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DXC Technology Reports Fourth Quarter and Fiscal 2020 Results

DXC Technology (NYSE: DXC) today reported results for the three and twelve months ended March 31, 2020.

“I am very proud of how our team at DXC has navigated this world crisis, with an industry leading 99% of our people enabled to work virtually from home,” said Mike Salvino, president and CEO. “If COVID-19 taught us anything, it reinforces that what we do is incredibly relevant to today’s market. Our people have done a phenomenal job taking care of themselves and their families, while helping our customers enable their employees to work from home, fix needed upgrades to their IT infrastructure estates, stand-up cloud environments, deal with sudden surges of demand, and innovate. I am pleased with where we ended FY20. We have taken steps to ensure a strong financial position and enhance our financial flexibility. We are making good progress with our transformation journey to deliver and build stronger relationships with our customers, optimize our costs to better serve our customers, and capture a unique market opportunity by cross-selling the services that we do every day for our customers. The actions we are taking set up a solid foundation for growth.”

Financial Highlights - Fourth Quarter Fiscal 2020

  • Diluted earnings per share from continuing operations was $(13.79) in the fourth quarter, including $(0.01) per share of restructuring costs, $(0.28) per share of transaction, separation and integration-related costs, $(0.45) per share of amortization of acquired intangible assets, $(15.00) per share of goodwill impairment, $0.76 per share of pension and OPEB actuarial and settlement gains, and $0.02 per share of tax adjustment. This compares with $1.01 in the year ago period.
  • Non-GAAP diluted earnings per share from continuing operations was $1.20.
  • Revenue in the fourth quarter was $4,815 million compared with $5,280 million in the year ago period.
  • Loss from continuing operations before income taxes was $(3,562) million for the fourth quarter, including $(4) million of restructuring costs, $(92) million of transaction, separation and integration-related costs, $(148) million of amortization of acquired intangibles, $(3,854) million of goodwill impairment, and $244 million of pension and OPEB actuarial and settlement gains. This compares with $354 million in the year ago period.
  • Non-GAAP income from continuing operations before income taxes was $292 million compared with $778 million in the year ago period.
  • Net loss was $(3,501) million for the fourth quarter, including $(2) million of restructuring costs, $(72) million of transaction, separation and integration-related costs, $(114) million of amortization of acquired intangibles, $(3,812) million of goodwill impairment, $193 million of pension and OPEB actuarial and settlement gains, and $6 million of tax adjustment. This compares with $271 million in the prior year period.
  • Non-GAAP net income was $300 million.
  • Adjusted EBIT was $352 million in the fourth quarter compared with $827 million in the prior year. Adjusted EBIT margin was 7.3% compared with 15.7% in the year ago quarter.
  • Net cash provided by operating activities was $288 million in the fourth quarter, compared with $748 million in the year ago period.
  • Adjusted free cash flow was $131 million in the fourth quarter.

Financial Highlights - Fiscal 2020

  • Diluted earnings per share from continuing operations was $(20.76) in fiscal 2020, including $(0.80) per share of restructuring costs, $(0.98) per share of transaction, separation and integration-related costs, $(1.73) per share of amortization of acquired intangible assets, $(25.78) per share of goodwill impairment, $2.43 per share of gain on arbitration award, $0.74 per share of pension and OPEB actuarial and settlement gains, and $(0.13) per share of tax adjustment. This compares with $4.35 in the year ago period.
  • Non-GAAP diluted earnings per share from continuing operations was $5.58.
  • Revenue in fiscal 2020 was $19,577 million compared with $20,753 million in the year ago period.
  • Loss from continuing operations before income taxes was $(5,228) million for fiscal 2020, including $(252) million of restructuring costs, $(318) million of transaction, separation and integration-related costs, $(583) million of amortization of acquired intangibles, $(6,794) million of goodwill impairment, $632 million of gain on arbitration award, and $244 million of pension and OPEB actuarial and settlement gains. This compares with $1,515 million in the year ago period.
  • Non-GAAP income from continuing operations before income taxes was $1,843 million compared with $3,063 million in the prior year.
  • Net loss was $(5,358) million for fiscal 2020, including $(208) million of restructuring costs, $(255) million of transaction, separation and integration-related costs, $(450) million of amortization of acquired intangibles, $(6,699) million of goodwill impairment, 632 million of gain on arbitration award, $193 million of pension and OPEB actuarial and settlement gains, and $(33) million of tax adjustment. This compares with $1,262 million in the prior year period.
  • Non-GAAP net income was $1,462 million.
  • Adjusted EBIT was $2,061 million in fiscal 2020 compared with $3,269 million in the prior year. Adjusted EBIT margin was 10.5% compared with 15.8% in the prior year.
  • Net cash provided by operating activities was $2,350 million in fiscal 2020, compared with $1,783 million in the prior year.
  • Adjusted free cash flow was $1,341 million in fiscal 2020.

