x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
CSRA INC. | ||
(Exact name of Registrant as specified in its charter) |
Nevada | 47-4310550 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
3170 Fairview Park Drive | ||
Falls Church, Virginia | 22042 | |
(Address of principal executive offices) | (zip code) | |
Registrant’s telephone number, including area code: (703) 641-2000 |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer x | Smaller reporting company o |
TABLE OF CONTENTS | ||
PAGE | ||
PART I. | FINANCIAL INFORMATION | |
Item 1. | Financial Statements (unaudited) | |
Consolidated and Condensed Balance Sheets as of September 30, 2016 and April 1, 2016 | ||
Consolidated and Condensed Statements of Operations for the Three and Six Months Ended September 30, 2016 and October 2, 2015 | ||
Consolidated and Condensed Statements of Comprehensive Income for the Three and Six Months Ended September 30, 2016 and October 2, 2015 | ||
Consolidated and Condensed Statements of Cash Flows for the Six Months Ended September 30, 2016 and October 2, 2015 | ||
Notes to Consolidated and Condensed Financial Statements | ||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | |
Item 4. | Controls and Procedures | |
PART II. | OTHER INFORMATION | |
Item 1. | Legal Proceedings | |
Item 1A. | Risk Factors | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
Item 3. | Default Upon Senior Securities | |
Item 4. | Mine Safety Disclosures | |
Item 5. | Other Information | |
Item 6. | Exhibits |
As of | ||||||
(Dollars in millions) | September 30, 2016 | April 1, 2016 | ||||
Current assets | ||||||
Cash and cash equivalents | $ | 68 | $ | 130 | ||
Receivables, net of allowance for doubtful accounts of $25 and $21, respectively | 809 | 751 | ||||
Prepaid expenses and other current assets | 114 | 123 | ||||
Total current assets | 991 | 1,004 | ||||
Intangible and other assets | ||||||
Goodwill | 2,330 | 2,332 | ||||
Customer-related and other intangible assets, net of accumulated amortization of $211 and $201, respectively | 810 | 870 | ||||
Software, net of accumulated amortization of $104 and $95, respectively | 46 | 41 | ||||
Other assets | 68 | 69 | ||||
Total intangible and other assets | 3,254 | 3,312 | ||||
Property and equipment, net of accumulated depreciation of $797 and $773, respectively | 524 | 530 | ||||
Total assets | $ | 4,769 | $ | 4,846 | ||
Current liabilities | ||||||
Accounts payable | $ | 171 | $ | 170 | ||
Accrued payroll and related costs | 176 | 200 | ||||
Accrued expenses and other current liabilities | 532 | 528 | ||||
Current capital lease liability | 53 | 42 | ||||
Current maturities of long-term debt | 73 | 128 | ||||
Dividends payable | 18 | 18 | ||||
Total current liabilities | 1,023 | 1,086 | ||||
Long-term debt, net of current maturities | 2,568 | 2,656 | ||||
Noncurrent capital lease liability | 95 | 109 | ||||
Deferred income tax liabilities | 153 | 163 | ||||
Other long-term liabilities | 726 | 742 | ||||
Commitments and contingent liabilities (Note 15) | ||||||
Equity | ||||||
Stockholders’ Equity: | ||||||
Common stock, $0.001 par value, 750,000,000 shares authorized, 163,744,743 and 162,925,821 shares issued, and 163,588,001 and 162,925,821 shares outstanding, respectively | — | — | ||||
Additional paid-in capital | 128 | 117 | ||||
Accumulated earnings (deficit) | 34 | (74 | ) | |||
Accumulated other comprehensive income | 14 | 21 | ||||
Total stockholders’ equity | 176 | 64 | ||||
Noncontrolling interests | 28 | 26 | ||||
Total equity | 204 | 90 | ||||
Total liabilities and equity | $ | 4,769 | $ | 4,846 |
Three Months Ended | Six Months Ended | |||||||||||
(Dollars in millions, except per share amounts) | September 30, 2016 | October 2, 2015 | September 30, 2016 | October 2, 2015 | ||||||||
Revenue | $ | 1,263 | $ | 967 | $ | 2,517 | $ | 1,924 | ||||
Related-party revenue | — | 2 | — | 4 | ||||||||
Total revenue | 1,263 | 969 | 2,517 | 1,928 | ||||||||
Cost of services | 983 | 755 | 1,974 | 1,528 | ||||||||
Related-party cost of services | — | 2 | — | 4 | ||||||||
Total cost of services (excludes depreciation and amortization) | 983 | 757 | 1,974 | 1,532 | ||||||||
Selling, general and administrative expenses | 55 | 44 | 111 | 85 | ||||||||
Separation and merger costs | 8 | 42 | 13 | 56 | ||||||||
Depreciation and amortization | 63 | 35 | 128 | 68 | ||||||||
Interest expense, net | 29 | 5 | 59 | 10 | ||||||||
Other expense (income), net | 1 | (2 | ) | 2 | (21 | ) | ||||||
Total costs and expenses | 1,139 | 881 | 2,287 | 1,730 | ||||||||
Income before income taxes | 124 | 88 | 230 | 198 | ||||||||
Income tax expense | 44 | 35 | 82 | 78 | ||||||||
Net income | 80 | 53 | 148 | 120 | ||||||||
Less: noncontrolling interests | 4 | 5 | 7 | 9 | ||||||||
Net income attributable to CSRA common stockholders | $ | 76 | $ | 48 | $ | 141 | $ | 111 | ||||
Earnings per common share: | ||||||||||||
Basic | $ | 0.46 | $ | 0.35 | $ | 0.86 | $ | 0.80 | ||||
Diluted | $ | 0.46 | $ | 0.35 | $ | 0.86 | $ | 0.80 | ||||
Common share information (weighted averages): | ||||||||||||
Common shares outstanding - basic | 163,824,108 | 139,128,158 | 163,550,807 | 139,128,158 | ||||||||
Dilutive effect of stock options and equity awards | 1,259,895 | — | 1,331,012 | — | ||||||||
Common shares outstanding - diluted | 165,084,003 | 139,128,158 | 164,881,819 | 139,128,158 | ||||||||
Cash dividend per common share | $ | 0.10 | $ | — | $ | 0.20 | $ | — |
Three Months Ended | Six Months Ended | |||||||||||
(Dollars in millions) | September 30, 2016 | October 2, 2015 | September 30, 2016 | October 2, 2015 | ||||||||
Net income | $ | 80 | $ | 53 | $ | 148 | $ | 120 | ||||
Other comprehensive (loss) income, net of taxes, related to: | ||||||||||||
Amortization of prior service cost | (2 | ) | (1 | ) | (4 | ) | (2 | ) | ||||
Unrealized gain (loss) on interest rate swaps | 3 | — | (3 | ) | — | |||||||
Other comprehensive income (loss), net of taxes | 1 | (1 | ) | (7 | ) | (2 | ) | |||||
Comprehensive income | 81 | 52 | 141 | 118 | ||||||||
Less: comprehensive income attributable to noncontrolling interest, net of taxes | — | 5 | 3 | 9 | ||||||||
Comprehensive income attributable to CSRA common stockholders | $ | 81 | $ | 47 | $ | 138 | $ | 109 |
(Dollars in millions) | Six Months Ended | |||||
September 30, 2016 | October 2, 2015 | |||||
Cash flows from operating activities | ||||||
Net income | $ | 148 | $ | 120 | ||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||
Depreciation and amortization | 131 | 72 | ||||
Stock-based compensation | 7 | 4 | ||||
Excess tax benefit from stock compensation | (2 | ) | — | |||
Net gain on dispositions of businesses and assets | — | (11 | ) | |||
Other non-cash items, net | 1 | — | ||||
Changes in assets and liabilities, net of acquisitions and dispositions: | ||||||
(Increase) decrease in assets | (56 | ) | 237 | |||
Decrease in liabilities | (21 | ) | (56 | ) | ||
Other operating activities, net | 3 | — | ||||
Cash provided by operating activities | 211 | 366 | ||||
Cash flows from investing activities | ||||||
Purchases of property and equipment | (68 | ) | (38 | ) | ||
Proceeds from business dispositions | — | 34 | ||||
Software purchased and developed | (8 | ) | (10 | ) | ||
Other investing activities, net | (15 | ) | 1 | |||
Cash used in investing activities | (91 | ) | (13 | ) | ||
Cash flows from financing activities | ||||||
Payments of lines of credit | (50 | ) | — | |||
Payments of long-term debt | (98 | ) | — | |||
Proceeds from stock options and other employee stock transactions | 7 | — | ||||
Repurchase of common stock | (8 | ) | — | |||
Dividends paid | (34 | ) | — | |||
Payments on lease liability | (17 | ) | (10 | ) | ||
Net transfers to CSC | — | (338 | ) | |||
Other financing activities | 22 | — | ||||
Payments to noncontrolling interests | (4 | ) | — | |||
Cash used in financing activities | (182 | ) | (348 | ) | ||
Net (decrease) increase in cash and cash equivalents | (62 | ) | 5 | |||
Cash and cash equivalents at beginning of period | 130 | 5 | ||||
Cash and cash equivalents at end of period | $ | 68 | $ | 10 | ||
Supplemental cash flow information: | ||||||
Cash paid for income taxes | $ | 47 | $ | 78 | ||
Cash paid for interest | 54 | 10 | ||||
Non-cash investing activities | 9 | 11 | ||||
Capital expenditures through capital lease obligations | 20 | — | ||||
Non-cash operating activities | (2 | ) | — |
Three Months Ended | Six Months Ended | |||||||||||
September 30, 2016 | October 2, 2015 | September 30, 2016 | October 2, 2015 | |||||||||
Gross favorable | $ | 16 | $ | 20 | $ | 27 | $ | 44 | ||||
Gross unfavorable | (8 | ) | (2 | ) | (16 | ) | (5 | ) | ||||
Total net adjustments, before taxes and noncontrolling interests | $ | 8 | $ | 18 | $ | 11 | $ | 39 |
Preliminary allocation (in millions): | Amount | ||
Cash, accounts receivable and other current assets | $ | 302 | |
Property, equipment and other long-term assets | 46 | ||
Intangibles—customer relationships, backlog and other intangibles assets | 891 | ||
Accounts payable and other current liabilities | (193 | ) | |
Other long-term liabilities | (26 | ) | |
Deferred tax liabilities | (258 | ) | |
Total identified net assets acquired | 762 | ||
Goodwill | 1,538 | ||
Estimated total purchase consideration and liabilities paid at closing | $ | 2,300 |
Three Months Ended September 30, 2016 | ||||||||||||
(Dollars in millions, except per share amounts) | CSRA Consolidated | Effects of Spin-Off (a) | Effects of Mergers (b) | Pro Forma for Spin-Off and Merger | ||||||||
Revenue | $ | 1,263 | $ | — | $ | — | $ | 1,263 | ||||
Income attributable to CSRA Shareholders | 76 | 1 | 4 | 81 | ||||||||
Income per common share: | ||||||||||||
Basic | $ | 0.46 | $ | 0.49 | ||||||||
(a) Income from continuing operations attributable to CSRA Shareholders effected for the Spin-Off excludes $1 million, net of tax, of non-recurring costs incurred to give effect to the merger of SRA and CSRA. (b) Income from continuing operations effected for the Merger excludes $4 million, net of tax, of non-recurring costs incurred to give effect to the merger of SRA and CSRA. |
Three Months Ended October 2, 2015 | |||||||||||||||
(Dollars in millions, except per share amounts) | Historical Computer Sciences GS | Historical SRA | Effects of Spin-Off | Effects of Merger | Pro Forma for Spin-Off and Merger | ||||||||||
Revenue | $ | 969 | $ | 351 | $ | — | $ | — | $ | 1,320 | |||||
Income (loss) attributable to Parent | 48 | (4 | ) | 49 | 11 | 104 | |||||||||
Income per common share: | |||||||||||||||
Basic | $ | 0.35 | $ | 0.63 |
Six Months Ended September 30, 2016 | ||||||||||||
(Dollars in millions, except per share amounts) | CSRA Consolidated | Effects of Spin-Off (a) | Effects of Mergers (b) | Pro Forma for Spin-Off and Merger | ||||||||
Revenue | $ | 2,517 | $ | — | $ | — | $ | 2,517 | ||||
Income attributable to CSRA Shareholders | 141 | 1 | 7 | 149 | ||||||||
Income per common share: | ||||||||||||
Basic | $ | 0.86 | $ | 0.91 | ||||||||
(a) Income from continuing operations attributable to CSRA Shareholders effected for the Spin-Off excludes $1 million, net of tax, of non-recurring costs incurred to give effect to the merger of SRA and CSRA. (b) Income from continuing operations effected for the Merger excludes $7 million, net of tax, of non-recurring costs incurred to give effect to the merger of SRA and CSRA. |
Six Months Ended October 2, 2015 | |||||||||||||||
(Dollars in millions, except per share amounts) | Historical Computer Sciences GS | Historical SRA | Effects of Spin-Off | Effects of Merger | Pro Forma for Spin-Off and Merger | ||||||||||
Revenue | $ | 1,928 | $ | 710 | $ | — | $ | (1 | ) | 2,637 | |||||
Income (loss) attributable to Parent | 111 | (3 | ) | 62 | 21 | 191 | |||||||||
Income (loss) per common share: | |||||||||||||||
Basic | $ | 0.80 | $ | 1.16 |
Three Months Ended | Six Months Ended | |||||||||||
(Dollars in millions) | September 30, 2016 | October 2, 2015 | September 30, 2016 | October 2, 2015 | ||||||||
Sales of billed receivables | $ | 469 | $ | 192 | $ | 937 | $ | 393 | ||||
Sales of unbilled receivables | 329 | 427 | 556 | 939 | ||||||||
Total sales of receivables | $ | 798 | $ | 619 | $ | 1,493 | $ | 1,332 | ||||
Collections of sold receivables | 831 | 609 | 1,402 | 1,157 | ||||||||
Operating cash flow effect, net of collections and fees from sales | (34 | ) | 9 | 90 | 176 |
As of | |||||||||
September 30, 2016 | |||||||||
(Dollars in millions) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||
Customer-related intangibles | $ | 950 | (153 | ) | 797 | ||||
Backlog | 65 | (55 | ) | 10 | |||||
Other intangible assets | 6 | (3 | ) | 3 | |||||
Software | 150 | (104 | ) | 46 | |||||
Total intangible assets | $ | 1,171 | $ | (315 | ) | $ | 856 |
As of | |||||||||
April 1, 2016 | |||||||||
(Dollars in millions) | Gross Carrying Value | Accumulated Amortization | Net Carrying Value | ||||||
Customer-related intangibles | $ | 954 | $ | (133 | ) | $ | 821 | ||
Backlog | 65 | (22 | ) | 43 | |||||
Other intangible assets | 52 | (46 | ) | 6 | |||||
Software | 136 | (95 | ) | 41 | |||||
Total intangible assets | $ | 1,207 | $ | (296 | ) | $ | 911 |
As of | ||||||
(Dollars in millions) | September 30, 2016 | April 1, 2016 | ||||
Purchased software | $ | 40 | $ | 40 | ||
Internally developed software for external use | 1 | 1 | ||||
Internally developed software for internal use | 5 | — | ||||
Total software | $ | 46 | $ | 41 |
As of | ||||||
(Dollars in millions) | September 30, 2016 | April 1, 2016 | ||||
Accrued contract costs | $ | 256 | $ | 248 | ||
Deferred revenue | 165 | 140 | ||||
Accrued expenses | 103 | 132 | ||||
Other | 8 | 8 | ||||
Total | $ | 532 | $ | 528 |
September 30, 2016 | April 1, 2016 | |||||
Revolving credit facility, due November 2020 | $ | — | $ | 50 | ||
Tranche A1 facility, due November 2018 | 590 | 600 | ||||
Tranche A2 facility, due November 2020 | 1,396 | 1,432 | ||||
Term Loan B facility, due November 2022 | 696 | 748 | ||||
Capitalized lease liability | 148 | 151 | ||||
Total debt | 2,830 | 2,981 | ||||
Less: unamortized debt issuance costs | (41 | ) | (46 | ) | ||
Less: current portion of long-term debt and capitalized lease liability | (126 | ) | (170 | ) | ||
