Nevada (State or Other Jurisdiction of Incorporation) | 001-37494 (Commission File Number) | 47-4310550 (I.R.S. Employer Identification No.) |
3170 Fairview Park Drive Falls Church, Virginia (Address of Principal Executive Offices) | 22042 (Zip Code) | |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit No. | Description |
99.1 | Press Release, dated May 24, 2017 |
By: | /s/ William J. Haynes II Name: William J. Haynes II Title: Executive Vice President, General Counsel and Secretary |
Exhibit No. | Description |
99.1 | Press Release, dated May 24, 2017 |
• | Revenue: $1.25 billion for Q4—up 3 percent sequentially, down 3 percent year-over-year |
• | Diluted EPS: $0.22 (GAAP) and $0.49 (Adjusted) for Q4 and $1.84 (GAAP) and $1.91 (Adjusted) reflect strong profitability |
• | Adjusted diluted EPS for quarter and fiscal year up 7 percent and 10 percent, respectively, compared to fiscal year 2016 |
• | Robust book-to-bill ratios of 1.1x for the quarter and 1.4x for the trailing twelve months build the foundation for future growth |
• | FY18 guidance projects return to organic revenue growth |
(Dollars in millions, except per share data) | Three Months Ended | Fiscal Years Ended | |||||||||||||||||||||||||
March 31, 2017 | April 1, 2016 | March 31, 2017 | April 1, 2016(a) | ||||||||||||||||||||||||
Revenue | $ | 1,254 | $ | 1,290 | $ | 4,993 | $ | 4,250 | |||||||||||||||||||
Operating income (loss) | $ | 90 | $ | (76 | ) | $ | 622 | $ | 187 | ||||||||||||||||||
Net income (loss) attributable to CSRA common stockholders | $ | 37 | $ | (72 | ) | $ | 304 | $ | 87 | ||||||||||||||||||
GAAP diluted EPS | $ | 0.22 | $ | (0.44 | ) | $ | 1.84 | $ | 0.53 | ||||||||||||||||||
Adjusted revenue | $ | 1,254 | $ | 1,290 | $ | 4,993 | $ | 5,198 | |||||||||||||||||||
Adjusted EBITDA | $ | 207 | $ | 197 | $ | 792 | $ | 787 | |||||||||||||||||||
Adjusted diluted EPS | $ | 0.49 | $ | 0.46 | $ | 1.91 | $ | 1.74 | |||||||||||||||||||
Note: All quarterly and adjusted figures are unaudited; refer to "Reconciliation of Non-GAAP Financial Measures" at the end of this news release for a more detailed discussion of management's use of non-GAAP measures and for reconciliations to GAAP financial measures. | |||||||||||||||||||||||||||
(a) | For the fiscal year ended April 1, 2016, adjusted revenue, adjusted EBITDA, and adjusted diluted EPS are pro forma measures. | ||||||||||||||||||||||||||
• | Enterprise IT Support for the Environmental Protection Agency (EPA). Under a $266 million, five-year contract, CSRA will provide a full range of services to develop and operate the EPA’s infrastructure and application platforms. Services delivered under this new contract for CSRA include: data center management, application hosting, application deployment and maintenance, geospatial service support, network security, cybersecurity, cloud computing, continuity of operations (COOP) services, enterprise identity and access management (EIAM), and active directory (AD). |
• | Program Executive Office (PEO) Aircraft Carriers Support. CSRA secured a five-year, $61 million recompete to provide a full range of acquisition program support services to PEO Aircraft Carriers, including the design, development, construction, modernization, and life cycle management of aircraft carriers for the Navy. CSRA has supported PEO Aircraft Carriers for over 25 years. |
• | Administrative Office of U.S. Courts (AOUSC) IT Security Support. The AOUSC awarded CSRA a new $57 million, four-year contract to secure the Courts' IT assets. Under this task order, CSRA will provide highly-specialized security services, such as security engineering, penetration testing, security assessments, and training. |
