$
359

 
$
526

 
$
(220
)
 
$
(1,013
)
 
$
2,192

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective Tax Rate
 
(18.6
)%
 
 
 
 
 
 
 
 
 
 
 
28.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS
 
$
5.32

 
$
2.77

 
$
1.26

 
$
1.85

 
$
(0.77
)
 
$
(3.56
)
 
$
6.86

Diluted EPS
 
$
5.23

 
$
2.72

 
$
1.24

 
$
1.82

 
$
(0.76
)
 
$
(3.50
)
 
$
6.75

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding for:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic EPS
 
284.93

 
284.93

 
284.93

 
284.93

 
284.93

 
284.93

 
284.93

Diluted EPS
 
289.77

 
289.77

 
289.77

 
289.77

 
289.77

 
289.77

 
289.77





14