Total long-term debt, net of current maturities | $ | 2,663 | $ | 2,765 |
Fiscal Year | Amount (in Millions) | ||
Last half of 2017 | $ | 36 | |
2018 | 73 | ||
2019 | 662 | ||
2020 | 73 | ||
2021 | 1,142 | ||
Thereafter | 696 | ||
Total | $ | 2,682 | |
Jurisdiction: | Tax Years that Remain Subject to Examination (Fiscal Year Ending): | |
United States - federal | 2008 and forward | |
United States - various states | 2008 and forward |
Net periodic pension costs (dollars in millions) | Three Months Ended | Six Months Ended | ||||||||||
September 30, 2016 | October 2, 2015 | September 30, 2016 | October 2, 2015 | |||||||||
Service cost | $ | 3 | — | $ | 6 | — | ||||||
Interest cost | 25 | $ | 1 | 51 | $ | 1 | ||||||
Expected return on assets | (49 | ) | (1 | ) | (98 | ) | (2 | ) | ||||
Net periodic pension benefit | $ | (21 | ) | $ | — | $ | (41 | ) | $ | (1 | ) |
As of | ||||||
(Dollars in millions) | September 30, 2016 | April 1, 2016 | ||||
Net benefit obligation | $ | (3,196 | ) | $ | (3,222 | ) |
Net plan assets | 2,603 | 2,585 | ||||
Net unfunded status | $ | (593 | ) | $ | (637 | ) |
Net periodic postretirement benefit costs (in millions) | Three Months Ended | Six Months Ended | ||||||||||||||
September 30, 2016 | October 2, 2015 | September 30, 2016 | October 2, 2015 | |||||||||||||
Service cost | $ | — | $ | — | $ | — | $ | — | ||||||||
Interest cost | — | — | 1 | — | ||||||||||||
Expected return on assets | (2 | ) | — | (3 | ) | — | ||||||||||
Amortization of prior service benefit | (3 | ) | (1 | ) | (6 | ) | (2 | ) | ||||||||
Net periodic benefit | $ | (5 | ) | $ | (1 | ) | $ | (8 | ) | $ | (2 | ) |
As of | ||||||
(Dollars in millions) | September 30, 2016 | April 1, 2016 | ||||
Net benefit obligation | $ | (91 | ) | $ | (93 | ) |
Net plan assets | 75 | 76 | ||||
Net unfunded status | $ | (16 | ) | $ | (17 | ) |
Three Months Ended | Six Months Ended | |||||||||||
(Dollars in millions) | September 30, 2016 | October 2, 2015 | September 30, 2016 | October 2, 2015 | ||||||||
Cost of services | $ | — | $ | 2.1 | $ | — | $ | 0.8 | ||||
Selling, general and administrative expenses | 4.1 | 2.8 | 7.1 | 3.4 | ||||||||
Total | $ | 4.1 | $ | 4.9 | $ | 7.1 | $ | 4.2 | ||||
Total, net of tax | $ | 2.6 | $ | 3.0 | $ | 4.5 | $ | 2.5 |
Six Months Ended | |||||
September 30, 2016 | October 2, 2015 | ||||
Risk-free interest rate | 1.39 | % | 1.77 | % | |
Expected volatility | 30.90 | % | 31.72 | % | |
Expected term (in years) | 4.80 | 6.04 | |||
Dividend yield | 1.61 | % | 1.39 | % |
Number of Option Shares | Weighted Average Exercise Price per share | Weighted Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in millions) | ||||||||
Outstanding as of April 1, 2016 | 1,502,547 | $ | 23.06 | 7.0 | $ | 7.6 | |||||
Granted | 1,002,151 | 24.77 | |||||||||
Exercised | (186,340 | ) | 18.66 | ||||||||
Canceled/Forfeited | (64,406 | ) | 24.92 | ||||||||
Expired | (54,752 | ) | 27.76 | ||||||||
Outstanding as of September 30, 2016 | 2,199,200 | 24.04 | 8.2 | 7.6 | |||||||
Vested and expected to vest in the future as of September 30, 2016 | 1,449,556 | 25.12 | 9.4 | 3.5 | |||||||
Exercisable as of September 30, 2016 | 749,644 | 21.96 | 5.7 | 4.2 |
Number of Restricted Stock Units | Weighted Average Fair Value | |||||
Outstanding as of April 1, 2016 | 376,557 | $ | 29.39 | |||
Granted | 611,524 | 25.69 | ||||
Vested | (145,156 | ) | 26.52 | |||
Canceled/Forfeited | (21,427 | ) | 31.89 | |||
Outstanding as of September 30, 2016 | 821,498 | 27.08 |
For the Three Months Ended September 30, 2016 | |||||||
(Dollars in millions) | Before Tax Amount | Tax Impact Increase (Decrease) | Net of Tax Amount | ||||
Unrealized loss on interest rate swap | $ | 5 | (2 | ) | 3 | ||
Amortization of prior service credit | (3 | ) | 1 | (2 | ) | ||
Total other comprehensive income | $ | 2 | (1 | ) | 1 |
For the Three Months Ended October 2, 2015 | |||||||
(Dollars in millions) | Before Tax Amount | Tax Impact Increase (Decrease) | Net of Tax Amount | ||||
Amortization of prior service credit | $ | (1 | ) | — | (1 | ) | |
Total other comprehensive income | $ | (1 | ) | — | (1 | ) |
For the Six Months Ended September 30, 2016 | |||||||
(Dollars in millions) | Before Tax Amount | Tax Impact Increase (Decrease) | Net of Tax Amount | ||||
Foreign currency translation adjustments | $ | 1 | (1 | ) | — | ||
Unrealized loss on interest rate swap | (5 | ) | 2 | (3 | ) | ||
Amortization of prior service credit | (7 | ) | 3 | (4 | ) | ||
Total other comprehensive income | $ | (11 | ) | 4 | (7 | ) |
For the Six Months Ended October 2, 2015 | |||||||
(Dollars in millions) | Before Tax Amount | Tax Impact Increase (Decrease) | Net of Tax Amount | ||||
Amortization of prior service credit | $ | (2 | ) | — | (2 | ) | |
Total other comprehensive income | $ | (2 | ) | — | (2 | ) |
(Dollars in millions) | Foreign Currency Translation Adjustments | Cash Flow Hedge | Pension and Other Post-retirement Benefit Plans | Accumulated Other Comprehensive (Loss) Income | ||||||||
Balance as of April 1, 2016 | $ | — | $ | (7 | ) | $ | 28 | $ | 21 | |||
Other comprehensive income (loss), net of taxes | — | (3 | ) | — | (3 | ) | ||||||
Amounts reclassified from accumulated other comprehensive income (loss), net of taxes and noncontrolling interests | — | — | (4 | ) | (4 | ) | ||||||
Balance as of September 30, 2016 | $ | — | $ | (10 | ) | $ | 24 | $ | 14 |
(Dollars in millions) | Foreign Currency Translation Adjustments | Pension and Other Postretirement Benefit Plans | Accumulated Other Comprehensive (Loss) Income | ||||||
Balance as of April 3, 2015 | $ | (2 | ) | $ | 2 | $ | — | ||
Other comprehensive income, net of taxes | — | — | — | ||||||
Amounts reclassified from accumulated other comprehensive income, net of taxes and noncontrolling interests | — | (2 | ) | (2 | ) | ||||
Balance as of October 2, 2015 | $ | (2 | ) | $ | — | $ | (2 | ) |
• | Defense and Intelligence—The Defense and Intelligence segment provides services to the DoD, National Security Agency, branches of the Armed Forces and other DoD and intelligence agencies. |
• | Civil—The Civil segment provides services to various federal agencies within the Department of Homeland Security, Department of Health and Human Services and other federal civil agencies, as well as various state and local government agencies. |
(Dollars in millions) | Defense and Intelligence | Civil | Subtotal | Corporate(1) | Total | ||||||||||
As of September 30, 2016 | |||||||||||||||
Total assets | $ | 1,939 | $ | 2,619 | $ | 4,558 | $ | 211 | $ | 4,769 | |||||
Three Months Ended September 30, 2016 | |||||||||||||||
Revenues | $ | 575 | $ | 688 | $ | 1,263 | $ | — | $ | 1,263 | |||||
Segment operating income | 80 | 101 | 181 | — | 181 | ||||||||||
Depreciation and amortization expense | 34 | 29 | 63 | — | 63 | ||||||||||
Six Months Ended September 30, 2016 | |||||||||||||||
Revenues | $ | 1,143 | $ | 1,374 | $ | 2,517 | $ | — | $ | 2,517 | |||||
Segment operating income | 134 | 206 | 340 | — | 340 | ||||||||||
Depreciation and amortization expense | 68 | 60 | 128 | — | 128 | ||||||||||
As of October 2, 2015 | |||||||||||||||
Total assets | $ | 1,160 | $ | 753 | $ | 1,913 | $ | — | $ | 1,913 | |||||
Three Months Ended October 2, 2015 | |||||||||||||||
Revenues | $ | 500 | $ | 469 | $ | 969 | $ | — | $ | 969 | |||||
Segment operating income | 70 | 77 | 147 | — | 147 | ||||||||||
Depreciation and amortization expense | 23 | 12 | 35 | — | 35 | ||||||||||
Six Months Ended October 2, 2015 | |||||||||||||||
Revenues | $ | 1,006 | $ | 922 | $ | 1,928 | $ | — | $ | 1,928 | |||||
Segment operating income | 134 | 138 | 272 | — | 272 | ||||||||||
Depreciation and amortization expense | 46 | 22 | 68 | — | 68 | ||||||||||
(1) Total assets allocated to the Corporate Segment at September 30, 2016 consist of the following: (1) $51 million of cash, (2) $43 million of accounts receivable, (3) $82 million of property, plant, and equipment, net, and (4) $35 million of other current assets. |
Three Months Ended | Six Months Ended | |||||||||||
(Dollars in millions) | September 30, 2016 | October 2, 2015 | September 30, 2016 | October 2, 2015 | ||||||||
Segment operating income | $ | 181 | $ | 147 | $ | 340 | $ | 272 | ||||
Corporate G&A | (19 | ) | (14 | ) | (36 | ) | (29 | ) | ||||
Separation and merger costs | (8 | ) | (42 | ) | (13 | ) | (56 | ) | ||||
Interest expense, net | (29 | ) | (5 | ) | (59 | ) | (10 | ) | ||||
Other (expense) income, net | (1 | ) | 2 | (2 | ) | 21 | ||||||
Income before income taxes | $ | 124 | $ | 88 | $ | 230 | $ | 198 |
(Dollars in millions) | Last Half of Fiscal 2017 | Fiscal 2018 | Fiscal 2019 and Thereafter | Total | ||||||||
Stand-by letters of credit | $ | 32 | $ | 13 | $ | — | $ | 45 | ||||
Surety bonds | — | 12 | — | 12 | ||||||||
Total | $ | 32 | $ | 25 | $ | — | $ | 57 |
• | Overview: A discussion of our business and overall analysis of financial and other highlights affecting CSRA to provide context for the remainder of MD&A. The overview analysis compares the three and six months ended September 30, 2016 to the three and six months ended October 2, 2015; |
• | Results of Operations: An analysis of our financial results comparing the three and six months ended September 30, 2016 to the comparable prior-year periods. A discussion of the results of operations at the consolidated level is followed by a discussion of the results of operations by segment; |
• | Liquidity and Capital Resources: An analysis of changes in our cash flows and a discussion of our financial condition and liquidity; |
• | Contractual Obligations: An overview of contractual obligations, retirement benefit plan funding and off balance sheet arrangements; and |
• | Critical Accounting Policies and Estimates: A discussion of accounting policies and estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results. |
• | Defense and Intelligence—The Defense and Intelligence segment provides services to the DoD, National Security Agency, branches of the Armed Forces and other DoD and Intelligence agencies. |
• | Civil Segment—The Civil segment provides services to various federal agencies within the Department of Homeland Security, Department of Health and Human Services and other federal civil agencies, as well as various state and local government agencies. |
Three Months Ended | Six Months Ended | |||||||||||||||
(Dollars in millions) | September 30, 2016 | October 2, 2015 | September 30, 2016 | October 2, 2015 | ||||||||||||
Total Revenue | $ | 1,263 | $ | 969 | $ | 2,517 | $ | 1,928 | ||||||||
Income Before Income Taxes | 124 | 88 | 230 | 198 | ||||||||||||
Net Income | 80 | 53 | 148 | 120 | ||||||||||||
Net Income Attributable to Common Shareholders | 76 | 48 | 141 | 111 | ||||||||||||
Non -GAAP measures: | ||||||||||||||||
Total Segment Operating Income (1) | 181 | 147 | 340 | 272 | ||||||||||||
Adjusted EBITDA (2) | 228 | 177 | 439 | 323 | ||||||||||||
Segment Operating Income Margin | 14.3 | % | 15.2 | % | 13.5 | % | 14.1 | % |
Three Months Ended | Six Months Ended | |||||||||||||||
(Dollars in millions) | September 30, 2016 | October 2, 2015 | September 30, 2016 | October 2, 2015 | ||||||||||||
Total segment operating income(a) | $ | 181 | $ | $ | 147 | $ | 340 | $ | 272 | |||||||
Corporate G&A | (19 | ) | (14 | ) | (36 | ) | (29 | ) | ||||||||
Separation and merger costs(b) | (8 | ) | (42 | ) | (13 | ) | (56 | ) | ||||||||
Interest expense, net | (29 | ) | (5 | ) | (59 | ) | (10 | ) | ||||||||
Other (expense) income, net | (1 | ) | 2 | (2 | ) | 21 | ||||||||||
Income before income taxes(a) | $ | 124 | $ | 88 | $ | 230 | $ | 198 |
Three Months Ended | Six Months Ended | |||||||||||||||
(Dollars in millions) | September 30, 2016 | October 2, 2015 | September 30, 2016 | October 2, 2015 | ||||||||||||
Net income | $ | 80 | $ | 53 | $ | 148 | $ | 120 | ||||||||
Interest expense, net | 29 | 5 | 59 | 10 | ||||||||||||
Tax expense on income | 44 | 35 | 82 | 78 | ||||||||||||
Depreciation and amortization | 63 | 35 | 128 | 68 | ||||||||||||
Amortization for contract-related intangibles | — | 2 | 2 | 5 | ||||||||||||
Stock-based compensation | 4 | 5 | 7 | 4 | ||||||||||||
Gain on disposition of business | — | — | — | (18 | ) | |||||||||||
Separation and merger costs(a) | 8 | 42 | 13 | 56 | ||||||||||||
Adjusted EBITDA | $ | 228 | $ | 177 | $ | 439 | $ | 323 |
• | We announced contract awards(3) of $2.4 billion and $3.7 billion for the three and six months ended September 30, 2016, respectively, as compared to $1.5 billion and $2.5 billion during the three and six months ended October 2, 2015, respectively. |
• | Total backlog(4) was $15.5 billion at September 30, 2016, compared to $15.1 billion at April 1, 2016. Of the total $15.5 billion backlog at September 30, 2016, $2.3 billion is expected to be realized as revenue during the remainder of fiscal year 2017, and $12.5 billion is not yet funded. |
• | Days Sales Outstanding (“DSO”)(5) was 58 days as of September 30, 2016 and 52 days as of April 1, 2016, as compared to 43 days as of October 2, 2015. The increase in the second quarter of fiscal 2017 was due, in part, to a $25 million receivable associated with CSRA’s funding of a settlement for a legacy pension plan of Computer Sciences GS Business. Excluding this receivable, the DSO was approximately 57 days as of September 30, 2016. |
• | Cash provided by operating activities was $211 million and $366 million for the six months ended September 30, 2016 and October 2, 2015, respectively. |
• | Cash used in investing activities was $(91) million and $(13) million for the six months ended September 30, 2016 and October 2, 2015, respectively. |
• | Cash used in financing activities was $(182) million and $(348) million for the six months ended September 30, 2016 and October 2, 2015, respectively. |
• | Free cash flow(6) was $8 million and $75 million for the three and six months ended September 30, 2016, respectively, as compared to $118 million and $170 million for the three and six months ended October 2, 2015, respectively. |
Three Months Ended | Six Months Ended | |||||||||||||||
(Dollars in millions) | September 30, 2016 | October 2, 2015 | September 30, 2016 | October 2, 2015 | ||||||||||||