Global Business Services (GBS)

GBS revenue was $2,308 million in the quarter compared to $2,191 million for the prior year. GBS revenues increased 5.3% year-over-year, reflecting the contribution from the Luxoft acquisition which was closed in June 2019. GBS profit margin in the quarter was 9.7%, down from 20.4% in the prior year, reflecting the impact of the resolution of certain customer disputes, the profit impact of lower revenue in our traditional applications business, and higher cost-take out activities in the prior year. New business awards for GBS were $2,185 million in the fourth quarter.

Global Infrastructure Services (GIS)

GIS revenue was $2,507 million in the quarter compared to $3,089 million for the prior year. GIS revenues decreased 18.8% year-over-year. The GIS revenue reflects the run-off and termination of certain accounts,. GIS profit margin in the quarter was 7.7%, down from 14.1% in the prior year, primarily driven by the profit impact from lower revenue. New business awards for GIS were $2,183 million in the fourth quarter.

Returning Capital to Shareholders; Suspension of Dividend

During the fourth quarter, DXC Technology returned $53 million to shareholders in the form of common stock dividends. To enhance the company’s financial flexibility under current uncertain market conditions the company has elected to suspend payment of a quarterly dividend. This decision will be reevaluated by the Board of DXC Technology as market conditions stabilize.

Earnings Conference Call and Webcast

DXC Technology senior management will host a conference call and webcast today at 4:45 p.m. EDT. The dial-in number for domestic callers is (800) 368-1029. Callers who reside outside of the United States should dial +1 (334) 777-6981. The passcode for all participants is 145605. 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 June 4, 2020. The replay passcode is 7889820.

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 basis, we have also disclosed in this press release preliminary non-GAAP information including: constant currency, earnings before interest and taxes ("EBIT"), adjusted EBIT, adjusted EBIT margin, adjusted free cash flow, and non-GAAP results including non-GAAP income from continuing operations before taxes, non-GAAP income from continuing operations and non-GAAP EPS from continuing operations.

About DXC Technology

DXC Technology (NYSE: DXC) helps global companies run their mission critical systems and operations while modernizing IT, optimizing data architectures, and ensuring security and scalability across public, private and hybrid clouds. With decades of driving innovation, the world’s largest companies trust DXC to deploy our enterprise technology stack to deliver new levels of performance, competitiveness and customer experiences. Learn more about the DXC story and our focus on people, customers and operational execution at www.dxc.technology.

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. Furthermore, many of these risks and uncertainties are currently amplified by and may continue to be amplified by or may, in the future, be amplified by, the recent outbreak of the novel coronavirus (“COVID-19”) pandemic and the impact of varying private and governmental responses that affect our customers, employees, vendors and the economies and communities where they operate. 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, 2019, September 30, 2019, December 31, 2019 and any updating information in subsequent SEC filings, including DXC's upcoming Form 10-K for the fiscal year ended March 31, 2020. 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.

