Perspecta announces financial results for first quarter of fiscal year 2021
CHANTILLY, Va., Aug. 6, 2020 /PRNewswire/ -- Perspecta Inc. (NYSE:PRSP), a leading U.S. government services provider, today announced financial results for the first quarter of fiscal year 2021, which ended July 3, 2020.
"We are off to a solid start this fiscal year and our first quarter results continue to demonstrate solid execution across the enterprise, delivering on our revenue, adjusted diluted earnings per share and free cash flow conversion expectations," said Mac Curtis, chairman and chief executive officer of Perspecta. "I am pleased with both our operational performance and business development efforts during these challenging market conditions. Additionally, our new business wins build on the positive momentum in both of our segments and we remain dedicated to meeting our customers' needs and generating value for all our stakeholders."
Summary operating results (unaudited)
Fiscal Quarters Ended
(in millions, except
margin and per share
amounts) July 3, 2020 June 30, 2019
Revenue $
1,108 $
1,107
Income before taxes $
3 $
42
Operating margin 0.3
% 3.8
%
Net (loss) income $
(3) $
31
Diluted (loss)
earnings per share
(EPS) $
(0.02) $
0.19
Non-GAAP Measures*:
Adjusted Net Income $
76 $
85
Adjusted EBITDA $
167 $
204
Adjusted EBITDA Margin 15.1
% 18.4
%
Adjusted Diluted EPS $
0.47 $
0.52
* Adjusted Net Income, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Diluted EPS are non-GAAP financial
measures. Non-GAAP financial measures should be considered in addition to, but not as a substitute for, the
information provided in accordance with GAAP. See Selected Financial Data and Reconciliation of Non-GAAP
Financial Measures at the end of this press release for more information.
---
The tables in Selected Financial Data and Reconciliation of Non-GAAP Financial Measures at the end of this press release provide all appropriate reconciliations from adjusted results to GAAP.
Revenue for the quarter was $1.11 billion, up slightly compared to the first quarter of fiscal year 2020, and up 1% compared to the fourth quarter of fiscal year 2020. The sequential increase in revenue was primarily driven by contract growth and the in-quarter acquisition of DHPC Technologies, Inc., and was partially offset by the COVID-19 impact of approximately $23 million.
Income before taxes for the first quarter of fiscal year 2021 was $3 million, which was down 93% compared to the first quarter of fiscal year 2020. Operating margin decreased from 3.8% to 0.3% year-over-year. Net loss was $3 million, or a loss of $0.02 per diluted share.
Adjusted net income was $76 million for the first quarter of fiscal year 2021, down 11% year-over-year. Adjusted EBITDA was $167 million for the first quarter of fiscal year 2021, down 18% compared to adjusted EBITDA for the first quarter of fiscal year 2020; adjusted EBITDA margin decreased from 18.4% to 15.1% over the same period. The year-over-year decrease in profitability was primarily due to lower asset intensity, an increased mix of cost-reimbursable programs and an $8 million COVID-19 impact. Adjusted diluted EPS for the first quarter of fiscal year 2021 was $0.47, down 10% compared to adjusted diluted EPS for the first quarter of fiscal year 2020.
Segment operating results (unaudited)
For the fiscal quarter ended July 3, 2020, Defense and Intelligence segment revenue of $776 million increased by 3% compared to the first quarter of fiscal year 2020, primarily due to new business wins and growth on existing programs. Civilian and Health Care segment revenue of $332 million decreased by 6% compared to the segment's revenue from the comparable period of the prior year due to NASA Agency Consolidated End-User Services and other program wind downs.
Defense and Intelligence adjusted segment profit margin for the first quarter of fiscal year 2021 decreased to 12.6% from 15.7% in the first quarter of fiscal year 2020. Civilian and Health Care adjusted segment profit margin for the first quarter of fiscal year 2021 improved to 10.2% from 9.3% in the first quarter of fiscal year 2020. Total adjusted segment profit for the first quarter of fiscal year 2021 decreased to $132 million from $151 million in the first quarter of fiscal year 2020.
Cash management and capital deployment
Perspecta generated $132 million of net cash provided by operating activities in the first quarter of fiscal year 2021. Quarterly adjusted free cash flow was $102 million, or 134% of adjusted net income. During the first quarter of fiscal year 2021, Perspecta used $26 million to make permanent debt repayments, used $50 million to repay revolver borrowings and returned $10 million to shareholders in the form of its regular quarterly cash dividend program.