Net cash provided by operating activities | $ | 55 | $ | 119 | $ | 211 | $ | 366 | ||||||||
Net cash (used in) provided by investing activities | (48 | ) | (32 | ) | (91 | ) | (13 | ) | ||||||||
Sale of accounts receivable(a) | — | 4 | (46 | ) | (176 | ) | ||||||||||
Business dispositions | — | — | — | (34 | ) | |||||||||||
Payments on capital leases and other long-term assets financing | (10 | ) | (5 | ) | (17 | ) | (10 | ) | ||||||||
Separation-related payments | 11 | 32 | 18 | 37 | ||||||||||||
Free cash flow | $ | 8 | $ | 118 | $ | 75 | $ | 170 |
Three Months Ended | ||||||||||||||||
(Dollars in millions) | September 30, 2016 | October 2, 2015 | Change | Percent Change | ||||||||||||
Defense and Intelligence | $ | 575 | $ | 500 | $ | 75 | 15.0 | % | ||||||||
Civil | 688 | 469 | 219 | 46.7 | ||||||||||||
Total Revenue | $ | 1,263 | $ | 969 | $ | 294 | 30.3 | % |
Six Months Ended | ||||||||||||||||
(Dollars in millions) | September 30, 2016 | October 2, 2015 | Change | Percent Change | ||||||||||||
Defense and Intelligence | $ | 1,143 | $ | 1,006 | $ | 137 | 13.6 | % | ||||||||
Civil | 1,374 | 922 | 452 | 49.0 | ||||||||||||
Total Revenue | $ | 2,517 | $ | 1,928 | $ | 589 | 30.5 | % |
Three Months Ended | |||||||||||||
(Dollars in millions) | September 30, 2016 | October 2, 2015 | Change | Percent Change | |||||||||
Defense and Intelligence | $ | 80 | $ | 70 | $ | 10 | 14.3 | % | |||||
Civil | 101 | 77 | 24 | 31.2 | |||||||||
Total segment operating income | $ | 181 | $ | 147 | $ | 34 | 23.1 | % | |||||
Segment operating income margin: | |||||||||||||
Defense and Intelligence | 13.9 | % | 14.0 | % | (0.1 | ) | % | ||||||
Civil | 14.7 | % | 16.4 | % | (1.7 | ) | % |
Six Months Ended | |||||||||||||
(Dollars in millions) | September 30, 2016 | October 2, 2015 | Change | Percent Change | |||||||||
Defense and Intelligence | $ | 134 | $ | 134 | $ | — | — | % | |||||
Civil | 206 | 138 | 68 | 49.3 | |||||||||
Total segment operating income | $ | 340 | $ | 272 | $ | 68 | 25.0 | % | |||||
Segment operating income margin: | |||||||||||||
Defense and Intelligence | 11.7 | % | 13.3 | % | (1.6 | ) | % | ||||||
Civil | 15.0 | % | 15.0 | % | — | % |
Three Months Ended | Six Months Ended | |||||||||||
(Dollars in millions) | September 30, 2016 | October 2, 2015 | September 30, 2016 | October 2, 2015 | ||||||||
Costs of services(a) | $ | 983 | $ | 757 | $ | 1,974 | $ | 1,532 | ||||
Selling, general and administrative | 55 | 44 | 111 | 85 | ||||||||
Depreciation and amortization | 63 | 35 | 128 | 68 | ||||||||
Separation and merger costs | 8 | 42 | 13 | 56 | ||||||||
Interest expense, net | 29 | 5 | 59 | 10 | ||||||||
Other (income) expense, net | 1 | (2 | ) | 2 | (21 | ) | ||||||
Total | $ | 1,139 | $ | 881 | $ | 2,287 | $ | 1,730 |
Three Months Ended | |||||||||||||
(Dollars in millions) | September 30, 2016 | October 2, 2015 | Change | Percent Change | |||||||||
Defense and Intelligence | $ | 34 | $ | 23 | $ | 11 | 47.8 | % | |||||
Civil | 29 | 12 | 17 | 141.7 | |||||||||
Total depreciation and amortization | $ | 63 | $ | 35 | $ | 28 | 80.0 | % |
Six Months Ended | |||||||||||||
(Dollars in millions) | September 30, 2016 | October 2, 2015 | Change | Percent Change | |||||||||
Defense and Intelligence | $ | 68 | $ | 46 | $ | 22 | 47.8 | % | |||||
Civil | 60 | 22 | 38 | 172.7 | |||||||||
Total depreciation and amortization | $ | 128 | $ | 68 | $ | 60 | 88.2 | % |
Six Months Ended | ||||||
(Dollars in millions) | September 30, 2016 | October 2, 2015 | ||||
Cash provided by operating activities | $ | 211 | $ | 366 | ||
Cash used in investing activities | (91 | ) | (13 | ) | ||
Cash used in financing activities | (182 | ) | (348 | ) | ||
Net (decrease) increase in cash and cash equivalents | (62 | ) | 5 | |||
Cash and cash equivalents at beginning of year | 130 | 5 | ||||
Cash and cash equivalents at end of period | $ | 68 | $ | 10 |
As of | ||||||||||||||||
(Dollars in millions) | September 30, 2016 | April 1, 2016 | ||||||||||||||
Total debt(7) | $ | 2,789 | $ | 2,935 | ||||||||||||
Less: Cash and cash equivalents | 68 | 130 | ||||||||||||||
Net debt(8) | $ | 2,721 | $ | 2,805 | ||||||||||||
Total debt | $ | 2,789 | $ | 2,935 | ||||||||||||
Equity | 204 | 90 | ||||||||||||||
Total capitalization | $ | 2,993 | $ | 3,025 | ||||||||||||
Debt-to-total capitalization | 93.2 | % | 97.0 | % | ||||||||||||
Net debt-to-total capitalization | 90.9 | % | 92.7 | % |
(7) | Total debt is the sum of short and long-term components of GAAP debt and capitalized leases. |
(8) | Net debt is a non-GAAP measure and our determination of it may not be comparable with calculations of similar measures by other issuers. We calculate net debt by subtracting cash and cash equivalents |
Item 1A. | Risk Factors |
Period | (a) Total Number of Shares (or Units) Purchased | (b) Average Price Paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Repurchase Plans or Programs (1) | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (in millions) | |||||||||
April 2, 2016 - July 1, 2016 | — | $ | — | — | $ | — | |||||||
July 2, 2016 - July 29, 2016 | — | — | — | — | |||||||||
July 30, 2016 - August 26, 2016 | — | — | — | — | |||||||||
August 27, 2016 - September 30, 2016 | 300,097 | 26.45 | 300,097 | 342 | |||||||||
Total | 300,097 | 26.45 | 300,097 | $ | 342 |
Exhibit Number | Exhibit Description | ||
31.1 | Section 302 Certification of Chief Executive Officer | ||
31.2 | Section 302 Certification of Chief Financial Officer | ||
32.1 | Section 906 Certification of Chief Executive Officer | ||
32.2 | Section 906 Certification of Chief Financial Officer | ||
101.INS | XBRL Instance | ||
101.SCH | XBRL Taxonomy Extension Schema | ||
101.CAL | XBRL Taxonomy Extension Calculation | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | ||
101.LAB | XBRL Taxonomy Extension Labels | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | ||
CSRA INC. | |||
Dated: | November 9, 2016 | By: | /S/ William Luebke |
Name: | William Luebke | ||
Title: | Controller | ||
(Principal Accounting Officer) |
Date: November 9, 2016 | /s/ Lawrence B. Prior III Name: Lawrence B. Prior III Title: President and Chief Executive Officer |
Date: November 9, 2016 | /s/ David F. Keffer Name: David F. Keffer Title: Chief Financial Officer |
Date: November 9, 2016 | /s/ Lawrence B. Prior III Name: Lawrence B. Prior III Title: President and Chief Executive Officer |
Date: November 9, 2016 | /s/ David F. Keffer Name: David F. Keffer Title: Chief Financial Officer |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Nov. 04, 2016 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | CSRA INC. | |
Entity Central Index Key | 0001646383 | |
Current Fiscal Year End Date | --03-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 163,426,170 |
CONSOLIDATED AND CONDENSED BALANCE SHEETS (unaudited) (Parenthetical) - USD ($) $ in Millions |
Sep. 30, 2016 |
Apr. 01, 2016 |
---|---|---|
Allowance for doubtful accounts | $ 25 | $ 21 |
Finite-lived intangible assets, accumulated amortization | 315 | 296 |
Plant, property and equipment, accumulated depreciation | $ 797 | $ 773 |
Common stock - par value (in USD per share) | $ 0.001 | $ 0.001 |
Common stock - shares authorized (in shares) | 750,000,000 | 750,000,000 |
Common stock - shares issued (in shares) | 163,744,743 | 162,925,821 |
Common stock - shares outstanding (in shares) | 163,588,001 | 162,925,821 |
Customer-related and other intangible assets | ||
Finite-lived intangible assets, accumulated amortization | $ 211 | $ 201 |
Software | ||
Finite-lived intangible assets, accumulated amortization | $ 104 | $ 95 |
CONSOLIDATED AND CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Oct. 02, 2015 |
Sep. 30, 2016 |
Oct. 02, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 80 | $ 53 | $ 148 | $ 120 |
Other comprehensive (loss) income, net of taxes, related to: | ||||
Amortization of prior service cost | (2) | (1) | (4) | (2) |
Unrealized gain (loss) on interest rate swaps | 3 | 0 | (3) | 0 |
Other comprehensive income (loss), net of taxes | 1 | (1) | (7) | (2) |
Comprehensive income | 81 | 52 | 141 | 118 |
Less: comprehensive income attributable to noncontrolling interest, net of taxes | 0 | 5 | 3 | 9 |
Comprehensive income attributable to CSRA common stockholders | $ 81 | $ 47 | $ 138 | $ 109 |
Description of the Business, Basis of Presentation and Recent Accounting Pronouncements |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Description of the Business, Basis of Presentation and Recent Accounting Pronouncements | Description of the Business, Basis of Presentation and Recent Accounting Pronouncements Description of the Business CSRA Inc. (“CSRA” or the “Company”) is a provider of IT and professional services to U.S. government organizations. CSRA delivers IT, mission, and operations-related services across the U.S. federal government to the Department of Defense (“DoD”), the intelligence community and homeland security, civil and healthcare agencies, as well as to certain state and local government agencies through two business segments: (1) Defense and Intelligence and (2) Civil. The Spin-Off and the Mergers On November 27, 2015, Computer Sciences Corporation (“CSC” or “Parent”) completed the spin-off of CSRA, including the Computer Sciences GS Business to CSC shareholders of record (the “Spin-Off”). Following the Spin-Off, on November 30, 2015, CSRA also completed two mergers, which resulted in SRA Companies, Inc. (“SRA Parent”) merging with and into a wholly owned subsidiary of CSRA (the “Mergers”). As a result, SRA International Inc. (“SRA”) became an indirect wholly owned subsidiary of CSRA. Basis of Presentation The accompanying unaudited Consolidated and Condensed Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission, and should be read in conjunction with the information contained in the Company’s Annual Report on Form 10-K for the year ended April 1, 2016. The interim period unaudited Consolidated and Condensed Financial Statements are presented as described below. Prior to the Spin-Off, the Company consisted of the business of CSC’s North American Public Sector segment and did not operate as a separate, stand-alone entity. Consequently, the period prior to the Spin-Off, as of and for the three and six months ended October 2, 2015, consists solely of the accounts and results of the Computer Sciences GS Business. The period subsequent to the Spin-Off and the Mergers, as of and for the three and six months ended September 30, 2016, consists of the consolidated accounts of CSRA and its wholly owned subsidiaries, which include the activity and operating results of SRA. All intercompany transactions and balances have been eliminated. Certain information and disclosures normally required for annual financial statements have been condensed or omitted pursuant to SEC rules and regulations. In the opinion of management, all adjustments considered necessary for fair presentation of the results of the interim period presented have been included. The accompanying unaudited financial statements for the period prior to the Spin-Off are prepared on a carved-out and combined basis from the financial statements of CSC. Such carved-out and combined amounts were determined using the historical results of operations and carrying amounts of the assets and liabilities transferred to CSRA. Related-party transactions between CSRA and CSC or the Computer Sciences GS Business and other businesses of CSC are reflected as related-party transactions. For additional information, see Note 2—Related-Party Transactions and Corporate Allocations. For the period prior to the Spin-Off, the unaudited financial statements include all revenues and costs directly attributable to the Computer Sciences GS Business and an allocation of expenses related to certain CSC corporate functions, including, but not limited to, senior management, legal, human resources, finance, IT and other shared services. These expenses had been allocated to the Computer Sciences GS Business based on direct usage or benefit where identifiable, with the remainder allocated on a pro rata basis of revenues, headcount, square footage, number of transactions or other measures. The Computer Sciences GS Business considered these allocations to be a reasonable reflection of the utilization of services by, or benefit provided to it. However, the allocations may not be indicative of the actual expense that would have been incurred had the Computer Sciences GS Business operated as an independent, stand-alone entity for the period presented. Prior to the Spin-Off, CSC maintained various benefit and share-based compensation plans at a corporate level and other benefit plans at a subsidiary level. The employees of CSRA participated in those plans and a portion of the cost of those plans for the period prior to the Spin-Off is included in the unaudited Consolidated and Condensed Financial Statements for the period prior to the Spin-Off. However, the unaudited Combined Condensed Balance Sheets do not include any net benefit plan obligations unless the benefit plan covered only the Company’s active, retired and other former employees or any expense related to share based compensation plans. See Notes 11—Pension and Other Post-retirement Benefit Plans and Note 12—Share-Based Compensation Plans for further information about our benefit plans and share-based compensation, respectively. For the period presented prior to the Spin-Off, the unaudited financial statements include current and deferred income tax expense that has been determined for the legacy Computer Sciences GS Business as if it were a separate taxpayer (i.e., following the separate return methodology). CSRA reports its results based on a fiscal year convention that comprises four thirteen-week quarters. Every fifth year includes an additional week in the first quarter to prevent the fiscal year from moving from an approximate end of March date. CSRA’s income before income taxes and noncontrolling interest included gross favorable and unfavorable adjustments due to changes in estimated profitability on fixed price contracts accounted for under the percentage-of-completion method, for the three and six months ended September 30, 2016 and October 2, 2015 as follows.