Consolidated Statements of Operations

(preliminary and unaudited)

 

Three Months Ended

Twelve Months Ended

(in millions, except per-share amounts)

March 31, 2020

March 31, 2019

March 31, 2020

March 31, 2019

Revenues

$

4,815

$

5,280

$

19,577

$

20,753

Costs of services

3,773

3,836

14,901

14,946

Selling, general and administrative

536

459

2,050

1,959

Depreciation and amortization

526

505

1,942

1,968

Goodwill impairment losses

3,854

6,794

Restructuring costs

4

47

252

465

Interest expense

95

85

383

334

Interest income

(35

)

(36

)

(165

)

(128

)

Gain on arbitration award

(632

)

Other (income) expense, net

(376

)

30

(720

)

(306

)

Total costs and expenses

8,377

4,926

24,805

19,238

(Loss) income from continuing operations, before taxes

(3,562

)

354

(5,228

)

1,515

Income tax (benefit) expense

(61

)

83

130

288

(Loss) income from continuing operations

(3,501

)

271

(5,358

)

1,227

Income from discontinued operations, net of taxes

35

Net (loss) income

(3,501

)

271

(5,358

)

1,262

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

(6

)

(3

)

11

5

Net (loss) income attributable to DXC common stockholders

$

(3,495

)

$

274

$

(5,369

)

$

1,257

(Loss) income per common share:

Basic:

Continuing operations

$

(13.79

)

$

1.02

$

(20.76

)

$

4.40

Discontinued operations

0.13

$

(13.79

)

$

1.02

$

(20.76

)

$

4.53

Diluted:

Continuing operations

$

(13.79

)

$

1.01

$

(20.76

)

$

4.35

Discontinued operations

0.12

$

(13.79

)

$

1.01

$

(20.76

)

$

4.47

Cash dividend per common share

$

0.21

$

0.19

$

0.84

$

0.76

Weighted average common shares outstanding for:

Basic EPS

253.51

268.59

258.57

277.54

Diluted EPS

253.51

270.82

258.57

281.43

Selected Consolidated Balance Sheet Data

(preliminary and unaudited)

 

As of

(in millions)

March 31, 2020

March 31, 2019

Assets

Cash and cash equivalents

$

3,679

$

2,899

Receivables, net

4,392

5,181

Prepaid expenses

646

627

Other current assets

270

359

Total current assets

8,987

9,066

Intangible assets, net

5,731

5,939

Operating right-of-use assets, net

1,428

Goodwill

2,017

7,606

Deferred income taxes, net

265

355

Property and equipment, net

3,547

3,179

Other assets

4,031

3,429

Total Assets

$

26,006

$

29,574

Liabilities

Short-term debt and current maturities of long-term debt

$

1,276

$

1,942

Accounts payable

1,598

1,666

Accrued payroll and related costs

630

652

Current operating lease liabilities

482

Accrued expenses and other current liabilities

2,801

3,355

Deferred revenue and advance contract payments

1,021

1,630

Income taxes payable

87

208

Total current liabilities

7,895

9,453

Long-term debt, net of current maturities

8,672

5,470

Non-current deferred revenue

735

256

Non-current operating lease liabilities

1,063

Non-current pension obligations

761

790

Non-current income tax liabilities and deferred tax liabilities

1,157

1,184

Other long-term liabilities

594

696

Total Liabilities

20,877

17,849

Total Equity

5,129

11,725

Total Liabilities and Equity

$

26,006

$

29,574

Consolidated Statements of Cash Flows

(preliminary and unaudited)

 

Twelve Months Ended

(in millions)

March 31, 2020

March 31, 2019

Cash flows from operating activities:

Net (loss) income

$

(5,358

)

$

1,262

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

Depreciation and amortization

1,960

2,023

Goodwill impairment losses

6,794

Operating right-of-use expense

698

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

(244

)

143

Share-based compensation

68

74

Deferred taxes

(56

)

97

Loss (gain) on dispositions

1

(163

)

Provision for losses on accounts receivable

3

(10

)

Unrealized foreign currency exchange losses

24

30

Impairment losses and contract write-offs

30

Amortization of debt issuance costs and (premium) discount

(4

)