At quarter end, Perspecta had $122 million in cash and cash equivalents, $750 million of undrawn capacity in its revolving credit facility, and $2.5 billion in total debt, including $229 million in finance lease obligations. On August 5, 2020, the Perspecta Board of Directors declared that Perspecta will pay a cash dividend of $0.07 per share on October 15, 2020 to Perspecta shareholders of record at the close of business on August 26, 2020.
Contract awards
Contract awards (bookings) totaled $1.2 billion in the first quarter of fiscal year 2021, representing a book-to-bill ratio of 1.1x. Included in the quarterly bookings were several particularly important single-award prime contracts:
-- U.S. Army Training and Doctrine Command Army Training Information System
(ATIS) contract: Perspecta was awarded an Other Transaction Agreement
from the U.S. Army Training and Doctrine Command to deliver Phase II of
the ATIS program including the development, integration, delivery,
operation and maintenance of an enterprise capability for Army training
and education information. The Perspecta solution will consolidate 28
legacy systems, implement proven processes and migrate data into a
single-entry, integrated, cloud-based system. This will provide the Army
with a real-time understanding of combat readiness with reduced cost and
complexity. The four-year fixed-price program, which represents new work
for Perspecta, has a ceiling value of $237 million.
-- Received multiple awards on classified systems engineering and
integration programs in our Defense and Intelligence segment: Perspecta
will provide support to various U.S. government customers. The total
potential contract value of these awards is $370 million with a period
of performance of up to eight years.
-- U.S. Department of Homeland Security (DHS) new Data Center Two (DC2)
Support Services contract: Perspecta will provide DHS headquarters and
all authorized components with full scope managed services including
baseline data center hosting and engineering services, as well as
application and system migration, planning and execution support. The
indefinite delivery / indefinite quantity fixed-price contract has a
two-year base with two six-month option periods and a ceiling value of
$112 million.
-- Defense Advanced Research Projects Agency (DARPA) Fast Network Interface
Cards (FastNICs) program: DARPA awarded Perspecta Labs a contract on the
FastNICs program, with an objective of speeding up complex computing
applications, such as the distributed training of machine learning
classifiers and video analysis applications, by 100x through the
development, implementation, integration and validation of innovative
networking approaches. Perspecta Labs will research, design, develop and
demonstrate new network interface hardware that operates at a
10-terabits-per-second speed, and the associated system and programming
software to manage and utilize the new hardware. The award, which
represents new work for the company, has a total ceiling value of $37
million and a four-year period of performance if all options are
exercised.
Perspecta's backlog of signed business orders at the end of the first quarter of fiscal year 2021 was $13.5 billion; funded backlog at the end of the first quarter was $1.9 billion.
Forward guidance
The table below provides fiscal year 2021 guidance ranges for revenue, adjusted EBITDA margin, adjusted diluted EPS, and adjusted free cash flow conversion (as a percentage of adjusted net income). The table below provides information about the estimated financial impact of the network component of the existing U.S. Navy Next Generation Enterprise Network contract (NGEN SMIT), for which we are under contract through December 31, 2020. All forward-looking non-GAAP measures exclude estimates for amortization of intangible assets; stock-based compensation expenses; restructuring, separation, transaction and integration-related costs; mark-to-market changes associated with pension and other post-retirement benefit plans; and other non-recurring items. Perspecta is unable to provide a reconciliation of non-GAAP guidance measures to corresponding GAAP measures on a forward-looking basis without unreasonable effort due to the overall high variability and low visibility of most of the excluded items. Material changes to any one of these items could have a significant effect on future GAAP results.
Measure
Fiscal Year 2021
NGEN SMIT Information
Guidance
Estimated NGEN SMIT
Perspecta excluding Estimated
Impact NGEN SMIT Impact
Revenue
(millions)
$4,260 - $4,410
~ $600
~ $3,660 - $3,810
Adjusted
EBITDA 15.0% - 16.0% ~ 0.5% ~ 15.5% - 16.5%
Margin
Adjusted
Diluted EPS
$1.90 - $2.03
~ $0.30
~ $1.60 - $1.73
Adjusted Free
Cash 100+% ~ 100% ~ 100+%
Flow
Conversion
---
John Kavanaugh, chief financial officer of Perspecta, commented, "We are pleased to begin FY21 with strong results. We remain dedicated to delivering a consistent track record of execution. Our first quarter performance reinforces our efforts of continuing to deliver on our commitments."