Unbilled recoverable amounts under contracts in progress do not have an allowance for credit losses and, therefore, any adjustments to unbilled recoverable amounts under contracts in progress related to credit quality would be accounted for as a reduction of revenue. Unbilled recoverable amounts under contracts in progress resulting from sales, primarily to the U.S. and other governments, that are expected to be collected after one year totaled $15.7 million and $14.4 million as of September 30, 2016 and April 1, 2016, respectively. Depreciation expense was $31.0 million and $29.1 million for the three months ended September 30, 2016 and October 2, 2015, respectively. Depreciation expense was $63.4 million and $56.7 million for the six months ended September 30, 2016 and October 2, 2015, respectively. Use of Estimates GAAP requires management to make estimates and assumptions that affect certain amounts reported in the Consolidated and Condensed Financial Statements and accompanying notes. These estimates are based on management’s best knowledge of historical experience, current events and various other assumptions that management considers reasonable under the circumstances. Actual results could differ from those estimates. Amounts subject to significant judgment and/or estimates include, but are not limited to, determining the fair value of asset acquired and liabilities assumed, determining the fair value of derivative instruments, costs to complete fixed-price contracts, cash flows used in the evaluation of impairment of goodwill and other long-lived intangible assets, certain deferred costs, collectability of receivables, reserves for tax benefits and valuation allowances on deferred tax assets, loss accruals for litigation, and inputs used for computing share-based compensation and pension related liabilities. Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between marketplace participants. The accounting guidance for fair value measurements establishes a three level fair value hierarchy that prioritizes the inputs used in measuring fair value as follows: Level 1— Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2— Quoted prices for similar assets or liabilities or quoted market prices for identical or similar assets in markets that are not active. Level 3— Valuations derived from valuation techniques in which one or more significant inputs are observable. Our assets and liabilities which are valued using the fair value measurement guidance, on a recurring basis, include pension assets and derivative instruments, consisting of interest rate swap contracts and total return swaps. Our pension assets are valued using model based pricing methods that use observable market data; as such these inputs are considered Level 2 inputs. The fair value of interest rate swaps is estimated based on valuation models that use observable interest rate yield curves as inputs. Total return swaps are settled on the last day of every fiscal month. Therefore, the value of any total return swaps outstanding as of any balance sheet date is not material. The inputs used to estimate the fair value of the Company's derivative instruments are classified as Level 2. No significant assets or liabilities are measured at fair value on a recurring basis using significant unobservable (Level 3) inputs. Certain assets and liabilities are measured at fair value on a non-recurring basis. These include assets and liabilities acquired in a business combination, equity-method investments and long-lived assets, which would be recognized at fair value if deemed to be impaired or if reclassified as assets held for sale. The fair value in these instances would be determined using Level 3 inputs. The Company’s financial instruments include cash, trade receivables, vendor payables, derivative financial instruments, and debt. As of September 30, 2016, the carrying value of cash, trade receivables, and vendor payables approximated their fair value. The carrying amounts of the Company’s financial instruments with short-term maturities are deemed to approximate their market values. The carrying amount of the Company’s long-term debt, excluding capital leases was $2.6 billion and $2.7 billion at September 30, 2016 and April 1, 2016, respectively, and approximated its fair value on September 30, 2016, based on recent trading activity. The fair value of long-term debt is estimated based on the current interest rates offered to the Company for instruments with similar terms and remaining maturities and are classified as Level 2. Recent Accounting Pronouncements New Accounting Standards During the six months ended September 30, 2016, CSRA adopted the following Accounting Standard Updates (“ASUs”): In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718) (“ASU 2016-09”), which simplifies several aspects of accounting for share-based payment award transactions related to accounting for income taxes, forfeitures, statutory tax withholding requirements, classification of awards as either equity or liabilities, and classification of employee taxes paid on the statements of cash flows when an employer withholds shares for tax-withholding purposes. The standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period. Upon the implementation of ASU 2016-09, a company may elect to adopt certain simplifications on a prospective or retrospective basis. CSRA early adopted ASU 2016-09, effective for the three months ended July 1, 2016. Certain of the simplification provisions were not applicable to CRSA. The primary impact of adoption was our election to no longer estimate forfeitures, but instead account for the forfeitures as they occur. The change in accounting for forfeitures was applied on a modified retrospective basis; accordingly, a cumulative adjustment of $1.1 million was recognized as a reduction of accumulated earnings (deficit) upon adoption. The Company also adopted the simplification provision requiring recognition of excess tax benefits in the income statement as a discrete event and the provision related to the presentation of excess tax benefits and deficiencies within operating activities in the statement of cash flows on a prospective basis, beginning in the three months ended July 1, 2016. The adoption of this provision was not material to the Company’s financial results for the first half of fiscal year 2017. Standards Issued But Not Yet Effective The following ASUs were recently issued but have not yet been adopted by CSRA: In May 2014, the FASB issued a new standard, ASC Topic 606, Revenue from Contracts with Customers that will change the way we recognize revenue and significantly expand the disclosure requirements for revenue arrangements. On July 9, 2015, the FASB approved a one-year deferral of the effective date, which for CSRA would make the standard effective at the start of fiscal year 2019 (April 1, 2018). The FASB provided an option that would permit us the ability to adopt the standard beginning fiscal year 2018 (April 1, 2017). Early adoption prior to fiscal year 2018 is not permitted. The new standard may be adopted either retrospectively or on a modified retrospective basis whereby the new standard would be applied to new contracts and existing contracts with remaining performance obligations as of the effective date, with a cumulative catch-up adjustment recorded to beginning retained earnings at the effective date for existing contracts with remaining performance obligations. The new standard requires us to identify contractual performance obligations and determine when revenue should be recognized. This and other requirements could change the method or timing of revenue recognition for our firm-fixed-price and cost-reimbursable-plus-fee contract portfolio. As a result, we are applying an integrated approach to analyzing the standard’s impact on our contract portfolio, including a review of accounting policies and practices, evaluating differences from applying the requirements of the new standard to our contracts and business practices, and assessing the need for system changes or enhancements. As changes in estimated profit will be recognized in the period they are identified, rather than prospectively over the remaining contract term, the impact of revisions of contract estimates may be larger and potentially more variable from period to period. Anticipated losses on contracts will continue to be recognized in the period they are identified. While our assessment continues, we have not yet selected a transition date or method nor have we yet determined the effect of the adoption of this standard on our financial statements and, as a result, our evaluation of the effect of adoption will extend into future periods. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which supersedes the current guidance related to accounting for leases. The guidance requires lessees to recognize most leases on-balance sheet as a right of use asset and lease liability. ASU 2016-02 will also require expanded qualitative and quantitative disclosures designed to give financial statement users additional information on the amount, timing, and uncertainty of cash flows arising from CSRA leases. The standard is required to be adopted using the modified retrospective approach. The standard will be effective for the first interim period within annual periods beginning after December 15, 2019 with early adoption permitted. CSRA is currently evaluating the impact of adoption on its financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) (“ASU 2016-15”). The guidance addresses the concern from Stakeholders that there is diversity in practice in how certain cash receipts and cash payments are presented and classified in the Statement of Cash Flows. ASU 2016-15 addresses the following eight specific cash flow issues: Debt prepayment or debt extinguishment costs, cash payments for debt prepayment or debt extinguishment costs, including third-party costs, premiums paid to repurchase debt in an open-market transaction, and other fees paid to lenders that are directly related to the debt prepayment or debt extinguishment, should be classified as cash outflows for financing activities; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. CSRA is currently evaluating the impact of adoption on its financial statements. Other recently issued ASUs effective after September 30, 2016 are not expected to have a material effect on CSRA’s financial statements. |
Related-Party Transactions and Corporate Allocations |
6 Months Ended |
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Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions and Corporate Allocations | Related-Party Transactions and Corporate Allocations Corporate Allocations The unaudited Consolidated and Condensed Financial Statements include an allocation of general corporate expenses from CSC for the period prior to Spin-Off. The financial information in these unaudited Consolidated and Condensed Financial Statements does not necessarily include all the expenses that would have been incurred by CSRA had it been a separate, stand-alone entity during that time. The management of CSRA considered these allocations to be a reasonable reflection of the utilization of services by, or the benefits provided to, it. The allocation methods include relative headcount, actual services rendered and relative space utilization. Allocations for management costs and corporate support services provided to CSRA totaled $48.0 million and $104.7 million for the three and six months ended October 2, 2015, respectively. These amounts include costs for corporate functions, including, but not limited to, senior management, legal, human resources, finance, IT and other shared services. Following the Spin-Off, CSRA performs all corporate functions that were previously performed by CSC. Transition Agreements In connection with the separation and distribution, CSRA entered into certain agreements that govern the respective rights and responsibilities between CSC and CSRA. CSRA entered into an Intellectual Property Matters Agreement with CSC that governs the respective rights and responsibilities between CSRA and CSC with respect to intellectual property owned or used by each of the companies. Pursuant to the Intellectual Property Matters Agreement, CSC granted CSRA a perpetual, royalty-free, non-assignable license to certain know-how, certain software products, trademarks and workflow and design methodologies. CSRA pays CSC an annual net maintenance fee of $30.0 million per year for five years in exchange for maintenance and support of products licensed from CSC. On December 9, 2015, CSRA paid the maintenance fee for year one, which is included in Prepaid expenses and other current assets in the unaudited Consolidated and Condensed Balance Sheets and amortized on a straight line basis over one year. During the three and six months ended September 30, 2016, CSRA amortized $7.5 million and $15.0 million, respectively, which is included in Selling, general and administrative (“SG&A”) in the unaudited Consolidated and Condensed Statements of Operations. CSRA entered into a Tax Matters Agreement with CSC that governs the respective rights, responsibilities and obligations of CSC and CSRA with respect to all tax matters. CSRA has joint and several liability with CSC to the IRS for the consolidated U.S. Federal income taxes of the CSC consolidated group relating to the taxable periods in which CSRA was part of that group. During the three and six months ended September 30, 2016, CSRA did not incur charges payable to CSC under the Tax Matters Agreement. CSRA entered into a Real Estate Matters Agreement with CSC that governs the respective rights and responsibilities between CSRA and CSC following the Spin-Off with respect to certain real property used by CSRA. For the three and six months ended September 30, 2016, the rental income from CSC associated with the Real Estate Matters Agreement was not significant. |
Acquisitions and Divestitures |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions and Divestitures | Acquisitions and Divestitures There were no acquisitions or divestitures of other businesses during the six months ended September 30, 2016. There were no acquisitions of other businesses during the six months ended October 2, 2015. Fiscal 2016 Divestiture On April 27, 2015, the Computer Sciences GS Business divested its wholly owned subsidiary, Welkin Associates Limited (“Welkin”), a provider of systems engineering and technical assistance services to the intelligence community and other U.S. Department of Defense clients. The Computer Sciences GS Business received consideration of $34.0 million, and recorded a pre-tax gain on the sale of $18.5 million, which was included in Other expense (income), net in the Consolidated and Condensed Statements of Operations for the six months ended October 2, 2015. Included in the divested net assets of $13.8 million was $10.7 million of goodwill and transaction costs of $1.7 million. The divestiture did not qualify to be presented as discontinued operations as it did not represent a strategic shift that would have a major effect on the Computer Sciences GS Business’s operations and financial results. Fiscal 2016 Acquisition As discussed in Note 1—Description of the Business, Basis of Presentation and Recent Accounting Pronouncements, on November 30, 2015, CSRA completed its previously announced Mergers which resulted in SRA Parent merging with and into a wholly owned subsidiary of CSRA. As a result, SRA became an indirect, wholly owned subsidiary of CSRA. The Mergers are reflected in CSRA’s financial statements using the acquisition method of accounting, with CSRA being considered the accounting acquirer of SRA. The total merger consideration (“Merger Consideration”) transferred was $2.3 billion, which consisted of (1) $390.0 million in cash (gross of cash acquired of $48.3 million), (2) 25,170,564 shares of CSRA common stock representing in the aggregate 15.32% of the total number of shares of CSRA common stock outstanding, (3) $1.1 billion related to SRA debt and (4) $29.9 million of acquiree-related transaction costs. The fair market value of shares was determined based on a volume-weighted average price of $30.95 per CSRA share on November 30, 2015, the first day of CSRA’s regular-way trading on the NYSE. CSRA recorded, on a preliminary basis, the assets acquired and liabilities assumed at their estimated fair value, with the difference between the fair value of the net assets acquired and the purchase consideration reflected as goodwill. See Note 7—Goodwill and Other Intangible Assets for further discussion of the measurement considerations for acquired intangible assets. The following table reflects the preliminary fair values of assets acquired and liabilities assumed as of November 30, 2015 (including adjustments subsequent to closing):
In the fourth quarter of fiscal year 2016, the Company made certain adjustments to provisional amounts previously recognized, which resulted in a $12.3 million reduction of the goodwill, which are reflected in the table above. In the second quarter of fiscal year 2017, the Company made additional adjustments to the provisional amounts related to tax-related items and facility exit charges, which resulted in a net $2.2 million decrease of goodwill. The goodwill recognized in the acquisition is attributable to the intellectual capital, the acquired assembled work force, and expected cost synergies, none of which qualify for recognition as a separate intangible asset. The goodwill is not deductible for tax purposes. Goodwill arising from the acquisition has been allocated to CSRA’s reporting units based on the relative fair value of assets acquired. The resulting allocation to CSRA’s reportable segments was as follows: $334.4 million allocated to Defense and Intelligence and $1.2 billion allocated to Civil. The Company’s allocation of goodwill remains preliminary until the resolution of certain unresolved tax matters, which the Company expects to conclude during the third quarter, consequently, the fair values of assets acquired and liabilities assumed are subject to change. Unaudited Pro Forma Financial Information The following unaudited pro forma financial information presents results as if the Spin-Off and the Mergers and the related financing had occurred prior to April 3, 2015. The historical consolidated financial information of CSRA and SRA has been adjusted in the pro forma information to give effect to the events that are: (1) directly attributable to the transactions, (2) factually supportable, and (3) expected to have a continuing impact on the consolidated results. The consolidated financial information of SRA includes merger and integration costs that are not expected to recur and impact the consolidated results over the long term. The unaudited pro forma results do not reflect future events that have occurred or may occur after the transactions, including but not limited to, the impact of any actual or anticipated synergies expected to result from the Mergers. Accordingly, the unaudited pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected prior to April 3, 2015, nor is it necessarily an indication of future operating results.
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Earnings Per Share |
6 Months Ended |
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Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share On November 27, 2015, the date that CSRA’s common stock was distributed to CSC shareholders in the Spin-Off, CSRA had 139,128,158 common shares outstanding. The calculation of both basic and diluted earnings per share for the three and six months ended October 2, 2015 utilized this number of common shares because at that time, CSRA did not operate as a separate, stand-alone entity, and no equity-based awards were outstanding in the period. The calculation of basic earnings per share for the three and six months ended September 30, 2016 utilized and 163,824,108 and 163,550,807 shares, respectively, based on the weighted-average shares outstanding during the period. The calculation of diluted earnings per share for the three and six months ended September 30, 2016 utilized 165,084,003 and 164,881,819 shares, respectively, reflecting the dilutive impact of 1,259,895 and 1,331,012 shares, respectively, of outstanding stock options, restricted stock units, and performance-based stock units issued or granted. The computation of diluted earnings per share excluded stock options and restricted stock units, whose effect, if included, would have been anti-dilutive. The number of shares related to such stock options was 2,458,000 and 2,203,008 for the three and six months ended September 30, 2016, respectively. |
Sale of Receivables |
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Transfers and Servicing [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sale of Receivables | Sale of Receivables CSRA is the seller of certain accounts receivable under a Master Accounts Receivable Purchase Agreement (the “Purchase Agreement”) that was entered into on April 21, 2015 with the Royal Bank of Scotland, PLC (“RBS”), as Purchaser, along with Mitsubishi UFJ Financial Group Ltd, and Bank of Nova Scotia, each as a Participant, for the continuous non-recourse sale of CSRA’s eligible trade receivables. The Purchase Agreement with RBS was subsequently amended, and RBS assigned its rights as a purchaser to The Bank of Tokyo-Mitsubishi UFJ, Ltd., The Bank of Nova Scotia and Mizuho Bank, Ltd., each as a Purchaser. The amended agreement also converted the receivables purchase facility (the “Facility”) to a committed facility and extended the initial term to a two-year period. Under the Facility, CSRA sells eligible receivables, including billed receivables and certain unbilled receivables arising from “cost plus fixed fee” and “time and materials” contracts up to $450.0 million outstanding at any one time. CSRA has no retained interests in the transferred receivables and only performs collection and administrative functions for the Purchaser for a servicing fee. Beginning April 2, 2016, SRA discontinued selling receivables under its separate accounts receivable purchase agreement. The SRA accounts receivable agreement was terminated as of June 27, 2016 and, at that time, SRA became an additional seller under the Purchase Agreement. CSRA accounts for these receivable transfers as sales under ASC 860, Transfers and Servicing, and de-recognizes the sold receivables from its unaudited Consolidated and Condensed Balance Sheets. The fair value of the sold receivables approximated their book value due to their short-term nature. CSRA estimated that its servicing fee was at fair value and, therefore, no servicing asset or liability related to these services was recognized as of September 30, 2016 and April 1, 2016, respectively. The Company had the following accounts receivable sales activity under the existing facility during the periods presented.
As of September 30, 2016 and April 1, 2016, there was $30.0 million and $8.0 million, respectively, of cash collected by CSRA but not remitted to purchasers. CSRA incurred purchase discount and administrative fees of $1.6 million and $0.8 million for the six months ended September 30, 2016 and October 2, 2015, respectively. These fees were recorded within Other expense (income), net in the unaudited Consolidated and Condensed Statements of Operations. Concentrations of Risk The primary financial instruments, other than derivatives, that potentially subject the Company to concentrations of credit risk are accounts receivable. The Company’s primary customers are U.S. government agencies and prime contractors under contracts with the U.S. government. The Company continuously reviews its accounts receivable and records provisions for doubtful accounts as needed. |
Derivative Instruments |
6 Months Ended |
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Sep. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments Derivatives Designated for Hedge Accounting The Company utilizes derivative financial instruments to manage interest rate risk related to its Term Loan A Facilities. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company uses interest rate swaps as part of its interest rate risk management strategy. As of both September 30, 2016 and April 1, 2016, the Company had outstanding interest rate derivatives with a notional value of $1.4 billion, which were designated as a cash flow hedge of interest rate risk. The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in Accumulated other comprehensive income (“AOCI”), net of taxes, and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. The Company reclassified $2.6 million and $5.5 million of interest rate expense from AOCI into earnings in the Consolidated and Condensed Statements of Operations for the three and six months ending September 30, 2016, respectively. During the next twelve months, the Company estimates that approximately $5.0 million, net of tax, will be reclassified from AOCI into earnings. The fair value of the Company’s derivative financial instruments was a liability of $15.9 million and $11.1 million as of September 30, 2016 and April 1, 2016, respectively. These derivative instruments are classified by their short- and long-term components based on the fair value of the anticipated timing of their cash flows. The current portion is included in the Accrued expenses and other current liabilities and the long-term portion is included in Other long-term liabilities in the Consolidated and Condensed Balance Sheets. The Company has agreements with each of its interest rate swap counterparties that contain a provision providing that the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness. Derivatives Not Designated for Hedge Accounting Total Return Swaps The Company utilizes total return swap derivative contracts to manage exposure to market volatility of the notional investments underlying the Company’s deferred compensation obligations. These arrangements are entered into monthly and are settled on the last day of every fiscal month. For accounting purposes, these derivatives are not designated as hedges. As changes in the fair value of the deferred compensation liabilities are recognized in Cost of services and Selling, general and administrative expenses, so too are the changes in the fair value of the total return swaps derivative contracts. Amounts related to the total return swaps recognized in the three and six months ended September 30, 2016 were not significant. Concentrations of Risk The Company is subject to counterparty risk in connection with its interest rate swap derivative contracts. Credit risk related to a derivative financial instrument represents the possibility that the counterparty will not fulfill the terms of the contract. The Company mitigates this credit risk by entering into agreements with credit-worthy counterparties. As of September 30, 2016 there was one counterparty with greater than a 10% concentration of our total exposure. |
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Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill In November 2015, CSRA recorded $1.5 billion of goodwill acquired from the SRA acquisition, which was allocated to each reportable segment based on the relative fair value of net assets acquired. As discussed in Note 3, during the second quarter of fiscal year 2017, the Company made further adjustments related to the acquisition of SRA, which resulted in a $2.2 million decrease of goodwill. This decrease was allocated as $0.9 million to the Defense and Intelligence segment and $1.3 million to the Civil segment. There were no other changes in the balance of goodwill or the allocations to the segments during the six months ended September 30, 2016. Testing for Goodwill Impairment CSRA tests goodwill for impairment on an annual basis, as of the first day of the second fiscal quarter, and between annual tests if an event occurs, or circumstances change, that would more likely than not reduce the fair value of a reporting unit below its carrying amount. At the end of each annual and quarterly period CSRA assesses whether there were events or changes in circumstances that would more likely than not reduce the fair value of any of its reporting units below their carrying amount and require goodwill to be tested for impairment. For CSRA’s annual goodwill impairment assessment as of July 2, 2016, CSRA chose to bypass the initial qualitative assessment and proceeded directly to the first step of the impairment test for all reporting units. Based on the results of the first step of the impairment test, CSRA concluded that the fair value of each reporting unit significantly exceeded its carrying value, and therefore, the second step of the goodwill impairment test was not required. Other Intangible Assets On November 30, 2015, CSRA acquired $891 million of other intangible assets, as described in Note 3—Acquisitions and Divestitures, which consisted of customer relationships intangibles, backlog, and technology. Acquired intangible assets have been recorded at their preliminary estimated fair value through the use of various discounted cash flow valuation techniques. These valuation techniques incorporated Level 3 inputs as described under the fair value hierarchy of ASC 820, Fair Value Measurements (“ASC 820”). These unobservable inputs reflect CSRA’s own assumptions about which assumptions market participants would use in pricing an asset on a non-recurring basis. A summary of amortizing intangible assets is as follows:
Customer-related intangibles, backlog, and software are amortized to expense. Amortization expense for the three and six months ended September 30, 2016 was $32.4 million and $65.0 million, respectively, compared to the three and six months ended October 2, 2015 of $5.6 million and $10.9 million, respectively. Other intangible assets, which consist of contract-related intangibles, are amortized as a reduction to revenues and included in Depreciation and amortization in the Consolidated and Condensed Statements of Cash Flows. Amortization as a reduction to revenues for the three and six months ended September 30, 2016 was $0.2 million and $2.5 million, respectively, compared to the three and six months ended October 2, 2015 of $2.3 million and $4.6 million, respectively. As of September 30, 2016, estimated amortization related to intangible assets for the remainder of fiscal year 2017 is $43.4 million, and for each of the fiscal years 2018, 2019, 2020 and 2021, is as follows: $66.5 million, $71.9 million, $66.4 million and $59.3 million, respectively. Purchased and internally developed software (for both external and internal use), net of accumulated amortization, consisted of the following:
Amortization expense related to purchased software for the three and six months ended September 30, 2016 was $3.3 million and $6.9 million, respectively, compared to the three and six months ended October 2, 2015 of $3.6 million and $7.1 million, respectively. Amortization expense related to internally developed software for external use for the three and six months ended September 30, 2016 was $0.2 million and $0.4 million, respectively, compared to the three and six months ended October 2, 2015 of $0.4 million and $0.7 million, respectively. Amortization expense related to internally developed software for internal use for the three and six months ended September 30, 2016 was $0.3 million and $0.5 million, respectively, compared to $0.1 million for the six months ended October 2, 2015. As of September 30, 2016, estimated amortization related to purchased and internally developed software for the remainder of fiscal 2017 is $9.2 million, and for each of the fiscal years 2018, 2019, 2020 and 2021, is as follows: $13.3 million, $9.8 million, $7.7 million and $4.4 million, respectively. |
Accrued Expenses and Other Current Liabilities |
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Accounts Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following:
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt CSRA maintains the following debt facilities: (1) a senior secured revolving credit facility (the “Revolving Credit Facility”) with a committed borrowing capacity of $700 million, (2) a senior secured tranche A1 Term loan facility (the “Tranche A1 Facility”), (3) a senior secured tranche A2 Term loan facility (the “Tranche A2 Facility” and, together with the Tranche A1 Facility, the “Term Loan A Facilities”) and (4) a senior secured term loan B facility (the “Term Loan B Facility” and, together with the Term Loan A Facilities, the “Term Loan Facilities”). The following is a summary of CSRA’s outstanding debt as of September 30, 2016 and April 1, 2016.