(10

)

Cash surrender value in excess of premiums paid

(12

)

(11

)

Other non-cash charges, net

11

Changes in assets and liabilities, net of effects of acquisitions and dispositions:

Decrease (increase) in receivables

269

(947

)

Increase in prepaid expenses and other current assets

(229

)

(632

)

Decrease in accounts payable and accruals

(565

)

(52

)

Decrease in income taxes payable and income tax liability

(197

)

(107

)

Decrease in operating lease liability

(698

)

(Decrease) increase in advance contract payments and deferred revenue

(146

)

(74

)

Other operating activities, net

12

149

Net cash provided by operating activities

2,350

1,783

Cash flows from investing activities:

Purchases of property and equipment

(350

)

(297

)

Payments for transition and transformation contract costs

(281

)

(394

)

Software purchased and developed

(235

)

(261

)

Payments for acquisitions, net of cash acquired

(1,997

)

(365

)

Business dispositions

(65

)

Cash collections related to deferred purchase price receivable

671

1,084

Proceeds from sale of assets

73

357

Short-term investing

(75

)

Proceeds from short-term investing

38

Other investing activities, net

19

10

Net cash (used in) provided by investing activities

(2,137

)

69

Cash flows from financing activities:

Borrowings of commercial paper

4,939

2,747

Repayments of commercial paper

(5,076

)

(2,840

)

Borrowings under lines of credit

1,500

Borrowings on long-term debt, net of discount

2,198

1,646

Principal payments on long-term debt

(1,039

)

(2,625

)

Payments on finance leases and borrowings for asset financing

(865

)

(944

)

Borrowings for USPS spin transaction

1,114

Proceeds from bond issuance

753

Proceeds from stock options and other common stock transactions

11

47

Taxes paid related to net share settlements of share-based compensation awards

(16

)

(54

)

Repurchase of common stock and advance payment for accelerated share repurchase

(736

)

(1,344

)

Dividend payments

(214

)

(210

)

Other financing activities, net

(45

)

47

Net cash provided by (used in) financing activities

657

(1,663

)

Effect of exchange rate changes on cash and cash equivalents

(90

)

(19

)

Net increase in cash and cash equivalents

780

170

Cash and cash equivalents at beginning of year

2,899

2,729

Cash and cash equivalents at end of year

$

3,679

$

2,899

Segment Results

The following tables summarize segment revenue for the three and twelve months ended March 31, 2020 as compared to the three and twelve months ended March 31, 2019:

Segment Revenue

Three Months Ended

(in millions)

March 31, 2020

March 31, 2019

% Change

% Change in
Constant
Currency

GBS

$

2,308

$

2,191

5.3

%

7.3

%

GIS

2,507

3,089

(18.8

)%

(16.9

)%

Total Revenues

$

4,815

$

5,280

(8.8

)%

(6.9

)%

Segment Revenue

Twelve Months Ended

(in millions)

March 31, 2020

March 31, 2019

% Change

% Change in
Constant
Currency

GBS

$

9,111

$

8,684

4.9

%

7.0

%

GIS

10,466

12,069

(13.3

)%

(11.1

)%

Total Revenues

$

19,577

$

20,753

(5.7

)%

(3.5

)%

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). The Company does not allocate to its 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, goodwill impairment and amortization of acquired intangible assets.

Segment Profit

Three Months Ended

Twelve Months Ended

(in millions)

March 31, 2020

March 31, 2019

March 31, 2020

March 31, 2019

GBS profit

$

223

$

447

$

1,301

$

1,645

GIS profit

192

436

1,007

1,911

All other loss

(63

)

(56

)

(247

)

(287

)

Interest income

35

36

165

128

Interest expense

(95

)

(85

)

(383

)

(334

)

Restructuring costs

(4

)

(47

)

(252

)

(465

)

Transaction, separation and integration-related costs

(92

)

(96

)

(318

)

(401

)

Amortization of acquired intangibles

(148

)

(138

)

(583

)

(539

)