The fourth quarter of fiscal year 2020 marked the beginning of the COVID-19 pandemic in the United States, and the pandemic has continued through the first quarter of fiscal year 2021. Due to the mission-critical nature of the majority of our business, substantially all of the services we provide to our government customers have been considered essential services, which has allowed them to continue, and the company has maintained its workforce at near full capacity. For the fiscal quarter ended July 3, 2020, the overall impact of the COVID-19 pandemic on our results of operations was approximately $23 million lower revenue, $8 million lower adjusted EBITDA and a liquidity benefit due to a $20 million deferral of payroll tax payments afforded by the Coronavirus Aid, Relief and Economic Security Act. We continue to assess further possible implications to our business, supply chain and customers, and to take actions in an effort to mitigate adverse consequences. Our fiscal year 2021 guidance above accounts for a potential impact of the COVID-19 pandemic of approximately $75 million in revenue and $20 million in adjusted EBITDA.
Conference call
Perspecta executive management will hold a conference call on August 6, 2020, at 5 p.m. Eastern to discuss the financial results and outlook and answer questions. Analysts and investors may participate on the conference call by dialing 888-348-3873 (domestic), 855-669-9657 (Canada), or 412-902-4234 (international). The conference call will be webcast simultaneously through a link on the Investor Relations section of the Perspecta website. A replay of the conference call will be available on the Investor Relations section of the Perspecta website approximately two hours after the conclusion of the call.
About Perspecta Inc.
At Perspecta, we question, we seek and we solve. Perspecta brings a diverse set of capabilities to our U.S. government customers in defense, intelligence, civilian, health care and state and local markets. Our 280+ issued, licensed and pending patents are more than just pieces of paper, they tell the story of our innovation. With offerings in mission services, digital transformation and enterprise operations, our team of nearly 14,000 engineers, analysts, investigators and architects work tirelessly to not only execute the mission, but build and support the backbone that enables it. Perspecta was formed to take on big challenges. We are an engine for growth and success and we enable our customers to build a better nation. For more information about Perspecta, visit perspecta.com.
Forward-looking statements
All statements and assumptions in this press release that do not directly and exclusively relate to historical facts could be deemed "forward-looking statements." Forward-looking statements are often identified by the use of words such as "anticipates," "believes," "estimates," "expects," "may," "could," "should," "forecast," "goal," "intends," "objective," "plans," "projects," "strategy," "target" and "will" and similar words and terms or variations of such. These statements represent current intentions, expectations, beliefs or projections, and no assurance can be given that the results described in such statements will be achieved. Forward-looking statements include, among other things, statements with respect to our financial condition, results of operations, cash flows, business strategies, prospects, guidance, share repurchases, dividend payments, contract value, revenue acceleration, profitability and revenue generation. Such statements are subject to numerous assumptions, risks, uncertainties and other factors that could cause actual results to differ materially from those described in such statements, many of which are outside of our control. Important factors that could cause actual results to differ materially from those described in forward-looking statements include, but are not limited to, (i) various risks related to health epidemics, pandemics and similar outbreaks, such as the COVID-19 pandemic, which may have material adverse effects on our business, financial position, results of operations and/or cash flows; (ii) any issue that compromises our relationships with the U.S. federal government, or any state or local governments, or damages our professional reputation; (iii) changes in the U.S. federal, state and local governments' spending and mission priorities that shift expenditures away from agencies or programs that we support; (iv) any delay in completion of the U.S. federal government's budget process; (v) failure to comply with numerous laws, regulations and rules, including regarding procurement, anti-bribery and organizational conflicts of interest; (vi) failure by us or our employees to obtain and maintain necessary security clearances or certifications; (vii) our ability to compete effectively in the competitive bidding process and delays, contract terminations or cancellations caused by competitors' protests of major contract awards received by us; (viii) our ability to accurately estimate or otherwise recover expenses, time and resources for our contracts; (ix) problems or delays in the development, delivery and transition of new products and services or the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; (x) failure of third parties to deliver on commitments under contracts with us; (xi) misconduct or other improper activities from our employees or subcontractors; (xii) delays, terminations, or cancellations of our major contract awards, including as a result of our competitors protesting such awards; (xiii) failure of our internal control over financial reporting to detect fraud or other issues; (xiv) failure or disruptions to our systems, due to cyber-attack, service interruptions or other security threats; (xv) failure to be awarded task orders under our indefinite delivery/indefinite quantity contracts; (xvi) changes in government procurement, contract or other practices or the adoption by the government of new laws, rules and regulations in a manner adverse to us; and (xvii) uncertainty from the expected discontinuance of the London Interbank Offered Rate and transition to any other interest rate benchmark; as well as the matters described in the "Cautionary Statement Regarding Forward-Looking Statements" and "Risk Factors" sections of Perspecta's Annual Report on Form 10-K for the fiscal year ended March 31, 2020, as may be updated or supplemented in our Quarterly Reports on Form 10-Q and our other filings with the Securities and Exchange Commission, which discuss these and other factors that could adversely affect our results. Readers are cautioned not to place undue reliance on such statements which speak only as of the date they are made. We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events except as required by law.
