Leases

12 Months Ended

Mar. 31, 2020

As described in Note 1 – “Overview and Summary of Significant Accounting Policies” under the heading “Recently Adopted Accounting Pronouncements,” effective April 1, 2019, we adopted ASC 842 using the optional transition method. In accordance with the optional transition method, we did not recast the prior period financial statements, and all prior period amounts and disclosures are presented under ASC 840.

The components of lease expense were as follows:



(in millions)	Statement of Operations Line Item(s)	Fiscal Year Ended March 31, 2020
Finance lease expense
Amortization of leased assets	Depreciation and amortization	$	122
Interest on lease obligations	Interest expense, net	17
Total finance lease expense		139
Operating lease expense	Cost of services and selling, general and administrative	54
Variable lease expense	Cost of services and selling, general and administrative	11
Sublease income	Cost of services and selling, general and administrative	(4		)
Total lease expense, net		$	200

Under ASC 840, rental expense was approximately $56 million and $44 million during the fiscal years ended March 31, 2019 and 2018, respectively. Also under ASC 840, net interest expense on finance lease obligations was $20 million and $12 million for the fiscal years ended March 31, 2019 and 2018, respectively.

Supplemental balance sheet information related to leases was as follows:



(in millions)	Balance Sheet Line Item	March 31, 2020			March 31, 2019
Assets
Finance lease assets, gross	Property and equipment, net	$	395		$	377
Accumulated depreciation	Property and equipment, net	(168		)	(130		)
Finance lease assets, net	Property and equipment, net	227			247
Operating lease assets	Other assets	157			—
Total lease assets		$	384		$	247
Liabilities
Current
Finance leases	Current finance lease obligations	$	111		$	137
Operating leases	Other current liabilities	39			—
Non-current
Finance leases	Non-current finance lease obligations	136			168
Operating leases	Other long-term liabilities	129			—
Total lease liabilities		$	415		$	305

Supplemental cash flow information related to leases was as follows:



(in millions)	Fiscal Year Ended March 31, 2020
Cash paid for amounts included in the measurement of lease obligations:
Operating cash flows from operating leases	$	51
Operating cash flows from finance leases	18
Financing cash flows from finance leases	141

The Company includes both the amortization of operating lease assets and changes in the lease liabilities in changes in other assets and liabilities, net on the statement of cash flows.

The weighted average remaining lease terms and discount rates were as follows:



	March 31, 2020
Weighted average remaining lease term (in years):
Finance leases	2.8
Operating leases	5.6
Weighted average discount rate:
Finance leases	6.26	%
Operating leases	4.32	%

As of March 31, 2020, future minimum lease payments required to be made under leases were as follows:



Fiscal Year (in millions)	Operating Leases			Finance Leases
2021	$	45		$	123
2022	35			82
2023	30			42
2024	22			16
2025	18			4
Thereafter	41			—
Total minimum lease payments	191			267
Less: Amount representing interest	(23		)	(20		)
Present value of net minimum lease payments	$	168		$	247

As of March 31, 2020, the Company had aggregate rent obligations of $27 million for operating leases and $5 million for finance leases, for leases that have not commenced, with terms ranging from less than one to eight years.

On October 4, 2019, we completed a sale and leaseback transaction of our Herndon, Virginia facility. The land and buildings sold had a carrying value of $23 million, which was included in other current assets on our balance sheet as of March 31, 2019. We recognized a pre-tax gain on sale of assets of $33 million included in other (income) expense, net on the statements of operations for the year ended March 31, 2020. The leaseback period will facilitate the Company’s exit from the facility.

On December 13, 2019, we completed a sale and leaseback transaction of our Clarksville, Virginia facility. The land and building sold had a carrying value of $26 million, which was included in property and equipment, net on our balance sheet as of March 31, 2019. We recognized an insignificant gain on the sale. The future minimum lease payments required to be made under the leaseback are approximately $15 million over seven years.