Goodwill impairment losses

(3,854

)

(6,794

)

Gain on arbitration award

632

Pension and OPEB actuarial and settlement gains (losses)

244

(143

)

244

(143

)

(Loss) income from continuing operations before taxes

$

(3,562

)

$

354

$

(5,228

)

$

1,515

Segment profit margins

GBS

9.7

%

20.4

%

14.3

%

18.9

%

GIS

7.7

%

14.1

%

9.6

%

15.8

%

Non-GAAP Financial Measures

We present non-GAAP financial measures of performance which are derived from the statements 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 basis. Non-GAAP financial measures exclude certain items from GAAP results which DXC management believes are not indicative of core operating performance. DXC management believes these non-GAAP measures allow investors to better understand 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 targets.

Non-GAAP financial measures exclude certain items from GAAP results which DXC management believes are not indicative of operating performance such as the amortization of acquired intangible assets and transaction, separation and integration-related costs.

Incremental amortization of intangible assets acquired through business combinations may result in a significant difference in period over period amortization expense on a GAAP basis. We exclude amortization of certain acquired intangibles assets as these non-cash amounts are inconsistent in amount and frequency and are significantly impacted by the timing and/or size of acquisitions. Although DXC management excludes amortization of acquired intangible assets primarily customer related intangible assets, from its non-GAAP expenses, we believe that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and support revenue generation. Any future transactions may result in a change to the acquired intangible asset balances and associated amortization expense.

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. 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.
  • Goodwill impairment losses - reflects impairment losses on goodwill.
  • Gain on arbitration award - reflects a gain related to the HPES merger arbitration award.
  • Pension and OPEB actuarial and settlement gains and losses - reflects pension and OPEB actuarial and settlement gains and losses.
  • Tax adjustment - Fiscal 2020 includes the impact of an adjustment to the Transition Tax and tax liabilities related to prior restructuring charges. Fiscal 2019 reflects the estimated non-recurring benefit of the Tax Cuts and Jobs Act of 2017. Fiscal 2018 reflects the application of an approximate 28% tax rate, which is within the targeted effective tax rate range for fiscal year 2018. Income tax expense of other non-GAAP adjustments is computed by applying the jurisdictional tax rate to the pre-tax adjustments on a jurisdictional basis.

EBIT and Adjusted EBIT

Reconciliations of net income to adjusted EBIT are as follows:

Three Months Ended

Twelve Months Ended

(in millions)

March 31, 2020

March 31, 2019

March 31, 2020

March 31, 2019

Net (loss) income

$

(3,501

)

$

271

$

(5,358

)

$

1,262

Income from discontinued operations, net of taxes

(35

)

Income tax (benefit) expense

(61

)

83

130

288

Interest income

(35

)

(36

)

(165

)

(128

)

Interest expense

95

85

383

334

EBIT

(3,502

)

403

(5,010

)

1,721

Restructuring costs

4

47

252

465

Transaction, separation and integration-related costs

92

96

318

401

Amortization of acquired intangible assets

148

138

583

539

Goodwill impairment losses

3,854

6,794

Gain on arbitration award

(632

)

Pension and OPEB actuarial and settlement (gains) losses

(244

)

143

(244

)

143

Adjusted EBIT

$

352

$

827

$

2,061

$

3,269

Adjusted EBIT margin

7.3

%

15.7

%

10.5

%

15.8

%

EBIT margin

(72.7

)%

7.6

%

(25.6

)%

8.3

%

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, 2020

March 31, 2020

Net cash provided by operating activities

$

288

$

2,350

Net cash used in investing activities (1)

(53

)

(2,100

)

Acquisitions, net of cash acquired

1,997

Payments on capital leases and other long-term asset financings

(219

)

(865

)

Payments on transaction, separation and integration-related costs

54

257

Payments on restructuring costs

61

334

Gain on arbitration award

(632

)

Adjusted free cash flow

$

131

$

1,341

__________________ 

(1) Excludes short-term investments.