Condensed Consolidated Statements of Operations
(preliminary and unaudited)
Fiscal Quarters Ended
(in millions, except per
share amounts) July 3, 2020 June 30, 2019
Revenue $
1,108 $
1,107
Costs of services 899 836
Selling, general and
administrative 62 72
Depreciation and
amortization 96 101
Restructuring costs 18 2
Separation, transaction and
integration-related costs 15 19
Interest expense, net 30 35
Other (income) expense, net (15)
Total costs and expenses 1,105 1,065
Income before taxes 3 42
Income tax expense 6 11
Net (loss) income $
(3) $
31
(Loss) earnings per common
share:
Basic $
(0.02) $
0.19
Diluted $
(0.02) $
0.19
Selected Condensed Consolidated Balance Sheet Data
(preliminary and unaudited)
(in millions) July 3, 2020 March 31, 2020
ASSETS
Current assets:
Cash and cash equivalents $
122 $
147
Receivables, net of allowance for
doubtful accounts of $1 and $1 566 513
Other receivables 33 45
Prepaid expenses 62 81
Other current assets 78 101
Total current assets 861 887
Property and equipment, net of
accumulated depreciation of $220 and
$193 299 307
Goodwill 2,701 2,671
Intangible assets, net of accumulated
amortization of $566 and $515 1,149 1,193
Other assets 320 347
Total assets $
5,330 $
5,405
LIABILITIES and SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $
89 $
89
Current finance lease obligations 106 111
Current operating lease obligations 38 39
Accounts payable 158 218
Accrued payroll and related costs 174 142
Accrued expenses 459 385
Other current liabilities 85 73
Total current liabilities 1,109 1,057
Long-term debt, net of current
maturities 2,213 2,283
Non-current finance lease
obligations 123 136
Non-current operating lease
obligations 126 129
Deferred tax liabilities 99 114
Other long-term liabilities 312 329
Total liabilities 3,982 4,048
Commitments and contingencies
Total shareholders' equity 1,348 1,357
Total liabilities and shareholders'
equity $
5,330 $
5,405
Condensed Consolidated Statements of Cash Flows
(preliminary and unaudited)
Fiscal Quarters Ended
(in millions) July 3, 2020 June 30, 2019
Cash flows from operating
activities:
Net (loss) income $
(3) $
31
Adjustments to reconcile net
(loss) income to net cash
provided by operating activities:
Depreciation and amortization 96 101
Share-based compensation 7 5
Deferred income taxes (16) (8)
Loss on sale or disposal of
assets, net 7 8
Other non-cash charges, net 4 1
Changes in assets and liabilities,
net of effects of acquisitions:
Receivables, net (18) 55
Prepaid expenses and other current
assets 24 31
Accounts payable, accrued expenses
and other current liabilities 38 (26)
Deferred revenue and advanced
contract payments 1 (13)
Income taxes payable and liability (1)
Other assets and liabilities, net (7)
Net cash provided by operating
activities 132 185
Cash flows from investing
activities:
Payments for acquisitions, net of
cash acquired (53)
Proceeds from sale of assets 9
Purchases of property, equipment
and software (15) (1)
Payments for outsourcing contract
costs (1)
Net cash used in investing
activities (59) (2)
Cash flows from financing
activities:
Principal payments on long-term
debt (26) (22)
Payments on revolving credit
facility (50)
Payments on finance lease
obligations (28) (35)
Repurchases of common stock (15)
Repurchases of common stock to
satisfy tax withholding
obligations (2)
Dividends paid (10) (8)
Net cash used in financing
activities (116) (80)
Net change in cash and cash
equivalents, including restricted (43) 103
Cash and cash equivalents,
including restricted, at
beginning of period 221 99
Cash and cash equivalents,
including restricted, at end of
period 178 202
Less restricted cash and cash
equivalents included in other
current assets 56 23
Cash and cash equivalents at end
of period $
122 $
179
Selected Financial Data and Reconciliation of Non-GAAP Financial Measures
The following tables present selected financial data, including the reconciliation of non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP. Perspecta management believes that these non-GAAP financial measures provide useful additional information to investors regarding Perspecta's results of operations as they provide another measure of Perspecta's profitability and ability to service its debt and are considered important to financial analysts covering Perspecta's industry.