During the first quarter of fiscal 2017, the Company made a repayment of $50.0 million on the Revolving Credit Facility. Pursuant to the terms of the Term Loan Facilities agreements, CSRA paid $48.0 million related to FY16 excess cash flow during the first quarter of fiscal 2017 on its Term Loan Facilities. In September 2016, the Company made a principal repayment of $50.5 million on the Term Loan Facilities, of which $11.5 million was applied to the Term Loan A Facilities and $39.0 million was applied to the Term Loan B Facility. CSRA incurred costs in connection with the issuance of its Term Loan Facilities, which are amortized using the effective interest method over the life of the respective loans. Unamortized debt issuance costs related to the Revolving Credit Facility are recorded with the carrying value of the debt and are amortized using the straight-line method. During the six months ended September 30, 2016, $0.7 million and $4.8 million of costs for the Revolving Credit Facility and Term Loan Facilities, respectively, were amortized and reflected in Interest expense, net in the unaudited Consolidated and Condensed Statements of Operations. Expected maturities of long-term debt, excluding future minimum capital lease payments for the last half of fiscal year 2017 and fiscal years subsequent to fiscal year 2017, are as follows:
CSRA’s long-term debt facilities contain representations, warranties, and covenants customary for arrangements of these types, as well as customary events of default. CSRA was in compliance with all financial covenants associated with its borrowings as of September 30, 2016. |
Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||
Income Taxes | Income Taxes CSRA’s effective tax rate (“ETR”) was 35.5% and 35.7% for the three and six months ended September 30, 2016, respectively, compared to 39.8% and 39.4% for the three and six months ended October 2, 2015, respectively. The lower ETR for the three and six months ended September 30, 2016 compared to the three and six months ended October 2, 2015 was due to the addition of beneficial stock compensation deductions and the absence of adjustments related to the carve-out approach used for tax purposes prior to the Spin-Off in the fiscal year 2017 periods. Our Tax Matters Agreement, entered into with CSC in connection with the Spin-Off, states each company’s rights and responsibilities with respect to payment of taxes, tax return filings and control of tax examinations. Except for historic SRA tax liabilities and certain separate state liabilities, we are generally only responsible for taxes allocable to periods (or portions of periods) beginning after the Spin-Off. Prior periods included uncertain tax positions allocated from CSC to CSRA on a stand-alone basis that are not reflected in the post-Spin-Off period. CSRA is currently under examination in several tax jurisdictions. As a result of the Mergers, the tax years that remain subject to examination in certain of CSRA’s major tax jurisdictions are as follows:
The Internal Revenue Service (“IRS”) is currently examining SRA’s federal income tax return for 2011. The IRS has contested a $136.7 million worthless stock deduction for a disposed subsidiary in that period. CSRA believes its tax positions are appropriate and is prepared to defend them vigorously. Furthermore, pursuant to the Merger Agreement, SRA obtained an insurance policy limiting the exposure related to this position. It is reasonably possible that changes to CSRA’s unrecognized tax benefits could be significant; however, due to the uncertainty regarding the timing of completion of audits and possible outcomes, a current estimate of the range of increases or decreases that may occur within the next 12 months is not expected to be material. |
Pension and Other Post-retirement Benefit Plans |
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Compensation and Retirement Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Other Post-retirement Benefit Plans | Pension and Other Post-retirement Benefit Plans Certain employees of CSRA and its subsidiaries may be participants in employer-sponsored defined benefit and defined contribution plans. CSRA’s defined benefit plans included both pension and other post-retirement benefit (“OPEB”) plans. As discussed in Note 1 — Description of the Business, Basis of Presentation and Recent Accounting Pronouncements, on November 27, 2015, CSC completed the Spin-Off of CSRA, including the Computer Sciences GS Business. Prior to the Spin-Off date, the Computer Sciences GS Business recorded the assets, liabilities, and service costs for current employees for the single employer pension and OPEB plans in the unaudited Consolidated and Condensed Financial Statements for the period ended October 2, 2015. For multi-employer plans, the Computer Sciences GS Business recorded the service cost related to their current employees in the unaudited Consolidated and Condensed Financial Statements for the period ended October 2, 2015. Subsequent to the Spin-Off date, all pension and OPEB plan assets, liabilities and services costs related to current employees were fully absorbed by CSRA. Defined Benefit Pension Plans The assets and liabilities for the plans as well as service and interest costs related to current employees are reflected in CSRA’s unaudited Consolidated and Condensed Financial Statements. The largest U.S. defined benefit pension plan was frozen in fiscal 2010 for most participants. The net periodic pension benefit for CSRA pension plans includes the following components:
The following table provides the pension plans’ projected benefit obligations, assets, and a statement of their funded status:
CSRA contributed $4.2 million to the defined benefit pension plans during the six months ended September 30, 2016 for the funding of benefit payments made to plan participants. CSRA expects to make $4.2 million of additional contributions during the remainder of fiscal year 2017 for the funding of participants’ benefit payments. During the second and third quarters of fiscal year 2017, the Company offered lump sum settlements to the vested participants of certain of its U.S. defined benefit pension plans, who were no longer with the Company. The lump-sum settlements are expected to be paid in December 2016 and will require interim remeasurement of the plans’ assets and liabilities at the end of the third quarter of fiscal year 2017. As part of the third quarter remeasurement, we expect to incorporate updates to the life expectancy assumptions, which is released annually by the Society of Actuaries. Other Postretirement Benefit Plans The assets and liabilities for the OPEB plans as well as service costs related to current employees are reflected in CSRA’s unaudited Consolidated and Condensed Financial Statements. CSRA’s financial statements reflect the service costs related to current employees of the business and the assets and liabilities for the plans. CSRA provides subsidized healthcare, dental and life insurance benefits for certain U.S. employees and retirees, primarily for individuals employed prior to August 1992.
The following table provides the OPEB plans’ projected benefit obligations, assets, and a statement of their funded status:
CSRA contributed $0.8 million and $0.5 million to a supplemental executive retirement plan during the six months ended September 30, 2016 and October 2, 2015, respectively. CSRA expects to make $0.8 million of additional contributions to this plan during the remainder of fiscal year 2017 for the funding of participants’ benefit payments. |
Share-Based Compensation Plans |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation Plans | Share-Based Compensation Plans Employee Incentives Prior to the Spin-Off, CSC maintained various share-based compensation plans at a corporate level and other benefit plans at a subsidiary level. The employees of the Computer Sciences GS Business participated in those programs and a portion of the cost of those plans for the period prior to the Spin-Off is included in the unaudited Consolidated and Condensed Financial Statements. On November 27, 2015, CSRA became an independent company through CSC’s consummation of the Spin-Off. Historically, CSC had two stock incentive plans under which CSC issued stock options, restricted stock units (“RSUs”), and performance stock units (“PSUs”). Some of these awards vested upon separation of CSC and CSRA, some continue to vest in accordance with their original terms, and some converted into a different type of equity award at separation. Additionally, CSRA issued stock in relation to restricted stock awards and stock option replacement awards to employees in connection with the SRA Mergers on November 30, 2015. As of September 30, 2016 and April 1, 2016, CSRA has a net payable to CSC of $7.5 million and $6.5 million, respectively, related to the settlement of equity awards granted to employees prior to the Spin-Off. On May 31, 2016, CSRA granted stock options, RSUs and PSU awards for 1,538,878 shares that vest ratably over 3 years. The closing stock price on the date of the grant used to determine the award fair value was $24.77. During the second quarter of fiscal year 2017, CSRA granted stock options, RSUs and PSU awards to employees for approximately 8,825 shares that vest ratably over 3 years. The weighted average closing stock price on the dates of the grants used to determine the award fair value was $25.52. On August 12, 2016, CSRA also granted RSUs to non-employee directors for approximately 63,500 shares that vest ratably over 1 year. The weighted average closing stock price on the date of the grants used to determine the award fair value was $25.94. CSRA issues authorized but previously unissued shares upon the exercise of stock options, the granting of restricted stock and the settlement of RSUs and PSUs. As of September 30, 2016, 7,822,031 shares of CSRA common stock were available for the grant of future stock options, RSUs, PSUs or other share-based incentives to employees of CSRA. Share-Based Compensation Expense For the three and six months ended September 30, 2016 and October 2, 2015, CSRA recognized share-based compensation expense as follows:
The share-based compensation listed above included CSRA’s corporate and non-employee director grants and was $2.5 million and $3.8 million for the three and six months ended September 30, 2016, respectively. The share-based compensation listed above included CSRA’s share of the former Parent’s corporate and non-employee director grants for the three and six months ended October 2, 2015 of $2.4 million and $3.0 million, respectively. CSRA uses the Black-Scholes-Merton model in determining the fair value of options granted. The risk-free rate is based on the zero-coupon interest rate of U.S. government-issue Treasury securities with periods commensurate with the expected term of the options. The weighted-average grant date fair values of stock options granted for the six months ended September 30, 2016 was $5.99 per share of CSRA shares. In calculating the compensation expense for its stock incentive plans, the following weighted-average assumptions were used:
For the six months ended September 30, 2016 and October 2, 2015, CSRA’s tax benefit realized for deductions from exercising stock options was $5.5 million and $1.8 million, respectively. CSRA’s excess tax benefit was $2.0 million for the six months ended September 30, 2016. Stock Options Information concerning stock options of CSRA during the six months ended September 30, 2016 was as follows.
The intrinsic value of options exercised during the six months ended September 30, 2016 and October 2, 2015 totaled $1.3 million and $1.9 million, respectively. The total intrinsic value of stock options is based on the difference between the fair market value of CSRA’s common stock less the applicable exercise price. The grant-date fair value of stock options vested during the six months ended September 30, 2016 totaled $1.5 million. The cash received from stock options exercised during the six months ended September 30, 2016 and October 2, 2015 was $3.1 million in both periods. As of September 30, 2016, unrecognized compensation expense related to unvested stock options totaled $7.4 million. This cost is expected to be recognized over a weighted-average period of 2.4 years. Restricted Stock Units Information concerning RSUs (including PSUs) of CSRA during the six months ended September 30, 2016 was as follows.
As of September 30, 2016, total unrecognized compensation expense related to unvested restricted stock units totaled $16.8 million, net of expected forfeitures. This cost is expected to be recognized over a weighted-average period of 2.2 years. As of September 30, 2016, accrued unpaid dividends related to restricted stock units outstanding as of the date of the Spin-Off totaled $1.0 million. |
Stockholder's Equity and Accumulated Other Comprehensive Income (Loss) |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholder's Equity and Accumulated Other Comprehensive Income (Loss) | Stockholders’ Equity and Accumulated Other Comprehensive Income (Loss) Dividends Declared During the fourth quarter of fiscal 2016, CSRA announced that its Board of Directors had declared a quarterly cash dividend of $0.10 per share. The total qualifying shares were 162,952,919 shares with a total dividend payout of $16.3 million. Payment of the dividend was made on April 29, 2016 to CSRA stockholders of record at the close of business on April 5, 2016. On May 25, 2016, CSRA announced that its Board of Directors had declared a quarterly cash dividend of $0.10 per share. The total qualifying shares were 163,427,525 shares, with a total dividend payout of $16.3 million. Payment of the dividend was made on July 11, 2016 to CSRA stockholders of record at the close of business on June 14, 2016. On August 10, 2016, CSRA announced that its Board of Directors had declared a quarterly cash dividend of $0.10 per share. The total qualifying shares were 163,796,116 shares, with a total dividend payout of $16.4 million. Payment of the dividend was made on October 4, 2016 to CSRA stockholders of record at the close of business on August 31, 2016. Share Repurchase Program On November 30, 2015, the Board authorized a share repurchase program (the “Share Repurchase Program”), pursuant to which CSRA, from time to time, purchases shares of its common stock for an aggregate purchase price not to exceed $400 million. During September 2016, CSRA repurchased 300,097 shares of common stock through open market purchases for an aggregate consideration of $7.9 million, at an average price of $26.45 per share. As of September 30, 2016, CSRA remained authorized to repurchase $342 million of common stock pursuant to the Share Repurchase Program with an expiration date of March 31, 2019. Accumulated Other Comprehensive Income (Loss) The following tables show the activity in the components of other comprehensive income (loss), including the respective tax effects, and reclassification adjustments for the three and six months ended September 30, 2016 and October 2, 2015, respectively.
The following tables show the changes in Accumulated other comprehensive (loss) income for the six months ended September 30, 2016 and October 2, 2015, respectively.
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information CSRA’s reportable segments are as follows:
The following table summarizes operating results and total assets by reportable segments.