Leases

The components of lease expense were as follows:



(in millions)	Statement of Operations Line Item(s)	Fiscal Year Ended March 31, 2020
Finance lease expense
Amortization of leased assets	Depreciation and amortization	$	122
Interest on lease obligations	Interest expense, net	17
Total finance lease expense		139
Operating lease expense	Cost of services and selling, general and administrative	54
Variable lease expense	Cost of services and selling, general and administrative	11
Sublease income	Cost of services and selling, general and administrative	(4		)
Total lease expense, net		$	200

Supplemental balance sheet information related to leases was as follows:



(in millions)	Balance Sheet Line Item	March 31, 2020			March 31, 2019
Assets
Finance lease assets, gross	Property and equipment, net	$	395		$	377
Accumulated depreciation	Property and equipment, net	(168		)	(130		)
Finance lease assets, net	Property and equipment, net	227			247
Operating lease assets	Other assets	157			—
Total lease assets		$	384		$	247
Liabilities
Current
Finance leases	Current finance lease obligations	$	111		$	137
Operating leases	Other current liabilities	39			—
Non-current
Finance leases	Non-current finance lease obligations	136			168
Operating leases	Other long-term liabilities	129			—
Total lease liabilities		$	415		$	305

Supplemental cash flow information related to leases was as follows:



(in millions)	Fiscal Year Ended March 31, 2020
Cash paid for amounts included in the measurement of lease obligations:
Operating cash flows from operating leases	$	51
Operating cash flows from finance leases	18
Financing cash flows from finance leases	141

The Company includes both the amortization of operating lease assets and changes in the lease liabilities in changes in other assets and liabilities, net on the statement of cash flows.

The weighted average remaining lease terms and discount rates were as follows:



	March 31, 2020
Weighted average remaining lease term (in years):
Finance leases	2.8
Operating leases	5.6
Weighted average discount rate:
Finance leases	6.26	%
Operating leases	4.32	%

As of March 31, 2020, future minimum lease payments required to be made under leases were as follows:



Fiscal Year (in millions)	Operating Leases			Finance Leases
2021	$	45		$	123
2022	35			82
2023	30			42
2024	22			16
2025	18			4
Thereafter	41			—
Total minimum lease payments	191			267
Less: Amount representing interest	(23		)	(20		)
Present value of net minimum lease payments	$	168		$	247

Leases

The components of lease expense were as follows:



(in millions)	Statement of Operations Line Item(s)	Fiscal Year Ended March 31, 2020
Finance lease expense
Amortization of leased assets	Depreciation and amortization	$	122
Interest on lease obligations	Interest expense, net	17
Total finance lease expense		139
Operating lease expense	Cost of services and selling, general and administrative	54
Variable lease expense	Cost of services and selling, general and administrative	11
Sublease income	Cost of services and selling, general and administrative	(4		)
Total lease expense, net		$	200

Supplemental balance sheet information related to leases was as follows:



(in millions)	Balance Sheet Line Item	March 31, 2020			March 31, 2019
Assets
Finance lease assets, gross	Property and equipment, net	$	395		$	377
Accumulated depreciation	Property and equipment, net	(168		)	(130		)
Finance lease assets, net	Property and equipment, net	227			247
Operating lease assets	Other assets	157			—
Total lease assets		$	384		$	247
Liabilities
Current
Finance leases	Current finance lease obligations	$	111		$	137
Operating leases	Other current liabilities	39			—
Non-current
Finance leases	Non-current finance lease obligations	136			168
Operating leases	Other long-term liabilities	129			—
Total lease liabilities		$	415		$	305

Supplemental cash flow information related to leases was as follows:



(in millions)	Fiscal Year Ended March 31, 2020
Cash paid for amounts included in the measurement of lease obligations:
Operating cash flows from operating leases	$	51
Operating cash flows from finance leases	18
Financing cash flows from finance leases	141

The Company includes both the amortization of operating lease assets and changes in the lease liabilities in changes in other assets and liabilities, net on the statement of cash flows.

The weighted average remaining lease terms and discount rates were as follows:



	March 31, 2020
Weighted average remaining lease term (in years):
Finance leases	2.8
Operating leases	5.6
Weighted average discount rate:
Finance leases	6.26	%
Operating leases	4.32	%

As of March 31, 2020, future minimum lease payments required to be made under leases were as follows:



Fiscal Year (in millions)	Operating Leases			Finance Leases
2021	$	45		$	123
2022	35			82
2023	30			42
2024	22			16
2025	18			4
Thereafter	41			—
Total minimum lease payments	191			267
Less: Amount representing interest	(23		)	(20		)
Present value of net minimum lease payments	$	168		$	247