2017 Annual report
A Letter from Mike Lawrie, Chairman, President & CEO
On April 1, 2017, we began a new chapter in our transformation by completing the combination of CSC with the Enterprise Services business of Hewlett Packard Enterprise Company (HPE). DXC Technology Company (DXC), which began trading on the New York Stock Exchange under the ticker symbol “DXC” on April 3, is now the world’s leading independent, end-to-end IT services company, with a mission of leading clients on their digital transformation journeys.
DXC was created in direct response to the seismic shifts taking place in the technology industry — specifically the need for large enterprises to digitally transform their end-to-end operations.
So when we announced the merger on May 24, 2016, we set out to create a new company with a highly differentiated brand and culture that would produce greater value for clients, partners and stockholders, along with growth opportunities for our people. In a little more than 10 months, we delivered on our promise and launched DXC with an ambitious agenda and the overwhelming support of our stockholders.
From the outset, our vision behind combining two highly complementary businesses was to create a more powerful and versatile global technology services business — an enterprise that would be well positioned to innovate, compete and serve clients in a rapidly changing marketplace. We have been steadfast in our pursuit of this vision.
- We combined the best of both businesses to create a compelling value proposition that has been well received among clients, partners, employees, investors and analysts.
- Our people worked tirelessly and collaboratively to build the foundation for our operational and organizational models, along with our go-to-market strategy.
- In DXC, we have a distinctive brand that boldly captures who we are and how we do business: a force multiplier, enabling clients to seize the opportunities presented by today’s rapidly changing technologies.
- We have a strong leadership team in place — individuals who can best help our company and our people realize the tremendous opportunity ahead of us.
- Our people possess the ability to help drive the changes necessary to create a strong and winning culture. • Our board of directors brings exceptional knowledge, experience and talent to our new company.
On March 27, 2017, holders of approximately 85 percent of the outstanding shares of CSC common stock voted in favor of the merger, representing approximately 99 percent of the votes cast at the special meeting, a showing of broad support for the merger and our business transformation.
CSC FY17 in Review
In fiscal year 2017, CSC delivered strong growth in revenue, adjusted earnings before interest and taxes (EBIT) and adjusted free cash flow. Non-GAAP diluted earnings per share from continuing operations was $3.10 in fiscal year 2017.1 Reflecting merger-related integration and transaction costs, as well as pension and restructuring costs, CSC’s diluted earnings per share from continuing operations was $(0.88).
At CSC, we advanced our transformation and strategic priorities, especially with respect to growth and next-gen IT capabilities, client focus, alliance partnerships and people development:
- We acquired Xchanging and Aspediens, extending our leadership in key industries and offerings.
- We expanded our strategic alliances with AT&T, AWS, Dell EMC, HDS, IBM, SAP and ServiceNow, and created a new strategic alliance with PwC.
- We made strategic investments in Racemi and Virtual Clarity as well as eBECS to help clients accelerate their transformations to the public cloud and drive more value from their Microsoft-centric projects.
- We consolidated our offering families and created a seamless Build-Sell-Deliver operating model that is more closely aligned with our clients’ needs.
- We continued to strengthen our workforce with the launch of the new CSC University.
- We were recognized in more than 100 industry analyst assessments across seven influential analyst firms. Our next-gen offerings were ranked as leaders 24 different times, in areas such as cloud, cybersecurity and infrastructure. We also garnered recognition for our leadership in insurance and healthcare, and our Procurement as a Service capabilities.
In summary, CSC’s final fiscal year was approached with vigor and passion. We sent a strong message to the marketplace about our ability to thrive on change. Even while our teams did the hard work of integration, we maintained a relentless focus on our clients and built positive momentum.
The Road Ahead
“New, but not born yesterday” neatly sums up DXC’s identity and points to a value proposition that sets us apart from a crowded digital field. DXC has a clear and confident vision for navigating the future, and has met the challenges of innovation many times. While some may see us as a newcomer, we have nearly 6,000 clients in 70 countries and a network of more than 250 global partners. We are part of the Standard & Poor’s (S&P) 500 Index.
As a company, DXC will invest in skills development, training and recruitment of top talent to strengthen our foundation and ability to serve clients. We are fully committed to corporate responsibility and sustainability across our global operations, and recently we were recognized by Corporate Responsibility Magazine as a 2017 Best Corporate Citizen.
DXC leads clients through accelerating change, helping them harness the power of technology to deliver new outcomes for their businesses. We strive to support a culture of performance, matched with integrity. Our CLEAR Values guide our instincts and inform our actions: Client-Focused, Leadership, Execution Excellence, Aspiration, Results.
The debut of DXC was soundly embraced across all the communities we serve. Our journey has been immeasurably challenging and fulfilling. Together, we have been part of a historic, memorable and, for most, once-in-a-lifetime experience. Your ongoing commitment to our vision, mission and goals made our new venture possible. I extend my personal thanks to everyone who helped make this happen.
For DXC, our work has just now begun.
Our success will be measured by the trust we earn from clients, working shoulder to shoulder with them and with our partner network to solve complex challenges in ways that minimize business risk and maximize opportunity. Our world-class talent must be part of our clients’ teams, innovating with them and putting the right technology to work for their organizations. In this way, collaborative client relationships that flex and grow will be integral to meeting new challenges with confidence, speed and agility. Thank you. We have a great deal to look forward to as DXC.