• | EPA High Performance Computing (HPC) Support. CSRA secured a new five-year, $58 million contract to provision, maintain, and support the EPA’s HPC environment, as well as its scientific visualization hardware and software. CSRA's support of computational modeling and simulation tools will allow the EPA to solve complex research problems quickly and in a cost-effective manner to guide decisions and better protect human health and the environment. |
• | Department of the Navy Chief of Information (CHINFO) Support. Under a five-year, $39 million contract, CSRA will continue to provide the Navy support to its worldwide public communication and media support services program. |
Metric | Fiscal Year 2018 |
Revenue (millions) | $5,000 - $5,200 |
Adjusted EBITDA (millions) | $770 - $800 |
Adjusted Diluted Earnings per Share | $1.88 - $2.00 |
Free Cash Flow (millions) | $330 - $380 |
As of | ||||||||||||
(Dollars in millions, shares in thousands) | March 31, 2017 | April 1, 2016 | ||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | $ | 126 | $ | 130 | ||||||||
Receivables, net of allowance for doubtful accounts of $24 and $21, respectively | 748 | 751 | ||||||||||
Prepaid expenses and other current assets | 126 | 123 | ||||||||||
Total current assets | 1,000 | 1,004 | ||||||||||
Intangible and other assets | ||||||||||||
Goodwill | 2,335 | 2,332 | ||||||||||
Customer-related and other intangible assets, net of accumulated amortization of $244 and $201, respectively | 775 | 870 | ||||||||||
Software, net of accumulated amortization of $89 and $95, respectively | 81 | 41 | ||||||||||
Other assets | 87 | 69 | ||||||||||
Total intangible and other assets | 3,278 | 3,312 | ||||||||||
Property and equipment, net of accumulated depreciation of $694 and $773, respectively | 610 | 530 | ||||||||||
Total assets | $ | 4,888 | $ | 4,846 | ||||||||
Current liabilities | ||||||||||||
Accounts payable | $ | 187 | $ | 170 | ||||||||
Accrued payroll and related costs | 181 | 200 | ||||||||||
Accrued expenses and other current liabilities | 487 | 528 | ||||||||||
Current capital lease liability | 44 | 42 | ||||||||||
Current maturities of long-term debt | 72 | 128 | ||||||||||
Dividends payable | 21 | 18 | ||||||||||
Total current liabilities | 992 | 1,086 | ||||||||||
Long-term debt, net of current maturities | 2,511 | 2,656 | ||||||||||
Noncurrent capital lease liability | 172 | 109 | ||||||||||
Deferred income tax liabilities | 272 | 163 | ||||||||||
Other long-term liabilities | 582 | 742 | ||||||||||
Commitments and contingent liabilities | ||||||||||||
Equity | ||||||||||||
Stockholders’ Equity: | ||||||||||||
Common stock, $0.001 par value, 750,000 shares authorized, 163,570 and 162,926 shares issued, and 163,216 and 162,926 outstanding, respectively | — | — | ||||||||||
Additional paid-in capital | 134 | 117 | ||||||||||
Accumulated earnings (deficit) | 165 | (74 | ) | |||||||||
Accumulated other comprehensive income | 31 | 21 | ||||||||||
Total stockholders’ equity | 330 | 64 | ||||||||||
Noncontrolling interests | 29 | 26 | ||||||||||
Total equity | 359 | 90 | ||||||||||
Total liabilities and equity | $ | 4,888 | $ | 4,846 |
Three Months Ended | Fiscal Years Ended | |||||||||||||||||||||||
(Dollars in millions, except per share amounts) | March 31, 2017 | April 1, 2016 | March 31, 2017 | April 1, 2016 | ||||||||||||||||||||
Total revenue | $ | 1,254 | $ | 1,290 | $ | 4,993 | $ | 4,250 | ||||||||||||||||
Cost of services | 990 | 1,227 | 3,830 | 3,576 | ||||||||||||||||||||
Selling, general and administrative expenses | 50 | 52 | 210 | 187 | ||||||||||||||||||||