Segment operating income provides useful information to CSRA’s management for assessment of CSRA’s performance and results of operations and is one of the financial measures utilized to determine executive compensation. A reconciliation of consolidated segment operating income to income before income taxes is as follows:
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Commitments In the normal course of business, CSRA may provide certain customers, principally governmental entities, with financial performance guarantees, which are generally backed by stand-by letters of credit or surety bonds. In general, CSRA would only be liable for the amounts of these guarantees in the event that nonperformance by CSRA permits termination of the related contract by the customer. As of September 30, 2016, CSRA had $45 million of outstanding letters of credit and $12 million of surety bonds related to these performance guarantees. CSRA believes it is in compliance with its performance obligations under all service contracts for which there is a financial performance guarantee and the ultimate liability, if any, incurred in connection with these guarantees will not have a material adverse effect on its Consolidated and Condensed Financial Statements. The following table summarizes the expiration of CSRA’s financial guarantees and stand-by letters of credit outstanding as of September 30, 2016:
CSRA generally indemnifies licensees of its proprietary software products against claims brought by third parties alleging infringement of intellectual property rights (including rights in patents, copyrights, trademarks, and trade secrets). CSRA’s indemnification of its licensees relates to costs arising from court awards, negotiated settlements and the related legal and internal costs of those licensees. CSRA maintains the right, at its own costs, to modify or replace software in order to eliminate any infringement. Historically, CSRA has not incurred any significant costs related to licensee software indemnifications. Contingencies CSRA is routinely subject to investigations and reviews relating to compliance with various laws and regulations with respect to its role as a contractor to federal, state and local government customers and in connection with performing services in countries outside of the U.S. Adverse findings in these investigations or reviews can lead to criminal, civil or administrative proceedings, and CSRA could face penalties, fines, compensatory damages and suspension or debarment from doing business with governmental agencies. In addition, CSRA could suffer serious reputational harm if allegations of impropriety were made against CSRA. Adverse findings could also have a material adverse effect on CSRA’s business, Consolidated and Condensed Financial Statements due to its reliance on government contracts. U.S. federal government agencies, including the Defense Contract Audit Agency (“DCAA”), Defense Contract Management Agency (“DCMA”), and others, routinely audit and review a contractor’s performance on government contracts, indirect rates and pricing practices, and compliance with applicable contracting and procurement laws, regulations, and standards. These agencies also review the adequacy of the contractor’s compliance with government standards for its business systems including: a contractor’s accounting system, earned value management system, estimating system, materials management and accounting system, property management system and purchasing system. Both contractors and the U.S. federal government agencies conducting these audits and reviews have come under increased scrutiny, including such subjects as billing practices, labor charging and accounting for unallowable costs. CSRA’s indirect cost audits by the DCAA remain open for fiscal 2004 and subsequent fiscal years. Although the Computer Sciences GS Business has recorded contract revenues subsequent to and including fiscal 2004 based upon an estimate of costs that the Computer Sciences GS Business believes will be approved upon final audit or review, the Computer Sciences GS Business does not know the outcome of any ongoing or future audits or reviews and adjustments, and if future adjustments exceed the Computer Sciences GS Business’s estimates, its profitability would be adversely affected. The DCAA has not completed audits of SRA’s incurred cost submissions for fiscal 2009 and subsequent fiscal years. SRA has recorded financial results subsequent to fiscal 2008 based upon costs that SRA believes will be approved upon final audit or review. If incurred cost audits result in adverse findings that exceed SRA’s estimates, it may have an adverse effect on our financial position, results of operations or cash flows. As of September 30, 2016, CSRA has recorded a liability of $16.8 million for its current best estimate of net amounts to be refunded to customers for potential adjustments from such audits or reviews of contract costs. This amount includes potential adjustments related to both pre-separation and post-separation audits or reviews. In connection with the sale of ATD in fiscal 2014, CSC transferred its joint venture interests in Computer Sciences Raytheon (“CSR”) as part of the ATD sale transaction. CSR is a joint venture formed between CSC and Raytheon Technical Services Company, and its sole business is performance of a single contract for a DoD customer. CSR is the plan sponsor of the CSR pension plan, which was terminated in connection with the termination of the CSR contract with the customer. CSC agreed with the purchaser of ATD that CSC would fund the purchaser’s share of the CSR pension settlement obligation upon plan termination. In addition, the agreement with the purchaser provides that the eventual expected recovery by CSR of such plan termination settlement costs from the customer as provided for under federal Cost Accounting Standards (“CAS”) Section 413, whereby contractors may recover such costs from the government plus interest, will be reimbursed to the business. The CSR pension plan termination process commenced in September 2015. The share of the funding obligation that was attributable to the purchaser and, therefore, to be advanced by CSC, was initially estimated at $26.0 million. The ultimate plan termination settlement funding obligation is based on economic factors, including long-term interest rates that impact the cost of annuities offered by insurers at the time of the actual plan termination settlement. The fair value of CSC’s funding advance obligation net of subsequent expected recoveries was recorded by CSRA prior to CSRA’s separation from CSC. As part of the separation, CSC and CSRA agreed that CSC would transfer all rights, title and interest of the agreement to fund the CSR pension settlement obligation that would otherwise be the responsibility of CSC to CSRA. Consequently, in September 2016, the Company made a payment to escrow of $24.7 million to fund CSC’s CSR pension settlement obligation. Unless otherwise noted, CSRA is unable to develop a reasonable estimate of a possible loss or range of losses associated with the following contingent matters at this time. Maryland Medicaid Enterprise Restructuring Project After competitive bidding on March 1, 2012, CSC was awarded the Maryland Medicaid Enterprise Restructuring Project (“MERP”) contract by the State of Maryland (the “State”) to modernize the Medicaid Management Information System (“MMIS”), a database of Medicaid recipients and providers used to manage Medicaid reimbursement claims. The MERP contract was predominately fixed-price. Since the date the MERP was awarded, U.S. federal government-mandated Medicaid IT standards have been in considerable flux. The State directed CSC to include additional functionality in the design to incorporate new federal mandates and guidance promulgated after the base scope of the Contract was finalized. Further, the State declined to approve contract modifications to compensate CSC for the additional work. As a result of the State’s refusal to amend the MERP contract and equitably adjust the compensation to be paid to CSC and, in accordance with prescribed State statutes and regulations, CSC timely filed a certified contract claim in September 2013, which after various procedural developments is now pending before the Maryland Board of Contracts Appeals (the “State Board”). On August 22, 2014, the State unilaterally suspended performance under the Contract for 90 days and repeatedly extended the suspension until providing a Notice of Default termination in October 2015. As the result of the suspension and other actions and inactions by the State in performance of its obligations under the Contract, in October 2014, CSC filed additional claims under various legal theories, such that currently the total amount claimed by CSC is approximately $80.0 million. Between April 2015 and September 2015, CSC and the State were in settlement negotiations to restructure the program and resolve all issues, including CSC’s contract claims. However, on September 14, 2015, the State orally advised CSC that the State elected to abandon the contract settlement and restructuring discussions. On October 14, 2015, the State provided CSC with a Notice of Default Termination. When a contract is terminated for default, Maryland procurement regulations allow the State to procure substitute performance, with the contractor being liable for any excess reprocurement costs. Any State claim against CSC arising from a default termination for reprocurement costs would be appealable by CSC to the State Board, as is the default termination itself. The State has not asserted a claim for reprocurement costs and, were it do so, CSC believes such a claim to be meritless and unsupported by the facts. CSRA challenged the legal basis of the State’s termination for default in a Claim for $83.0 million filed with the State on December 14, 2015. The Claim subsumes the quantum of the prior claims and seeks to convert the termination to a convenience termination. The State has not rendered a decision on the latest claim; however, if it is denied, CSRA will appeal through litigation at the State Board. On December 22, 2015, the State filed a Motion to Dismiss CSC’s Claim with the State Board. CSC responded to the State’s Motion to Dismiss on January 19, 2016. As set forth in CSC’s extensive brief, the four arguments made in the State’s Motion are based on an incomplete and flawed discussion of the Contract and the factual record. On May 6, 2016, the State Board held a hearing on the Department’s motion and decided to take the motion under advisement. The Board requested that the Department move expeditiously to arrive at a final decision on CSC’s other claims and indicated that it would then consolidate the claims going forward and, at that time, might issue a decision on the Department’s motion. When all of the material parts of the Contract and record are considered, CSRA believes that CSC is entitled to prevail on all of the issues raised by the Department’s motion. On July 14, 2016, CSRA received a copy of a claim for breach of contract against CSC filed by the DHMH Contract Monitor with the DHMH Procurement Officer (the “State Claim”). The claim was filed in accordance with Maryland State procedure for claims against State contractors. If the DHMH Procurement Officer takes final action on the claim — which is likely to be an approval thereof — CSC and/or CSRA will be able to appeal to the State Board. The State Claim seeks damages in excess of $30.0 million. Categories of damages include: the full amount paid to CSC, $30.0 million; costs to be incurred by the State in procuring substitute performance; amounts paid by the State to its project management consultant; lost federal reimbursement from CMS; and additional costs incurred by the State, including wages, attributable to CSC’s alleged breach. The State Claim is based solely on issues raised in the State’s February 14, 2014, and March 14, 2014, cure notices which were fully addressed by CSC in the relevant timeframe. No new facts are contained in the State Claim. Subsequent to the cure notices, the State unilaterally suspended contract performance for over one year. The parties have resumed exploring potential settlement options but have not concluded any settlement. If those are not successful, litigation will proceed and CSC expects to consolidate all of its claims against the State with any claims arising from the default termination. CSRA will litigate on behalf of CSC and indemnify CSC for the costs of litigation and any other costs or liabilities CSC may incur in the litigation. Recovery by CSC will be credited to CSRA. Management has evaluated the recoverability of assets related to the contract in light of these developments and concluded that no adjustments to its financial statements are required. Further, we have assessed the legal risk associated with the State Claim under ASC 450 and have concluded at this time that no reserve is required. Strauch et al. Fair Labor Standards Act Class Action On July 1, 2014, plaintiffs filed Strauch and Colby v. Computer Sciences Corporation in the U.S. District Court for the District of Connecticut, a putative nationwide class action alleging that CSC violated provisions of the Fair Labor Standards Act (“FLSA”) with respect to system administrators who worked for CSC at any time from June 1, 2011 to the present. Plaintiffs claim that CSC improperly classified its system administrators as exempt from the FLSA and that CSC, therefore, owes them overtime wages and associated relief available under the FLSA and various statutes, including the Connecticut Minimum Wage Act, the California Unfair Competition Law, California Labor Code, California Wage Order No. 4-2001, and the California Private Attorneys General Act. CSC’s Motion to Transfer Venue was denied in February 2015. In September 2015, plaintiffs filed an amended complaint, which added claims under Missouri and North Carolina wage and hour laws. The relief sought by Plaintiffs includes unpaid overtime compensation, liquidated damages, pre- and post-judgment interest, damages in the amount of twice the unpaid overtime wages due, and civil penalties. If a liability is ultimately incurred as a result of these claims, CSRA would pay a portion to CSC pursuant to an indemnity obligation. CSC and CSRA both maintain the position that system administrators have the job duties, responsibilities, and salaries of exempt employees and are properly classified as exempt from overtime compensation requirements. On June 9, 2015, the Court entered an order granting the plaintiffs’ motion for conditional certification of the class of system administrators. The conditionally certified FLSA and putative classes include approximately 1,285 system administrators, of whom 407 are employed by CSRA and the remainder employed by CSC. Courts typically undertake a two-stage review in determining whether a suit may proceed as a class action under the FLSA. In its order, the Court noted that, as a first step, the Court examines pleadings and affidavits, and if it finds that proposed class members are similarly situated, the class is conditionally certified. Potential class members are then notified and given an opportunity to opt-in to the action. The second step of the class certification analysis occurs upon completion of discovery. At that point, the Court will examine all evidence then in the record to determine whether there is a sufficient basis to conclude that the proposed class members are similarly situated. If it is determined that they are, the case will proceed to trial; if it is determined they are not, the class is decertified and only the individual claims of the purported class representatives proceed. CSRA’s and CSC’s position in this litigation continues to be that the employees identified as belonging to the conditional class were paid in accordance with the FLSA and applicable state laws. Plaintiffs filed their motion for class certification on June 3, 2016. CSC filed its opposition on July 15, 2016. Plaintiffs filed their reply brief on August 12, 2016 and the matter is currently under advisement with the Court. The parties have explored potential settlement scenarios but have not concluded any settlement. Accordingly, the litigation is ongoing and briefing on plaintiffs’ motion for class certification, the next step in the litigation, is in progress. CECOM Rapid Response Demand Letter On July 12, 2013, the U.S. Army’s Communications-Electronics Command (“CECOM”) issued a demand letter based upon DCAA audit reports and Form 1, for reimbursement in the amount of $235.2 million in costs that CSC allegedly overcharged under its Rapid Response (“R2”) contract (Contract No. DAAB07-03-D-B007) by placing CSC, interdivisional, teammate, and vendor employees in R2 labor categories for which they were not qualified. CSC’s position has been that, in most instances, the individuals in question met the contract requirements for their labor categories, and that, in all instances, DCAA and CECOM have ignored the value the government received for CSC’s work. CSC and CECOM have engaged in discussions in an attempt to resolve this issue but, at this point in time, there can be no assurance that the parties will be able to resolve their differences, in which case CSRA expects to litigate this matter. DynCorp In connection with CSC’s acquisition of DynCorp in 2003 and its divestiture of substantially all of that business in two separate transactions (in 2005 to The Veritas Capital Fund II L.P. and DI Acquisition Corp. and in 2013 to Pacific Architects and Engineers, Incorporated (collectively, the “DynCorp Divestitures”)), CSC assumed and Computer Sciences GS Business will retain various environmental indemnities of DynCorp and its former subsidiaries arising from environmental representations and warranties under which DynCorp agreed to indemnify the purchasers of its subsidiaries DynAir Tech and DynAir Services by Sabreliner Corporation and ALPHA Airports Group PLC, respectively. As part of the DynCorp Divestitures, CSC also assumed and Computer Sciences GS Business will also retain indemnities for insured litigation associated with dormant suits by former employees of DynCorp subsidiaries alleging exposure to asbestos and other substances; other indemnities related to a 2001 case arising from counter-narcotics spraying in Colombia under a U.S. Department of State contract and an environmental remediation case involving HRI, a former wholly owned subsidiary of DynCorp, in Lawrenceville, New Jersey. CSRA does not anticipate any material adverse effect on its financial position, results of operations and cash flows from these indemnities. Litigation involving DynCorp’s aviation insurance underwriters was recently resolved and had no significant effect on our results for fiscal year 2017. Southwest Asia Employment Contract Litigation Rishell v. CSC, a single plaintiff lawsuit, was filed in February 2013 in Florida. In April 2013, a second lawsuit, Rhodes v. CSC, with five plaintiffs was filed in Mississippi. Both cases were consolidated before the United States District Court for the Eastern District of Virginia in 2014. Summary judgment was granted in each case on December 10, 2014, with the Rishell case decided under Florida law and the Rhodes case under Virginia law. On May 2, 2016, the U.S. Court of Appeals for the Fourth Circuit ruled against CSC in an appeal of these two consolidated cases, the liability for which the Company is contractually obligated to indemnify CSC pursuant to the terms of the Master Separation and Distribution Agreement between CSRA and CSC. These cases involved six former CSC employees with each of whom CSC had entered into two contracts upon employment: a general “Offer Letter” specifying an “hourly rate” to be paid biweekly, and a more specific “Foreign Travel Letter” specifying certain aspects of the employees’ employment while working overseas in Southwest Asia as civilian government contractors. Employees had sued CSC, claiming entitlement to be paid on an hourly rate, as specified in the Offer Letter, as opposed to being paid on a salary basis, which is how CSC compensated them. The District Court had held as a matter of contract interpretation that the two contracts, read together, required CSC to pay the employees by the hour. The Fourth Circuit in its May 2 unpublished opinion agreed with the trial court. A reserve for the amount of damages awarded by the trial court and for which the Company will be required to indemnify CSC has been included in the Company’s Consolidated and Condensed Financial Statements. In addition to the two consolidated cases that were the subject of the Fourth Circuit’s opinion, there are currently an additional six similar cases, involving approximately 100 individuals, pending before federal and state courts in California, Louisiana, and Virginia that have yet to be adjudicated. Plaintiffs in these cases present similar claims, that they worked in excess of 40 hours per week, they were compensated with a salary based on a 40-hour work week, and this violated the terms of their Offer Letters that quoted an hourly wage. It is reasonably possible that the trial courts considering these cases will interpret the Offer Letter and Foreign Travel Letter at issue in these other cases similarly to the Fourth Circuit and may enter judgments against CSC awarding damages. However, there remain differences among the pending cases, including statutes of limitations, which may lengthen or shorten the period of time for when damages may be recovered, and differences between plaintiffs’ legal entitlement to other damages or awards, such as punitive damages or attorneys’ fees. These are issues of state contract or statutory law and depend upon which states’ laws apply to the individual plaintiffs. These issues have not been resolved. The range of possible losses for which the Company would be required to indemnify CSC associated with these pending matters is between $0.0 million and $14.0 million. CSRA accrues a liability when management believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated under ASC 450. CSRA believes it has appropriately recognized liabilities for any such matters. In addition to the matters noted above, CSRA is currently party to a number of disputes which involve or may involve litigation. Regarding other matters that may involve actual or threatened disputes or litigation, CSRA, in accordance with the applicable reporting requirements, provides disclosure of such matters for which the likelihood of material loss is reasonably possible. CSRA assessed reasonably possible losses for all other such pending legal or other proceedings in the aggregate and concluded that the range of potential loss is not material. CSRA also considered the requirements regarding estimates used in the disclosure of contingencies under ASC Subtopic 275-10, Risks and Uncertainties. Based on that guidance, CSRA determined that supplemental accrual and disclosure was not required for a change in estimate that involves contingencies because CSRA determined that it was not reasonably possible that a change in estimate will occur in the near term. CSRA reviews contingencies during each interim period and adjusts its accruals to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular matter. |
