DXC Technology Co - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - June 6, 2018

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EX-2.7 - EXHIBIT 2.7 - DXC Technology Conon-usagencyagreement8xkex.htm
EX-2.6 - EXHIBIT 2.6 - DXC Technology Corealestatemattersagreement.htm
EX-2.5 - EXHIBIT 2.5 - DXC Technology Cotransitionservicesagreemen.htm
EX-2.4 - EXHIBIT 2.4 - DXC Technology Coipmattersagreement8-kex24.htm
EX-2.3 - EXHIBIT 2.3 - DXC Technology Cotaxmattersagreement8-kex23.htm
EX-2.2 - EXHIBIT 2.2 - DXC Technology Coemployeemattersagreement8-.htm
EX-2.1 - EXHIBIT 2.1 - DXC Technology Coseparationanddistributiona.htm
8-K - 8-K - DXC Technology Codxcuspsseparation8-k.htm
Exhibit 99.2




DXC TECHNOLOGY COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On May 31, 2018, DXC Technology Company (“DXC” or the “Company”) completed the previously announced separation of its U.S. Public Sector business, Perspecta, Inc. (“Perspecta”) (the “Separation”). The Separation was accomplished through a two-for-one pro rata distribution of 100% of the outstanding common stock of Perspecta to DXC’s shareholders (the “Distribution”). Perspecta is now an independent public company trading under the symbol “PRSP” on the New York Stock Exchange.
 
The unaudited pro forma condensed consolidated statement of operations of DXC for the fiscal year ended March 31, 2018 assumes the Distribution had occurred on April 1, 2017. The unaudited pro forma condensed consolidated balance sheet of DXC as of March 31, 2018 assumes the Distribution had occurred on March 31, 2018. Beginning in the first quarter of fiscal 2019, Perspecta’s historical financial results for periods prior to the Distribution will be reflected in DXC’s condensed consolidated financial statements as discontinued operations.
 
The unaudited pro forma condensed consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in DXC’s Form 10-K for the fiscal year ended March 31, 2018.
 
The information presented in the “Historical DXC” column in the unaudited pro forma condensed consolidated financial statements reflects DXC’s historical financial statements for the periods presented and do not reflect any adjustments related to the Distribution and related events.
 
The information presented in the “Perspecta Separation” column was derived from DXC’s audited consolidated financial statements and the related accounting records as of and for the fiscal year ended March 31, 2018.

The “Pro Forma Adjustments” column reflects adjustments to give effect to the Distribution.
 
The pro forma adjustments represent the Company's current best estimates and may differ from those that will be calculated to report Perspecta as discontinued operations in DXC’s future filings. The unaudited pro forma condensed consolidated financial statements are provided for illustrative and informational purposes only and are not intended to represent or be indicative of what DXC’s results of operations or financial position would have been had the Separation occurred on the dates indicated. The unaudited pro forma condensed consolidated financial statements also should not be considered representative of DXC’s future results of operations or financial position.
 
See notes to the unaudited pro forma condensed consolidated financial statements for a more detailed discussion of these transactions.


Page 1




DXC TECHNOLOGY COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Fiscal Year Ended March 31, 2018
(in millions, except per-share amounts)
 
Historical DXC
 
Perspecta Separation
 
Pro Forma Adjustments
 
Notes
 
Pro Forma* DXC Continuing Operations
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
$
24,556

 
$
(2,819
)
 
$
—

 
 
 
$
21,737

 
 
 
 
 
 
 
 
 
 
 
Costs of services (excludes depreciation and amortization and restructuring costs)
 
17,944

 
(2,098
)
 
—

 
 
 
15,846

Selling, general and administrative (excludes restructuring costs)
 
2,010

 
(157
)
 
—

 
 
 
1,853

Depreciation and amortization
 
1,964

 
(170
)
 
—

 
 
 
1,794

Restructuring costs
 
803

 
(14
)
 
—

 
 
 
789

Interest expense
 
335

 
(11
)
 
(4
)
 
(A)
 
320

Interest income
 
(89
)
 
—

 
—

 
 
 
(89
)
Other income, net
 
(82
)
 
—

 
—

 
 
 
(82
)
Total costs and expenses
 
22,885

 
(2,450
)
 
(4
)
 
 
 
20,431

 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
 
1,671

 
(369
)
 
4

 
 
 
1,306

Income tax benefit
 
(111
)
 
(132
)
 
1

 
(B)
 
(242
)
Net income
 
1,782

 
(237
)
 
3

 
 
 
1,548

Less: net income attributable to non-controlling interest, net of tax
 
31

 
—

 
—

 
 
 
31

Net income attributable to DXC common stockholders
 
$
1,751

 
$
(237
)
 
$
3

 
 
 
$
1,517

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income per common share:
 
 
 
 
 
 
 
 
 
 
Basic
 
$
6.15

 
 
 
 
 
 
 
$
5.32

Diluted
 
$
6.04

 
 
 
 
 
 
 
$
5.24

 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding for:
 
 
 
 
 
 
 
 
 
 
Basic EPS
 
284.93

 
 
 
 
 
 
 
284.93

Diluted EPS
 
289.77

 
 
 
 
 
 
 
289.77

*Pro forma as defined under Article 11 of SEC Regulation S-X

See accompanying notes.