Separation and merger costs | 72 | 18 | 90 | 118 | ||||||||||||||||||||
Depreciation and amortization | 52 | 69 | 241 | 182 | ||||||||||||||||||||
Operating expenses | 1,164 | 1,366 | 4,371 | 4,063 | ||||||||||||||||||||
Operating income (loss) | 90 | (76 | ) | 622 | 187 | |||||||||||||||||||
Interest expense, net | 29 | 29 | 124 | 53 | ||||||||||||||||||||
Other expense (income), net | — | 2 | 3 | (15 | ) | |||||||||||||||||||
Income before income taxes | 61 | (107 | ) | 495 | 149 | |||||||||||||||||||
Income tax expense (benefit) | 21 | (39 | ) | 179 | 46 | |||||||||||||||||||
Net income (loss) | 40 | (68 | ) | 316 | 103 | |||||||||||||||||||
Less: noncontrolling interests | 3 | 4 | 12 | 16 | ||||||||||||||||||||
Net income (loss) attributable to CSRA common stockholders | $ | 37 | $ | (72 | ) | $ | 304 | $ | 87 | |||||||||||||||
Earnings (loss) per common share: | ||||||||||||||||||||||||
Basic | $ | 0.23 | (0.44 | ) | $ | 1.86 | $ | 0.54 | ||||||||||||||||
Diluted | $ | 0.22 | (0.44 | ) | $ | 1.84 | $ | 0.53 | ||||||||||||||||
Common share information (weighted averages, in thousands): | ||||||||||||||||||||||||
Common shares outstanding - basic | 163,134 | 162,596 | 163,345 | 162,193 | ||||||||||||||||||||
Dilutive effect of stock options and equity awards | 1,721 | 1,414 | 1,491 | 1,392 | ||||||||||||||||||||
Common shares outstanding - diluted | 164,855 | 164,010 | 164,836 | 163,585 | ||||||||||||||||||||
Cash dividend per common share | $ | 0.10 | $ | 0.10 | $ | 0.40 | $ | 0.20 |
(Dollars in millions) | Fiscal Years Ended | |||||||||||
March 31, 2017(Unaudited) | April 1, 2016 | |||||||||||
Cash flow provided by operating activities: | ||||||||||||
Net income | $ | 316 | $ | 103 | ||||||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 244 | 192 | ||||||||||
Pension and OPEB actuarial & settlement losses (gains) | (98 | ) | 203 | |||||||||
Stock-based compensation | 29 | 10 | ||||||||||
Excess tax benefit from stock-based compensation | (4 | ) | (1 | ) | ||||||||
Deferred income taxes | 100 | (44 | ) | |||||||||
Net (gain) loss on dispositions on business and assets | 2 | (7 | ) | |||||||||
Other non-cash items, net | (2 | ) | (5 | ) | ||||||||
Changes in assets and liabilities, net of acquisitions and dispositions: | ||||||||||||
Decrease in receivables | 15 | 186 | ||||||||||
(Increase) decrease in prepaid and other assets | (9 | ) | (30 | ) | ||||||||
Increase (decrease) in payables and accrued expenses | (29 | ) | (18 | ) | ||||||||
Decrease in defined benefits liability | (87 | ) | (57 | ) | ||||||||
(Increase) decrease in other long-term liabilities | 6 | 14 | ||||||||||
Other operating activities, net | 5 | 7 | ||||||||||
Cash provided by operating activities | 488 | 553 | ||||||||||
Cash flows used in investing activities: | ||||||||||||
Purchases of property and equipment | (129 | ) | (139 | ) | ||||||||
Software purchased and developed | (21 | ) | (22 | ) | ||||||||
Payments for acquisitions, net of cash acquired | — | (342 | ) | |||||||||
Extinguishment of SRA long-term debt and costs | — | (1,101 | ) | |||||||||
Reimbursement of SRA-related expenses | — | (30 | ) | |||||||||
Proceeds from business dispositions | — | 34 | ||||||||||
Proceeds from disposals of assets | 11 | 4 | ||||||||||
Other investing activity | (29 | ) | (9 | ) | ||||||||
Cash used in investing activities | (168 | ) | (1,605 | ) | ||||||||
Cash flows (used in) provided by financing activities: | ||||||||||||
Borrowings under lines of credit | — | 200 | ||||||||||
Repayments of borrowings under lines of credit | (50 | ) | (150 | ) | ||||||||
Borrowings of long-term debt | 234 | 2,800 | ||||||||||