Non-GAAP Results

A reconciliation of reported results to non-GAAP results is as follows:

Three Months Ended March 31, 2020

(in millions, except per-share amounts)

As
Reported

Restructuring
Costs

Transaction,
Separation and
Integration-
Related Costs

Amortization of
Acquired
Intangible
Assets

Goodwill
Impairment
Losses

Pension and
OPEB
Actuarial and
Settlement
Gains

Tax
Adjustment

Non-GAAP
Results

Costs of services (excludes depreciation and
amortization and restructuring costs)

$

3,773

$

$

$

$

$

$

$

3,773

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

536

(92

)

444

(Loss) income from continuing operations,
before taxes

$

(3,562

)

$

4

$

92

$

148

$

3,854

$

(244

)

$

$

292

Income tax (benefit) expense

(61

)

2

20

34

42

(51

)

6

(8

)

Net (loss) income

$

(3,501

)

$

2

$

72

$

114

$

3,812

$

(193

)

$

(6

)

$

300

Less: net loss attributable to noncontrolling
interest, net of tax

(6

)

(6

)

Net (loss) income attributable to DXC
common stockholders

$

(3,495

)

$

2

$

72

$

114

$

3,812

$

(193

)

$

(6

)

$

306

Effective tax rate

1.7

%

(2.7

)%

Basic EPS

$

(13.79

)

$

0.01

$

0.28

$

0.45

$

15.04

$

(0.76

)

$

(0.02

)

$

1.21

Diluted EPS

$

(13.79

)

$

0.01

$

0.28

$

0.45

$

15.00

$

(0.76

)

$

(0.02

)

$

1.20

Weighted average common shares
outstanding for:

Basic EPS

253.51

253.51

253.51

253.51

253.51

253.51

253.51

253.51

Diluted EPS

253.51

254.14

254.14

254.14

254.14

254.14

254.14

254.14

Twelve Months Ended March 31, 2020

(in millions, except per-share amounts)

As
Reported

Restructuring
Costs

Transaction,
Separation and
Integration
Related Costs

Amortization of
Acquired
Intangible
Assets

Goodwill
Impairment
Losses

Gain on
Arbitration
Award

Pension
and OPEB
Actuarial
and
Settlement
Gains

Tax
Adjustment

Non-GAAP
Results

Costs of services (excludes
depreciation and amortization and
restructuring costs)

$

14,901

$

$

$

$

$

$

$

$

14,901

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

2,050

(318

)

1,732

(Loss) income from continuing
operations, before taxes

$

(5,228

)

$

252

$

318

$

583

$

6,794

$

(632

)

$

(244

)

$

$

1,843

Income tax expense (benefit)

130

44

63

133

95

(51

)

(33

)

381

Net (loss) income

$

(5,358

)

$

208

$

255

$

450

$

6,699

$

(632

)

$

(193

)

$

33

$

1,462

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

11

11

Net (loss) income attributable to
DXC common stockholders

$

(5,369

)

$

208

$

255

$

450

$

6,699

$

(632

)

$

(193

)

$

33

$

1,451

Effective tax rate

(2.5

)%

20.7

%

Basic EPS

$

(20.76

)

$

0.80

$

0.99

$

1.74

$

25.91

$

(2.44

)

$

(0.75

)

$

0.13

$

5.61

Diluted EPS

$

(20.76

)

$

0.80

$

0.98

$

1.73

$

25.78

$

(2.43

)

$

(0.74

)

$

0.13

$

5.58

Weighted average common
shares outstanding for:

Basic EPS

258.57

258.57

258.57

258.57

258.57

258.57

258.57

258.57

258.57

Diluted EPS

258.57

259.81

259.81

259.81

259.81

259.81

259.81

259.81

259.81

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 from continuing operations, 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

Income from 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

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 from continuing operations, 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

Income from 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

Contacts:

Richard Adamonis, Corporate Media Relations, +1-862-228-3481, radamonis@dxc.com
Shailesh Murali, M&A and Investor Relations, +1-703-245-9700, shailesh.murali@dxc.com

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