Subsequent Events |
6 Months Ended |
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Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Stock Repurchase Program CSRA repurchased an additional 106,311 shares of common stock subsequent to September 30, 2016 through open market purchases for an aggregate consideration of $2.9 million, at an average price of $26.92 per share. CSRA paid $2.2 million during the third quarter of fiscal 2017 for 81,806 shares repurchased during the second quarter of fiscal year 2017 that had not settled in cash by September 30, 2016. As of October 12, 2016, CSRA has remaining authorization to repurchase $337.0 million of common stock pursuant to its Share Repurchase Program. Debt Modification In October 2016, the Company began discussions with the administrative agents of its Term Loan and Revolving Credit Facilities to amend the terms, including an extension of the maturity dates. The amended facilities are expected to provide for: (a) a reduction in the margin over indexed interest rates on the Term Loan B Facility, (b) a reduction in the principal of Term Loan B Facility and an increase in the principal balance of the Tranche A2 Facility in substantially the same amount; and (c) changes to certain existing debt covenants to provide for greater operational and financial flexibility. The transaction is expected to be completed during the third quarter of fiscal year 2017. |
Description of the Business, Basis of Presentation and Recent Accounting Pronouncements (Policies) |
6 Months Ended |
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Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited Consolidated and Condensed Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission, and should be read in conjunction with the information contained in the Company’s Annual Report on Form 10-K for the year ended April 1, 2016. The interim period unaudited Consolidated and Condensed Financial Statements are presented as described below. Prior to the Spin-Off, the Company consisted of the business of CSC’s North American Public Sector segment and did not operate as a separate, stand-alone entity. Consequently, the period prior to the Spin-Off, as of and for the three and six months ended October 2, 2015, consists solely of the accounts and results of the Computer Sciences GS Business. The period subsequent to the Spin-Off and the Mergers, as of and for the three and six months ended September 30, 2016, consists of the consolidated accounts of CSRA and its wholly owned subsidiaries, which include the activity and operating results of SRA. All intercompany transactions and balances have been eliminated. Certain information and disclosures normally required for annual financial statements have been condensed or omitted pursuant to SEC rules and regulations. In the opinion of management, all adjustments considered necessary for fair presentation of the results of the interim period presented have been included. The accompanying unaudited financial statements for the period prior to the Spin-Off are prepared on a carved-out and combined basis from the financial statements of CSC. Such carved-out and combined amounts were determined using the historical results of operations and carrying amounts of the assets and liabilities transferred to CSRA. Related-party transactions between CSRA and CSC or the Computer Sciences GS Business and other businesses of CSC are reflected as related-party transactions. For additional information, see Note 2—Related-Party Transactions and Corporate Allocations. For the period prior to the Spin-Off, the unaudited financial statements include all revenues and costs directly attributable to the Computer Sciences GS Business and an allocation of expenses related to certain CSC corporate functions, including, but not limited to, senior management, legal, human resources, finance, IT and other shared services. These expenses had been allocated to the Computer Sciences GS Business based on direct usage or benefit where identifiable, with the remainder allocated on a pro rata basis of revenues, headcount, square footage, number of transactions or other measures. The Computer Sciences GS Business considered these allocations to be a reasonable reflection of the utilization of services by, or benefit provided to it. However, the allocations may not be indicative of the actual expense that would have been incurred had the Computer Sciences GS Business operated as an independent, stand-alone entity for the period presented. Prior to the Spin-Off, CSC maintained various benefit and share-based compensation plans at a corporate level and other benefit plans at a subsidiary level. The employees of CSRA participated in those plans and a portion of the cost of those plans for the period prior to the Spin-Off is included in the unaudited Consolidated and Condensed Financial Statements for the period prior to the Spin-Off. However, the unaudited Combined Condensed Balance Sheets do not include any net benefit plan obligations unless the benefit plan covered only the Company’s active, retired and other former employees or any expense related to share based compensation plans. See Notes 11—Pension and Other Post-retirement Benefit Plans and Note 12—Share-Based Compensation Plans for further information about our benefit plans and share-based compensation, respectively. For the period presented prior to the Spin-Off, the unaudited financial statements include current and deferred income tax expense that has been determined for the legacy Computer Sciences GS Business as if it were a separate taxpayer (i.e., following the separate return methodology). CSRA reports its results based on a fiscal year convention that comprises four thirteen-week quarters. Every fifth year includes an additional week in the first quarter to prevent the fiscal year from moving from an approximate end of March date. |
Use of Estimates | Use of Estimates GAAP requires management to make estimates and assumptions that affect certain amounts reported in the Consolidated and Condensed Financial Statements and accompanying notes. These estimates are based on management’s best knowledge of historical experience, current events and various other assumptions that management considers reasonable under the circumstances. Actual results could differ from those estimates. Amounts subject to significant judgment and/or estimates include, but are not limited to, determining the fair value of asset acquired and liabilities assumed, determining the fair value of derivative instruments, costs to complete fixed-price contracts, cash flows used in the evaluation of impairment of goodwill and other long-lived intangible assets, certain deferred costs, collectability of receivables, reserves for tax benefits and valuation allowances on deferred tax assets, loss accruals for litigation, and inputs used for computing share-based compensation and pension related liabilities. |
Fair Value Measurements | Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market in an orderly transaction between marketplace participants. The accounting guidance for fair value measurements establishes a three level fair value hierarchy that prioritizes the inputs used in measuring fair value as follows: Level 1— Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2— Quoted prices for similar assets or liabilities or quoted market prices for identical or similar assets in markets that are not active. Level 3— Valuations derived from valuation techniques in which one or more significant inputs are observable. Our assets and liabilities which are valued using the fair value measurement guidance, on a recurring basis, include pension assets and derivative instruments, consisting of interest rate swap contracts and total return swaps. Our pension assets are valued using model based pricing methods that use observable market data; as such these inputs are considered Level 2 inputs. The fair value of interest rate swaps is estimated based on valuation models that use observable interest rate yield curves as inputs. Total return swaps are settled on the last day of every fiscal month. Therefore, the value of any total return swaps outstanding as of any balance sheet date is not material. The inputs used to estimate the fair value of the Company's derivative instruments are classified as Level 2. No significant assets or liabilities are measured at fair value on a recurring basis using significant unobservable (Level 3) inputs. Certain assets and liabilities are measured at fair value on a non-recurring basis. These include assets and liabilities acquired in a business combination, equity-method investments and long-lived assets, which would be recognized at fair value if deemed to be impaired or if reclassified as assets held for sale. The fair value in these instances would be determined using Level 3 inputs. The Company’s financial instruments include cash, trade receivables, vendor payables, derivative financial instruments, and debt. As of September 30, 2016, the carrying value of cash, trade receivables, and vendor payables approximated their fair value. The carrying amounts of the Company’s financial instruments with short-term maturities are deemed to approximate their market values. The carrying amount of the Company’s long-term debt, excluding capital leases was $2.6 billion and $2.7 billion at September 30, 2016 and April 1, 2016, respectively, and approximated its fair value on September 30, 2016, based on recent trading activity. The fair value of long-term debt is estimated based on the current interest rates offered to the Company for instruments with similar terms and remaining maturities and are classified as Level 2. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements New Accounting Standards During the six months ended September 30, 2016, CSRA adopted the following Accounting Standard Updates (“ASUs”): In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718) (“ASU 2016-09”), which simplifies several aspects of accounting for share-based payment award transactions related to accounting for income taxes, forfeitures, statutory tax withholding requirements, classification of awards as either equity or liabilities, and classification of employee taxes paid on the statements of cash flows when an employer withholds shares for tax-withholding purposes. The standard is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period. Upon the implementation of ASU 2016-09, a company may elect to adopt certain simplifications on a prospective or retrospective basis. CSRA early adopted ASU 2016-09, effective for the three months ended July 1, 2016. Certain of the simplification provisions were not applicable to CRSA. The primary impact of adoption was our election to no longer estimate forfeitures, but instead account for the forfeitures as they occur. The change in accounting for forfeitures was applied on a modified retrospective basis; accordingly, a cumulative adjustment of $1.1 million was recognized as a reduction of accumulated earnings (deficit) upon adoption. The Company also adopted the simplification provision requiring recognition of excess tax benefits in the income statement as a discrete event and the provision related to the presentation of excess tax benefits and deficiencies within operating activities in the statement of cash flows on a prospective basis, beginning in the three months ended July 1, 2016. The adoption of this provision was not material to the Company’s financial results for the first half of fiscal year 2017. Standards Issued But Not Yet Effective The following ASUs were recently issued but have not yet been adopted by CSRA: In May 2014, the FASB issued a new standard, ASC Topic 606, Revenue from Contracts with Customers that will change the way we recognize revenue and significantly expand the disclosure requirements for revenue arrangements. On July 9, 2015, the FASB approved a one-year deferral of the effective date, which for CSRA would make the standard effective at the start of fiscal year 2019 (April 1, 2018). The FASB provided an option that would permit us the ability to adopt the standard beginning fiscal year 2018 (April 1, 2017). Early adoption prior to fiscal year 2018 is not permitted. The new standard may be adopted either retrospectively or on a modified retrospective basis whereby the new standard would be applied to new contracts and existing contracts with remaining performance obligations as of the effective date, with a cumulative catch-up adjustment recorded to beginning retained earnings at the effective date for existing contracts with remaining performance obligations. The new standard requires us to identify contractual performance obligations and determine when revenue should be recognized. This and other requirements could change the method or timing of revenue recognition for our firm-fixed-price and cost-reimbursable-plus-fee contract portfolio. As a result, we are applying an integrated approach to analyzing the standard’s impact on our contract portfolio, including a review of accounting policies and practices, evaluating differences from applying the requirements of the new standard to our contracts and business practices, and assessing the need for system changes or enhancements. As changes in estimated profit will be recognized in the period they are identified, rather than prospectively over the remaining contract term, the impact of revisions of contract estimates may be larger and potentially more variable from period to period. Anticipated losses on contracts will continue to be recognized in the period they are identified. While our assessment continues, we have not yet selected a transition date or method nor have we yet determined the effect of the adoption of this standard on our financial statements and, as a result, our evaluation of the effect of adoption will extend into future periods. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), which supersedes the current guidance related to accounting for leases. The guidance requires lessees to recognize most leases on-balance sheet as a right of use asset and lease liability. ASU 2016-02 will also require expanded qualitative and quantitative disclosures designed to give financial statement users additional information on the amount, timing, and uncertainty of cash flows arising from CSRA leases. The standard is required to be adopted using the modified retrospective approach. The standard will be effective for the first interim period within annual periods beginning after December 15, 2019 with early adoption permitted. CSRA is currently evaluating the impact of adoption on its financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230) (“ASU 2016-15”). The guidance addresses the concern from Stakeholders that there is diversity in practice in how certain cash receipts and cash payments are presented and classified in the Statement of Cash Flows. ASU 2016-15 addresses the following eight specific cash flow issues: Debt prepayment or debt extinguishment costs, cash payments for debt prepayment or debt extinguishment costs, including third-party costs, premiums paid to repurchase debt in an open-market transaction, and other fees paid to lenders that are directly related to the debt prepayment or debt extinguishment, should be classified as cash outflows for financing activities; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. ASU 2016-15 is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. CSRA is currently evaluating the impact of adoption on its financial statements. Other recently issued ASUs effective after September 30, 2016 are not expected to have a material effect on CSRA’s financial statements. |
Description of the Business, Basis of Presentation and Recent Accounting Pronouncements (Tables) |
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Change in Accounting Estimate | CSRA’s income before income taxes and noncontrolling interest included gross favorable and unfavorable adjustments due to changes in estimated profitability on fixed price contracts accounted for under the percentage-of-completion method, for the three and six months ended September 30, 2016 and October 2, 2015 as follows.
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Acquisitions and Divestitures (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preliminary Fair Value of Assets Acquired and Liabilities Assumed | The following table reflects the preliminary fair values of assets acquired and liabilities assumed as of November 30, 2015 (including adjustments subsequent to closing):
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Pro Forma Information | The following unaudited pro forma financial information presents results as if the Spin-Off and the Mergers and the related financing had occurred prior to April 3, 2015. The historical consolidated financial information of CSRA and SRA has been adjusted in the pro forma information to give effect to the events that are: (1) directly attributable to the transactions, (2) factually supportable, and (3) expected to have a continuing impact on the consolidated results. The consolidated financial information of SRA includes merger and integration costs that are not expected to recur and impact the consolidated results over the long term. The unaudited pro forma results do not reflect future events that have occurred or may occur after the transactions, including but not limited to, the impact of any actual or anticipated synergies expected to result from the Mergers. Accordingly, the unaudited pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected prior to April 3, 2015, nor is it necessarily an indication of future operating results.
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Sale of Receivables (Tables) |
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Transfers and Servicing [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable Sales Activity Under the Existing Facility | The Company had the following accounts receivable sales activity under the existing facility during the periods presented.
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Goodwill and Other Intangible Assets (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of amortizing intangible assets | Purchased and internally developed software (for both external and internal use), net of accumulated amortization, consisted of the following:
A summary of amortizing intangible assets is as follows:
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Accrued Expenses and Other Current Liabilities (Tables) |
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consisted of the following:
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Debt (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt | The following is a summary of CSRA’s outstanding debt as of September 30, 2016 and April 1, 2016.
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Schedule of Maturities of Long-term Debt | Expected maturities of long-term debt, excluding future minimum capital lease payments for the last half of fiscal year 2017 and fiscal years subsequent to fiscal year 2017, are as follows:
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Income Taxes (Tables) |
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Sep. 30, 2016 | ||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||
Summary of Income Tax Examinations | CSRA is currently under examination in several tax jurisdictions. As a result of the Mergers, the tax years that remain subject to examination in certain of CSRA’s major tax jurisdictions are as follows:
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Pension and Other Post-retirement Benefit Plans (Tables) |
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Compensation and Retirement Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Net Benefit Costs |
The net periodic pension benefit for CSRA pension plans includes the following components:
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Changes in Projected Benefit Obligations, Fair Value of Plan Assets, and Funded Status of Plan | The following table provides the OPEB plans’ projected benefit obligations, assets, and a statement of their funded status:
The following table provides the pension plans’ projected benefit obligations, assets, and a statement of their funded status:
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Share-Based Compensation Plans (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Share-based Compensation Expense | For the three and six months ended September 30, 2016 and October 2, 2015, CSRA recognized share-based compensation expense as follows:
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Schedule of Weighted-Average Assumptions for Stock Options | In calculating the compensation expense for its stock incentive plans, the following weighted-average assumptions were used:
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Disclosure of Share-based Compensation by Award Type | Information concerning RSUs (including PSUs) of CSRA during the six months ended September 30, 2016 was as follows.
Information concerning stock options of CSRA during the six months ended September 30, 2016 was as follows.
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Stockholder's Equity and Accumulated Other Comprehensive Income (Loss) (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The following tables show the activity in the components of other comprehensive income (loss), including the respective tax effects, and reclassification adjustments for the three and six months ended September 30, 2016 and October 2, 2015, respectively.
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Reclassification Out of Accumulated Other Comprehensive Income (Loss) | The following tables show the changes in Accumulated other comprehensive (loss) income for the six months ended September 30, 2016 and October 2, 2015, respectively.
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Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Results by Reportable Segment | The following table summarizes operating results and total assets by reportable segments.