Payments of long-term debt | (399 | ) | (20 | ) | ||||||||
Debt issuance costs | (4 | ) | (56 | ) | ||||||||
Proceeds from stock options and other common stock transactions | 5 | 4 | ||||||||||
Repurchase of common stock | (29 | ) | (50 | ) | ||||||||
Special Dividend payment | — | (1,148 | ) | |||||||||
Dividends paid | (67 | ) | (16 | ) | ||||||||
Repayment of Transitory Note | — | (350 | ) | |||||||||
Payments on capital lease liability | (47 | ) | (17 | ) | ||||||||
Payments to noncontrolling interest | (9 | ) | (18 | ) | ||||||||
Net transfers to CSC | — | (10 | ) | |||||||||
Other financing activity | 42 | 8 | ||||||||||
Cash (used in) provided by financing activities | (324 | ) | 1,177 | |||||||||
Net increase in cash and cash equivalents | (4 | ) | 125 | |||||||||
Cash and cash equivalents at beginning of period | 130 | 5 | ||||||||||
Cash and cash equivalents at end of period | $ | 126 | $ | 130 | ||||||||
(Dollars in millions) | Fiscal Years Ended | |||||||||||
March 31, 2017 | April 1, 2016 | |||||||||||
Supplemental cash flow information: | ||||||||||||
Cash paid for income taxes | $ | 90 | $ | 91 | ||||||||
Cash paid for interest | 108 | 48 | ||||||||||
Capital expenditures in accounts payable and other liabilities | 38 | 25 | ||||||||||
Capital expenditures through capital lease obligations | 119 | 1 | ||||||||||
Deferred tax liability | 110 | 215 | ||||||||||
Non-cash transfers related to Spin-Off | — | (475 | ) | |||||||||
Non-cash transactions related to Mergers | — | (11 | ) | |||||||||
Non-cash equity issued, net of shares held for taxes for SRA Shareholders | — | (768 | ) | |||||||||
Transfers of remaining net parent investment to additional paid-in-capital | — | (608 | ) |
Three Months Ended | Fiscal Years Ended | |||||||||||||||||||||||
(Dollars in millions) | March 31, 2017 | April 1, 2016 | March 31, 2017 | April 1, 2016(a) | ||||||||||||||||||||
Revenue | ||||||||||||||||||||||||
Defense and Intelligence | $ | 551 | $ | 578 | $ | 2,250 | $ | 2,349 | ||||||||||||||||
Civil | 703 | 712 | 2,743 | 2,849 | ||||||||||||||||||||
Segment operating income(b) | ||||||||||||||||||||||||
Defense and Intelligence | 87 | 77 | 268 | 316 | ||||||||||||||||||||
Civil | 130 | 83 | 440 | 349 | ||||||||||||||||||||
Notes: | ||||||||||||||||||||||||
(a) | For the fiscal year ended April 1, 2016, revenue and segment operating income are pro forma measures. | |||||||||||||||||||||||
(b) | Segment operating income excludes actuarial and settlement charges related to pension and other post-employment benefit plans, corporate G&A, separation and merger costs and SRA integration costs. | |||||||||||||||||||||||
• | Pro forma adjustments. For fiscal year 2016, pro forma results assume that the acquisition of SRA occurred prior to the beginning of the year. As a result, SRA revenue, EBITDA, and income for the first seven months of fiscal year 2016 are added to the comparable GAAP measures, after adjusting for intercompany effects. In addition, interest expense, share count, and tax rate for periods before the spin-merger are normalized for the ongoing levels at the time of the spin-merger. |
• | Plan impacts. At the time of the Spin-off on November 27, 2015, CSRA assumed the assets and obligations of the pension and other post-retirement plans from CSC. The recurring net non-cash benefits associated with these plans are excluded from all quarters. The non-cash gains and losses from fair value remeasurement of these plans are excluded from all quarters in which they occurred, specifically the third and fourth quarters of fiscal years 2016 and 2017. |