These non-GAAP financial measures have limitations as an analytical tool and should not be considered in isolation or as a substitute for income from operations, net income, diluted EPS or any other measure of financial performance reported in accordance with GAAP. Perspecta's non-GAAP measures may be calculated differently than similarly named measures reported by other companies. In addition, using non-GAAP measures may have limited value as they exclude certain items that may have a material impact on reported financial results and cash flows. When analyzing Perspecta's performance, it is important to evaluate each adjustment in the reconciliation tables and use adjusted measures in addition to, and not as an alternative to, GAAP measures.
Revenue Excluding NGEN SMIT (Unaudited)
Fiscal Quarters Ended
(in
millions) July 3, 2020 June 30, 2019
Revenue $
1,108 $
1,107
Less NGEN
SMIT impact 214 197
Revenue
excluding
NGEN SMIT
impact $
894 $
910
Adjusted EBITDA, Net Income, and Diluted EPS (Unaudited)
Adjusted EBITDA excludes the following items: interest, income taxes, depreciation and amortization, restructuring, separation, transaction and integration-related costs, mark-to-market adjustments to the pension and other post-employment benefit programs, stock-based compensation, and other non-recurring items. There were no mark-to-market changes in either the current or year-ago quarterly periods. Adjusted net income and adjusted diluted EPS also exclude acquisition-related intangible amortization.
Fiscal Quarters Ended
(in millions, except margin and per share amounts) July 3, 2020 June 30, 2019
Net (loss) income $
(3) $
31
Income tax expense 6 11
Interest expense, net 30 35
Depreciation and amortization 96 101
EBITDA 129 178
Restructuring costs 18 2
Separation, transaction and integration-related costs 15 19
Share-based compensation 7 5
Other (2)
Adjusted EBITDA 167 204
Adjusted EBITDA margin (a) 15.1 18.4
% %
Adjusted EBITDA, excluding NGEN SMIT (b) 144 180
Adjusted EBITDA margin, excluding NGEN SMIT (b) 16.1 19.8
% %
Depreciation and amortization (96) (101)
Amortization of acquired intangibles 61 48
Interest expense, net (30) (35)
Adjusted earnings before taxes 102 116
Income tax expense (c) 26 31
Adjusted net income $
76 $
85
Adjusted diluted EPS (d) $
0.47 $
0.52
Adjusted net income, excluding NGEN SMIT (e) $
60 $
68
Adjusted diluted EPS, excluding NGEN SMIT (e) $
0.37 $
0.42
Notes:
(a) Adjusted EBITDA
margin is
calculated as
the ratio of
adjusted
EBITDA to
revenue for
the fiscal
quarters ended
July 3, 2020
and June 30,
2019.