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Reconciliation of Consolidated Segment Operating Income to Income Before Taxes | A reconciliation of consolidated segment operating income to income before income taxes is as follows:
|
Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Expiration Of Financial Guarantees | The following table summarizes the expiration of CSRA’s financial guarantees and stand-by letters of credit outstanding as of September 30, 2016:
|
Description of the Business, Basis of Presentation and Recent Accounting Pronouncements (Details) $ in Millions |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2016
USD ($)
|
Oct. 02, 2015
USD ($)
|
Sep. 30, 2016
USD ($)
reportable_segment
|
Oct. 02, 2015
USD ($)
|
Apr. 01, 2016
USD ($)
|
Nov. 30, 2015
merger
|
|
Entity Information [Line Items] | ||||||
Number of segments | reportable_segment | 2 | |||||
Number of mergers | merger | 2 | |||||
Unbilled contracts receivable | $ 15.7 | $ 15.7 | $ 14.4 | |||
Depreciation expense | 31.0 | $ 29.1 | 63.4 | $ 56.7 | ||
Long-term debt, excluding capital leases | 2,568.0 | 2,568.0 | $ 2,656.0 | |||
Retained earnings | Accounting Standards Update 2016-09 | New accounting pronouncement, early adoption, effect | ||||||
Entity Information [Line Items] | ||||||
Cumulative adjustment to reduction of accumulated earnings (deficit) | $ 1.1 | $ 1.1 |
Description of the Business, Basis of Presentation and Recent Accounting Pronouncements - Income Before Income Taxes and Noncontrolling Interest Included Gross Favorable and Unfavorable Adjustments (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Oct. 02, 2015 |
Sep. 30, 2016 |
Oct. 02, 2015 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Gross favorable | $ 16 | $ 20 | $ 27 | $ 44 |
Gross unfavorable | (8) | (2) | (16) | (5) |
Total net adjustments, before taxes and noncontrolling interests | $ 8 | $ 18 | $ 11 | $ 39 |
Related-Party Transactions and Corporate Allocations (Details) - CSC - Affiliated entity - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Oct. 02, 2015 |
Sep. 30, 2016 |
Oct. 02, 2015 |
|
Allocated Expenses | ||||
Related Party Transaction [Line Items] | ||||
Allocated expenses | $ 48.0 | $ 104.7 | ||
Intellectual Property Matters Agreement | ||||
Related Party Transaction [Line Items] | ||||
Annual maintenance fee | $ 30.0 | $ 30.0 | ||
Term of agreement (in years) | 5 years | |||
Annual maintenance fee, amortization period (in years) | 1 year | |||
Selling, general and administrative expenses | Intellectual Property Matters Agreement | ||||
Related Party Transaction [Line Items] | ||||
Annual maintenance fee, amortization expense | $ 7.5 | $ 15.0 |
Acquisitions and Divestitures - Fiscal 2016 Divestiture (Details) - USD ($) $ in Millions |
6 Months Ended | ||
---|---|---|---|
Apr. 27, 2015 |
Sep. 30, 2016 |
Oct. 02, 2015 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Proceeds from divestiture of business | $ 0.0 | $ 34.0 | |
Welkin Associates Limited | Disposal group, disposed of by sale, not discontinued operations | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Proceeds from divestiture of business | $ 34.0 | ||
Net assets divested | 13.8 | ||
Goodwill divested | 10.7 | ||
Transaction costs | 1.7 | ||
Welkin Associates Limited | Disposal group, disposed of by sale, not discontinued operations | Other expense (income), net | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Pre-tax gain on divestiture of business | $ 18.5 |
Acquisitions and Divestitures - Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions |
Sep. 30, 2016 |
Apr. 01, 2016 |
Nov. 30, 2015 |
---|---|---|---|
Business Acquisition [Line Items] | |||
Intangibles—customer relationships, backlog and other intangibles assets | $ 891 | ||
Goodwill | $ 2,330 | $ 2,332 | |
Merger With SRA International | |||
Business Acquisition [Line Items] | |||
Cash, accounts receivable and other current assets | 302 | ||
Property, equipment and other long-term assets | 46 | ||
Accounts payable and other current liabilities | (193) | ||
Other long-term liabilities | (26) | ||
Deferred tax liabilities | (258) | ||
Total identified net assets acquired | 762 | ||
Goodwill | 1,538 | ||
Estimated total purchase consideration and liabilities paid at closing | 2,300 | ||
Merger With SRA International | Customer relationships, backlog and other intangibles assets | |||
Business Acquisition [Line Items] | |||
Intangibles—customer relationships, backlog and other intangibles assets | $ 891 |
Earnings Per Share (Details) - shares |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2016 |
Oct. 02, 2015 |
Sep. 30, 2016 |
Oct. 02, 2015 |
Apr. 01, 2016 |
Nov. 27, 2015 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Common stock - shares outstanding (in shares) | 163,588,001 | 163,588,001 | 162,925,821 | 139,128,158 | ||
Common shares outstanding - basic (in shares) | 163,824,108 | 139,128,158 | 163,550,807 | 139,128,158 | ||
Weighted average number of common shares outstanding - diluted (in shares) | 165,084,003 | 139,128,158 | 164,881,819 | 139,128,158 | ||
Dilutive effect of stock options and equity awards (in shares) | 1,259,895 | 0 | 1,331,012 | 0 | ||
Stock options | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Anti-dilutive shares excluded from diluted earnings per share (in shares) | 2,458,000 | 2,203,008 |
Sale of Receivables - Narrative (Details) - USD ($) |
6 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Oct. 02, 2015 |
Apr. 01, 2016 |
|
Securitization or Asset-backed Financing Arrangement, Financial Asset for which Transfer is Accounted as Sale [Line Items] | |||
Cash collected from sale of receivables but not remitted | $ 30,000,000 | $ 8,000,000 | |
The Bank of Tokyo-Mitsubishi UFJ, Ltd, The Bank of Nova Scotia, and Mizuho Bank, Ltd. | |||
Securitization or Asset-backed Financing Arrangement, Financial Asset for which Transfer is Accounted as Sale [Line Items] | |||
Term of receivables purchase facility commitment (years) | 2 years | ||
Receivables purchase facility commitment amount | $ 450,000,000 | ||
Other expense (income), net | |||
Securitization or Asset-backed Financing Arrangement, Financial Asset for which Transfer is Accounted as Sale [Line Items] | |||
Purchase discount and administrative fees | $ 1,600,000 | $ 800,000 |
Sale of Receivables - Accounts Receivable Sales Activity (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Oct. 02, 2015 |
Sep. 30, 2016 |
Oct. 02, 2015 |
|
Securitization or Asset-backed Financing Arrangement, Financial Asset for which Transfer is Accounted as Sale [Line Items] | ||||
Sales of receivables | $ 798 | $ 619 | $ 1,493 | $ 1,332 |
Collections of sold receivables | 831 | 609 | 1,402 | 1,157 |
Operating cash flow effect, net of collections and fees from sales | (34) | 9 | 90 | 176 |
Billed revenues | ||||
Securitization or Asset-backed Financing Arrangement, Financial Asset for which Transfer is Accounted as Sale [Line Items] | ||||
Sales of receivables | 469 | 192 | 937 | 393 |
Unbilled revenues | ||||
Securitization or Asset-backed Financing Arrangement, Financial Asset for which Transfer is Accounted as Sale [Line Items] | ||||
Sales of receivables | $ 329 | $ 427 | $ 556 | $ 939 |
Derivative Instruments (Details) $ in Millions |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Sep. 30, 2016
USD ($)
counterparty
|
Sep. 30, 2016
USD ($)
counterparty
|
Apr. 01, 2016
USD ($)
|
|
Derivative [Line Items] | |||
Interest rate expense reclassified from AOCI into earnings | $ 2.6 | $ 5.5 | |
Interest rate expense expected to be reclassified from AOCI into earnings in the next twelve months | 5.0 | 5.0 | |
Derivatives Designated for Hedge Accounting | Interest rate swap | |||
Derivative [Line Items] | |||
Notional value | 1,400.0 | 1,400.0 | $ 1,400.0 |
Derivative liability | $ 15.9 | $ 15.9 | $ 11.1 |
Derivatives Not Designated for Hedge Accounting | Interest rate swap | |||
Derivative [Line Items] | |||
Concentrations of risk, number of counterparties | counterparty | 1 | 1 |
Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Sep. 30, 2016 |
Apr. 01, 2016 |
Nov. 30, 2015 |
|
Goodwill [Line Items] | |||
Goodwill | $ 2,330.0 | $ 2,332.0 | |
Merger With SRA International | |||
Goodwill [Line Items] | |||
Goodwill | $ 1,538.0 | ||
Decrease of goodwill | 2.2 | $ 12.3 | |
Defense and Intelligence | Merger With SRA International | |||
Goodwill [Line Items] | |||
Goodwill | 334.4 | ||
Decrease of goodwill | 0.9 | ||
Civil | Merger With SRA International | |||
Goodwill [Line Items] | |||
Goodwill | 1,200.0 | ||
Decrease of goodwill | $ 1.3 |
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Millions |
Sep. 30, 2016 |
Apr. 01, 2016 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accrued contract costs | $ 256 | $ 248 |
Deferred revenue | 165 | 140 |
Accrued expenses | 103 | 132 |
Other | 8 | 8 |
Accrued expenses and other current liabilities | $ 532 | $ 528 |
Debt - Long-term Debt (Details) - USD ($) $ in Millions |
Sep. 30, 2016 |
Apr. 01, 2016 |
---|---|---|
Debt Instrument [Line Items] | ||
Capitalized lease liability | $ 148 | $ 151 |
Total debt | 2,830 | 2,981 |
Less: unamortized debt issuance costs | (41) | (46) |
Less: current portion of long-term debt and capitalized lease liability | (126) | (170) |
Total long-term debt, net of current maturities | 2,663 | 2,765 |
Revolving credit facility, due November 2020 | Revolving credit facility | Line of credit | ||
Debt Instrument [Line Items] | ||
Long-term debt | 0 | 50 |
Tranche A1 facility, due November 2018 | Senior secured term loan facility | ||
Debt Instrument [Line Items] | ||
Long-term debt | 590 | 600 |
Tranche A2 facility, due November 2020 | Senior secured term loan facility | ||
Debt Instrument [Line Items] | ||
Long-term debt | 1,396 | 1,432 |
Term Loan B facility, due November 2022 | Senior secured term loan facility | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 696 | $ 748 |
Debt - Maturities of Long-term Debt (Details) $ in Millions |
Sep. 30, 2016
USD ($)
|
---|---|
Fiscal Year | |
Last half of 2017 | $ 36 |
2018 | 73 |
2019 | 662 |
2020 | 73 |
2021 | 1,142 |
Thereafter | 696 |
Total | $ 2,682 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Oct. 02, 2015 |
Sep. 30, 2016 |
Oct. 02, 2015 |
|
Income Tax Examination [Line Items] | ||||
Effective tax rate (as a percent) | 35.50% | 39.80% | 35.70% | 39.40% |
Domestic Tax Authority | Internal Revenue Service (IRS) | ||||
Income Tax Examination [Line Items] | ||||
Income tax examination, estimate of possible loss | $ 136.7 |
Pension and Other Post-retirement Benefit Plans - Narrative (Details) - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Oct. 02, 2015 |
|
Defined Benefit Pension Plan | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Contributions by employer | $ 4.2 | |
Estimated future employer contributions for remainder of fiscal year | 4.2 | |
Supplemental executive retirement plan | ||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||
Contributions by employer | 0.8 | $ 0.5 |
Estimated future employer contributions for remainder of fiscal year | $ 0.8 |
Pension and Other Post-retirement Benefit Plans - Defined Benefit Pension Plans (Details) - Defined Benefit Pension Plan - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016 |
Oct. 02, 2015 |
Sep. 30, 2016 |
Oct. 02, 2015 |
Apr. 01, 2016 |
|
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | |||||
Service cost | $ 3 | $ 0 | $ 6 | $ 0 | |
Interest cost | 25 | 1 | 51 | 1 | |
Expected return on assets | (49) | (1) | (98) | (2) | |
Net periodic benefit | (21) | $ 0 | (41) | $ (1) | |
Defined Benefit Plan, Funded Status of Plan [Abstract] | |||||
Net benefit obligation | (3,196) | (3,196) | $ (3,222) | ||
Net plan assets | 2,603 | 2,603 | 2,585 | ||
Net unfunded status | $ (593) | $ (593) | $ (637) |
Pension and Other Post-retirement Benefit Plans - Other Postretirement Benefit Plans (Details) - Postretirement Health Coverage - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016 |
Oct. 02, 2015 |
Sep. 30, 2016 |
Oct. 02, 2015 |
Apr. 01, 2016 |
|
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | |||||
Service cost | $ 0 | $ 0 | $ 0 | $ 0 | |
Interest cost | 0 | 0 | 1 | 0 | |
Expected return on assets | (2) | 0 | (3) | 0 | |
Amortization of prior service benefit | (3) | (1) | (6) | (2) | |
Net periodic benefit | (5) | $ (1) | (8) | $ (2) | |
Defined Benefit Plan, Funded Status of Plan [Abstract] | |||||
Net benefit obligation | (91) | (91) | $ (93) | ||
Net plan assets | 75 | 75 | 76 | ||
Net unfunded status | $ (16) | $ (16) | $ (17) |
Share-Based Compensation Plans - Allocation of Recognized Share-Based Compensation Expense (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Oct. 02, 2015 |
Sep. 30, 2016 |
Oct. 02, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | $ 4.1 | $ 4.9 | $ 7.1 | $ 4.2 |
Share-based compensation expense, net of tax | 2.6 | 3.0 | 4.5 | 2.5 |
Cost of services | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | 0.0 | 2.1 | 0.0 | 0.8 |
Selling, general and administrative expenses | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense | $ 4.1 | $ 2.8 | $ 7.1 | $ 3.4 |
Share-Based Compensation Plans - Assumptions Used To Determine Fair Value of Stock Option (Details) - Stock options |
6 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Oct. 02, 2015 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Risk-free interest rate | 1.39% | 1.77% |
Expected volatility | 30.90% | 31.72% |
Expected term (in years) | 4 years 9 months 18 days | 6 years 15 days |
Dividend yield | 1.61% | 1.39% |
Stockholder's Equity and Accumulated Other Comprehensive Income (Loss) - Stockholder's Equity (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 6 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Oct. 04, 2016 |
Aug. 10, 2016 |
Jul. 11, 2016 |
May 25, 2016 |
Apr. 29, 2016 |
Nov. 09, 2016 |
Sep. 30, 2016 |
Sep. 30, 2016 |
Apr. 01, 2016 |
Oct. 02, 2015 |
Sep. 30, 2016 |
Oct. 02, 2015 |
Oct. 12, 2016 |
Nov. 30, 2015 |
|
Equity, Class of Treasury Stock [Line Items] | ||||||||||||||
Cash dividend per common share (in dollars per share) | $ 0.10 | $ 0.10 | $ 0.1 | $ 0.10 | $ 0 | $ 0.20 | $ 0 | |||||||
Common stock with dividend payout (in shares) | 163,427,525 | 162,952,919 | ||||||||||||
Dividends paid | $ 16,300,000 | $ 16,300,000 | ||||||||||||
Stock repurchase program, authorized amount | $ 342,064,000 | $ 342,064,000 | $ 342,064,000 | $ 400,000,000 | ||||||||||
Shares repurchases during the period (in shares) | 300,097 | |||||||||||||
Common stock repurchased | $ 7,900,000 | |||||||||||||
Common stock, average price per share repurchased (in USD per share) | $ 26.45 | |||||||||||||
Subsequent event | ||||||||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||||||||
Common stock with dividend payout (in shares) | 163,796,116 | |||||||||||||
Dividends paid | $ 16,400,000 | |||||||||||||
Stock repurchase program, authorized amount | $ 337,000,000 | |||||||||||||
Common stock, average price per share repurchased (in USD per share) | $ 26.92 |
Segment Information - Reconciliation of Consolidated Segment Operating Income to Income Before Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Oct. 02, 2015 |
Sep. 30, 2016 |
Oct. 02, 2015 |
|
Segment Reporting [Abstract] | ||||
Segment operating income | $ 181 | $ 147 | $ 340 | $ 272 |
Corporate G&A | (19) | (14) | (36) | (29) |
Separation and merger costs | (8) | (42) | (13) | (56) |
Interest expense, net | (29) | (5) | (59) | (10) |
Other (expense) income, net | (1) | 2 | (2) | 21 |
Income before income taxes | $ 124 | $ 88 | $ 230 | $ 198 |
Commitments and Contingencies - Commitments (Details) $ in Millions |
Sep. 30, 2016
USD ($)
|
---|---|
Loss Contingencies [Line Items] | |
Last Half of Fiscal 2017 | $ 32 |
Fiscal 2018 | 25 |
Fiscal 2019 and Thereafter | 0 |
Total guarantees outstanding | 57 |
Stand-by letters of credit | |
Loss Contingencies [Line Items] | |
Last Half of Fiscal 2017 | 32 |
Fiscal 2018 | 13 |
Fiscal 2019 and Thereafter | 0 |
Total guarantees outstanding | 45 |
Surety bonds | |
Loss Contingencies [Line Items] | |
Last Half of Fiscal 2017 | 0 |
Fiscal 2018 | 12 |
Fiscal 2019 and Thereafter | 0 |
Total guarantees outstanding | $ 12 |
Subsequent Events (Details) - USD ($) |
1 Months Ended | 3 Months Ended | ||||
---|---|---|---|---|---|---|
Nov. 09, 2016 |
Sep. 30, 2016 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Oct. 12, 2016 |
Nov. 30, 2015 |
|
Subsequent Event [Line Items] | ||||||
Common stock, average price per share repurchased (in USD per share) | $ 26.45 | |||||
Shares repurchased but cash settled in subsequent period (in shares) | 81,806 | |||||
Stock repurchase program, authorized amount | $ 342,064,000 | $ 342,064,000 | $ 400,000,000 | |||
Subsequent event | ||||||
Subsequent Event [Line Items] | ||||||
Shares repurchases during the period (in shares) | 106,311 | |||||
Value of shares repurchased | $ 2,900,000 | $ 2,200,000 | ||||
Common stock, average price per share repurchased (in USD per share) | $ 26.92 | |||||
Stock repurchase program, authorized amount | $ 337,000,000 |
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