• | CSC Intellectual Property Payments. Under the Original IPMA, CSRA reimbursed CSC $30 million in December 2015 for the maintenance of certain intellectual property. This payment is reflected in the free cash flow for the third quarter of fiscal year 2016. The quarterly amortization of $7.5 million is included in the adjusted EBITDA and adjusted diluted EPS expenses for all quarters in fiscal year 2016 and the first three quarters in fiscal year 2017. Under the IPMA executed in February 2017, the annual payment was eliminated. Consequently, $2.5 million of intellectual property costs that |
• | Spin, Merger, and Integration Costs. Costs directly associated with the separation and merger transactions are excluded from adjusted EBITDA, adjusted EPS, and free cash flow. Included in separation and merger costs is $14 million of non-cash stock compensation expense from performance-based awards for former SRA shareholders in the third quarter of fiscal year 2017. In the fourth quarter of fiscal year, there was a $65 million payment to CSC related to the IPMA, of which $61 million was expensed. Costs from the ongoing integration process are excluded from adjusted EBITDA and adjusted diluted EPS. |
• | Acquisition-related Intangible Amortization. All amortization associated with acquisition-related intangible assets is excluded from adjusted EPS. |
• | Other Non-Cash Charges Not Earned/Incurred in Operation of Business. Debt extinguishment expense of $8 million related to the debt amendments incurred in the third quarter of fiscal year 2017 is excluded from adjusted EPS. |
CSRA INC. | |||||||||||||||||||||||||
ADJUSTED REVENUE (unaudited) | |||||||||||||||||||||||||
Three Months Ended | Fiscal Years Ended | ||||||||||||||||||||||||
(Dollars in millions) | March 31, 2017 | April 1, 2016 | March 31, 2017 | April 1, 2016(a) | |||||||||||||||||||||
Revenue(b) | $ | 1,254 | $ | 1,290 | $ | 4,993 | $ | 4,250 | |||||||||||||||||
Historical SRA revenue(c) | — | — | — | 950 | |||||||||||||||||||||
Separation and merger effect(d) | — | — | — | (2 | ) | ||||||||||||||||||||
Adjusted revenue | $ | 1,254 | $ | 1,290 | $ | 4,993 | $ | 5,198 | |||||||||||||||||
Notes: | |||||||||||||||||||||||||
(a) | For the fiscal year ended April 1, 2016, adjusted revenue is a pro forma measure. | ||||||||||||||||||||||||
(b) | For the fiscal year ended April 1, 2016, GAAP results reflect the operations of CSRA LLC. | ||||||||||||||||||||||||
(c) | Revenue prior to the November 30, 2015 merger from the most closely corresponding reporting period, which is April 1, 2015 to November 30, 2015, in the case of the fiscal year ended April 1, 2016. | ||||||||||||||||||||||||
(d) | Adjustment for inter-company revenue prior to the November 30, 2015 merger with SRA. |
CSRA INC. | |||||||||||||||||||||||||
ADJUSTED DILUTED EARNINGS PER SHARE (unaudited) | |||||||||||||||||||||||||
Three Months Ended | Fiscal Years Ended | ||||||||||||||||||||||||
(Dollars in millions except per share amounts) | March 31, 2017 | April 1, 2016 | March 31, 2017 | April 1, 2016(a) | |||||||||||||||||||||
Income before income taxes(b) | $ | 61 | $ | (107 | ) | $ | 495 | $ | 149 | ||||||||||||||||
Historical SRA gain (loss) from continuing operations before taxes(c) | — | — | — | (62 | ) | ||||||||||||||||||||
Separation and merger costs(d) | 72 | 16 | 90 | 259 | |||||||||||||||||||||
Integration and other costs | (6 | ) | 12 | 25 | 18 | ||||||||||||||||||||
Actuarial and settlement (gains) losses of the defined benefit plans ("Plans") | 16 | 203 | (98 | ) | 184 | ||||||||||||||||||||
Other net benefits of the Plans(e) | (20 | ) | (28 | ) | (92 | ) | (108 | ) | |||||||||||||||||
Amortization of backlog associated with SRA acquisition(f) | — | 16 | 43 | 22 | |||||||||||||||||||||