Page 2




DXC TECHNOLOGY COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
As of March 31, 2018
(in millions)
 
Historical DXC
 
Perspecta Separation
 
Pro Forma Adjustments
 
Notes
 
Pro Forma* DXC Continuing Operations
 
 
 
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
2,648

 
$
—

 
$
984

 
(C)
 
$
3,632

Receivables, net
 
5,913

 
(459
)
 
—

 
 
 
5,454

Prepaid expenses
 
571

 
(75
)
 
—

 
 
 
496

Other current assets
 
485

 
(74
)
 
—

 
 
 
411

Total current assets
 
9,617

 
(608
)
 
984

 
 
 
9,993

 
 
 
 
 
 
 
 
 
 
 
Intangible assets, net
 
8,091

 
(912
)
 
—

 
 
 
7,179

Goodwill
 
9,652

 
(2,031
)
 
—

 
 
 
7,621

Deferred income taxes, net
 
373

 
—

 
—

 
 
 
373

Property and equipment, net
 
3,646

 
(275
)
 
—

 
 
 
3,371

Other assets
 
2,542

 
(139
)
 
—

 
 
 
2,403

Total Assets
 
$
33,921

 
$
(3,965
)
 
$
984

 
 
 
$
30,940

 
 
 
 
 
 
 
 
 
 
 
LIABILITIES and EQUITY
 
 
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
 
 
Short-term debt and current maturities of long-term debt
 
$
2,073

 
$
(155
)
 
$
—

 
 
 
$
1,918

Accounts payable
 
1,708

 
(195
)
 
—

 
 
 
1,513

Accrued payroll and related costs
 
766

 
(22
)
 
—

 
 
 
744

Accrued expenses and other current liabilities
 
3,466

 
(339
)
 
—

 
 
 
3,127

Deferred revenue and advance contract payments
 
1,694

 
(53
)
 
—

 
 
 
1,641

Income taxes payable
 
145

 
(18
)
 
—

 
 
 
127

Total current liabilities
 
9,852

 
(782
)
 
—

 
 
 
9,070

 
 
 
 
 
 
 
 
 
 
 
Long-term debt, net of current maturities
 
6,306

 
(135
)
 
(79
)
 
(A)
 
6,092

Non-current deferred revenue
 
802

 
(7
)
 
—

 
 
 
795

Non-current pension obligations
 
879

 
—

 
—

 
 
 
879

Non-current income tax liabilities and deferred tax liabilities
 
1,329

 
(198
)
 


 
 
 
1,131

Other long-term liabilities
 
916

 
(72
)
 


 
 
 
844

Total Liabilities
 
20,084

 
(1,194
)
 
(79
)
 
 
 
18,811

 
 
 
 
 
 
 
 
 
 
 
Commitments and contingencies
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DXC stockholders' equity
 
 
 
 
 
 
 
 
 
 
Preferred stock
 
—

 
—

 
—

 
 
 
—

Common stock
 
3

 
—

 
—

 
 
 
3

Additional paid-in capital
 
12,210

 
—

 
—

 
 
 
12,210

Retained earnings/ Net Parent Investment
 
1,301

 
(2,771
)
 
1,063

 
(D)
 
(407
)
Accumulated other comprehensive income
 
58

 
—

 
—

 
 
 
58

Treasury stock
 
(85
)
 
—

 
—

 
 
 
(85
)
Total DXC stockholders' equity
 
13,487

 
(2,771
)
 
1,063

 
 
 
11,779

Non-controlling interest in subsidiaries
 
350

 


 


 
 
 
350

Total Equity
 
13,837

 
(2,771
)
 
1,063

 
 
 
12,129

Total Liabilities and Equity
 
$
33,921

 
$
(3,965
)
 
$
984

 
 
 
$
30,940

*Pro forma as defined under Article 11 of SEC Regulation S-X

See accompanying notes.

Page 3




DXC TECHNOLOGY COMPANY
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The unaudited pro forma condensed consolidated statement of operations for the fiscal year ended March 31, 2018 and the unaudited pro forma condensed consolidated balance sheet as of March 31, 2018 include the following pro forma adjustments:

(A)
Reflects the 7.45% senior notes due 2029 ("EDS Notes") retained by Perspecta that were not exchanged for DXC notes pursuant to DXC’s offer to exchange any and all of the outstanding EDS Notes for newly issued DXC notes, which was made pursuant to the terms and conditions set forth in DXC’s prospectus, dated as of January 8, 2018.

(B)
Represents the tax impact of pro forma adjustments.

(C)
Adjusted for cash dividend payment from Perspecta to DXC.

(D)
Retained earnings was adjusted as a result of pro forma adjustments.









 







Page 4

DXC Technology Co Reports