Other acquisition-related intangible amortization | 11 | 17 | 50 | 32 | |||||||||||||||||||||
Adjusted income, before income taxes | 134 | 129 | 513 | 494 | |||||||||||||||||||||
Adjusted income tax expense(g) | 51 | 51 | 186 | 193 | |||||||||||||||||||||
Adjusted net income | 83 | 78 | 327 | 301 | |||||||||||||||||||||
Less: Noncontrolling interest | 3 | 4 | 12 | 16 | |||||||||||||||||||||
Adjusted net income attributable to CSRA common stockholders | $ | 80 | $ | 74 | $ | 315 | $ | 285 | |||||||||||||||||
Adjusted diluted earnings per common share(h) | $ | 0.49 | $ | 0.46 | $ | 1.91 | $ | 1.74 | |||||||||||||||||
Notes: Adjusted net income attributable to CSRA common stockholders may not equal the sum of the component figures due to rounding. | |||||||||||||||||||||||||
(a) | For the fiscal year ended April 1, 2016, adjusted income before income taxes, adjusted income tax expense, adjusted net income, adjusted net income attributable to CSRA common shareholders, and adjusted diluted earnings per common share are pro forma measures. | ||||||||||||||||||||||||
(b) | For the fiscal year ended April 1, 2016, GAAP results reflect the operations of CSRA LLC and include a pre-tax gain of $17 million on the sale of Welkin, which increased pro forma adjusted net income to shareholders by $10 million and pro forma adjusted diluted EPS by $0.06. | ||||||||||||||||||||||||
(c) | Income prior to the November 30, 2015 merger from the most closely corresponding reporting period, which is April 1, 2015 to November 30, 2015, in the case of the fiscal year ended April 1, 2016. | ||||||||||||||||||||||||
(d) | Inter-company income prior to the November 30, 2015 merger plus costs directly associated with the separation and merger transactions, before tax effect. | ||||||||||||||||||||||||
(e) | The expected return on pension and OPEB plan assets less the interest and service costs associated with the Plans. | ||||||||||||||||||||||||
(f) | Total value of $65 million amortized over the period November 30, 2015 to November 30, 2016 is included in Income before income taxes. | ||||||||||||||||||||||||
(g) | For the three months and fiscal year ended April 1, 2016, the assumed long-term effective tax rate of 39 percent is applied. | ||||||||||||||||||||||||
(h) | For the fiscal year ended April 1, 2016, Distribution Date common shares are used as the basis for computing weighted average shares outstanding for the periods prior to the Spin-off. |
CSRA INC. | |||||||||||||||||||||||||
ADJUSTED EBITDA (unaudited) | |||||||||||||||||||||||||
Three Months Ended | Fiscal Years Ended | ||||||||||||||||||||||||
(Dollars in millions) | March 31, 2017 | April 1, 2016 | March 31, 2017 | April 1, 2016(a) | |||||||||||||||||||||
Operating income (loss)(b) | $ | 90 | $ | (76 | ) | $ | 622 | $ | 187 | ||||||||||||||||
Historical SRA operating income(c) | — | — | — | 36 | |||||||||||||||||||||
Impact of spin-off & merger on interest and income tax expense | — | 12 | — | 52 | |||||||||||||||||||||
Less: other expense (income), net | — | (1 | ) | (3 | ) | 15 | |||||||||||||||||||
Separation, merger and integration costs(d) | 65 | 35 | 149 | 186 | |||||||||||||||||||||
Depreciation and amortization(e) | 52 | 49 | 197 | 198 | |||||||||||||||||||||
Amortization of contract-related intangibles | — | 2 | 2 | 9 | |||||||||||||||||||||
Stock-based compensation(f) | 4 | 1 | 15 | 12 | |||||||||||||||||||||
Pension and post-retirement plan actuarial losses (gains), settlement losses, and amortization of other comprehensive income | 16 | 203 | (98 | ) | 212 | ||||||||||||||||||||
Net periodic benefits of Plans(g) | (20 | ) | (28 | ) | (92 | ) | (108 | ) | |||||||||||||||||
Impact of acquisitions and dispositions of businesses(h) | — | — | — | (12 | ) | ||||||||||||||||||||
Adjusted EBITDA | $ | 207 | $ | 197 | $ | 792 | $ | 787 | |||||||||||||||||
Adjusted EBITDA Margin | 16.5 | % | 15.3 | % | 15.9 | % | 15.1 | % | |||||||||||||||||
Notes: | |||||||||||||||||||||||||
(a) | For the fiscal year ended April 1, 2016, adjusted EBITDA is a pro forma measure, and the various elements incorporate amounts furnished in the Form 8-K dated December 24, 2015, derived on the basis described therein. | ||||||||||||||||||||||||
(b) | For the three months and fiscal year ended March 31, 2017, GAAP results reflect the operations of CSRA LLC. | ||||||||||||||||||||||||
(c) | SRA income prior to November 30, 2015 merger from the most closely corresponding reporting period, which is October 1, 2015 to November 30, 2015, in the case of the fiscal year ended April 1, 2016. | ||||||||||||||||||||||||
(d) | Inter-company income prior to the November 30, 2015 merger, costs directly associated with the separation and merger transactions, intangibles amortization expense associated with SRA’s funded contract backlog, and one-time integration costs. | ||||||||||||||||||||||||
(e) | Excludes amortization of backlog intangibles. See endnote (d). | ||||||||||||||||||||||||
(f) | Excludes $14 million of expense in fiscal year 2017 that is included in separation, merger and integration costs. | ||||||||||||||||||||||||
(g) | The expected return on pension and OPEB plan assets minus the interest and service costs associated with the Plans on a pre-tax basis. | ||||||||||||||||||||||||
(h) | Pre-tax gain on the sale of Welkin in April 2015 and pre-tax income from the assets acquired by SRA in April 2015 earned before the acquisition as well as restructuring costs. |
CSRA INC. | |||||||||||||||||||||||||
FREE CASH FLOW (unaudited) | |||||||||||||||||||||||||
Three Months Ended | Fiscal Years Ended | ||||||||||||||||||||||||
(Amounts in millions) | March 31, 2017 | April 1, 2016 | March 31, 2017 | April 1, 2016 | |||||||||||||||||||||
Net cash provided by operating activities | $ | 50 | $ | 178 | $ | 488 | $ | 553 | |||||||||||||||||
Net cash (used in) provided by investing activities | (50 | ) | (54 | ) | (168 | ) | (1,605 | ) | |||||||||||||||||
Acquisitions, net of cash acquired | — | — | — | 1,473 | |||||||||||||||||||||
Business dispositions | — | — | — | (34 | ) | ||||||||||||||||||||
Payments on capital leases and other long-term assets financing | (15 | ) | (4 | ) | (47 | ) | (17 | ) | |||||||||||||||||
Separation and merger-related payments | 77 | 10 | 101 | 80 | |||||||||||||||||||||
Initial sales of qualifying accounts receivables(a) | — | 36 | (46 | ) | (172 | ) | |||||||||||||||||||
Free cash flow | $ | 62 | $ | 166 | $ | 328 | $ | 278 | |||||||||||||||||
Notes: | |||||||||||||||||||||||||
(a) | Adjustments for the relative impact of the net proceeds arising from the initial sale of billed and/or unbilled receivables under the Purchase Agreement as well as the effect of any new types of sales arising from changes in the Purchase Agreement. For the three months and fiscal year ended April 1, 2016, amounts represent unbilled and billed receivables, respectively, principally sold by the Computer Sciences Government Services Business. For the fiscal year ended March 31, 2017, the amount relates to SRA unbilled receivables under the Purchase Agreement to which SRA was added to during the period. Billed receivables historically sold by SRA under a separate accounts receivable purchase agreement continue under the Purchase Agreement. |