(b) Excludes the
impact of NGEN
SMIT. Adjusted
EBITDA,
excluding NGEN
SMIT is
defined as
revenue less
cost of
services,
selling,
general and
administrative
and excludes
certain
operating
expenses
managed at the
corporate
level. These
unallocated
costs include
certain
corporate
function
costs, share-
based
compensation
expense,
amortization
of acquired
intangible
assets,
impairment
charges,
certain
nonrecoverable
restructuring
costs,
separation,
transaction
and
integration-
relate costs,
net periodic
benefit cost
and gain or
loss on sale
of assets.
Adjusted
EBITDA margin,
excluding NGEN
SMIT is
calculated as
the ratio of
adjusted
EBITDA,
excluding NGEN
SMIT to
revenue
excluding NGEN
SMIT for the
fiscal
quarters ended
July 3, 2020
and June 30,
2019.
(c) Represents
income tax
expense
utilizing an
adjusted
effective tax
rate that
adjusts for
non-GAAP
measures
including:
transaction
costs,
integration
costs, and tax
add backs for
non-
deductible
prior-merger
goodwill
amortization.
Adjusted
effective tax
rates were 25%
for the fiscal
quarter ended
July 3, 2020,
and 27% for
the fiscal
quarter ended
June 30, 2019.
(d) Represents
adjusted net
income divided
by the
weighted
average common
shares on a
diluted basis
of 161.70
million and
163.29 million
for the fiscal
quarters ended
July 3, 2020
and June 30,
2019,
respectively.
(e) Excludes the
impact of NGEN
SMIT. Adjusted
net income
excluding NGEN
SMIT is
adjusted
EBITDA,
excluding NGEN
SMIT less NGEN
SMIT
depreciation
and imputed
income tax at
25%. Adjusted
diluted EPS,
excluding NGEN
SMIT is
adjusted net
income,
excluding NGEN
SMIT divided
by the
weighted-
average common
shares on a
diluted basis
of 161.70
million and
163.29 million
for the fiscal
quarters ended
July 3, 2020
and June 30,
2019,
respectively.
Adjusted Free Cash Flow (Unaudited)
Perspecta defines adjusted free cash flow as net cash provided by operating activities less purchases of property, equipment and software, and adjusted for certain items, such as (i) payments on finance lease obligations, (ii) business acquisitions, dispositions, and investments, (iii) restructuring payments, (iv) payments on separation, transaction and integration-related costs, (v) the impact arising from the initial sale of accounts receivables under the Master Accounts Receivable Purchase Agreement, and (vi) other non-recurring payments.
Fiscal Quarters Ended
(in
millions) July 3, 2020 June 30, 2019
Net
cash
provided
by
operating
activities $
132 $
185
Purchases
of
property,
equipment
and
software (15) (1)
Payments
on
finance
lease
obligations (28) (35)
Payments
on
restructuring,
separation,
transaction
and
integration-
related
costs 13 12
Adjusted
free
cash
flow $
102 $
161
Segment Operating Results (Unaudited)
Perspecta delivers IT, mission, and operations-related services across the U.S. federal government through two reportable segments--Defense and Intelligence, which provides services to the U.S. Department of Defense (DoD), intelligence community, branches of the U.S. Armed Forces, and other DoD agencies; and Civilian and Health Care, which provides services to the Departments of Homeland Security, Justice, and Health and Human Services, as well as other federal civilian and state and local government agencies. The following tables summarize reportable segment profit and reconciliation of reportable segment profit to income before taxes:
Selected Segment Measures (Unaudited)
Fiscal Quarters Ended
July 3, 2020
June 30, 2019
(in millions, except profit margin) Defense and Civilian and Total Defense and Civilian and Total
Intelligence Health Care Intelligence Health Care
Revenue $
776 $
332 $
1,108 $
752 $
355 $
1,107
Segment profit $
88 $
31 $
119 $
118 $
33 $
151
Non-GAAP adjustments (a) 10 3 13
Adjusted segment profit (b) $
98 $
34 $
132 $
118 $
33 $
151
Segment profit margin 11.3 9.3 10.7 15.7 9.3 13.6
% % % % % %
Adjusted segment profit margin (b) 12.6 10.2 11.9 15.7 9.3 13.6
% % % % % %
Notes:
(a) Non-GAAP adjustments include non-
operating net periodic pension
benefit, and certain separation-
related and other costs.
(b) Adjusted results represent non-
GAAP financial measures, and it
should be considered in addition
to, but not as substitute for,
the information provided in
accordance with GAAP.
Reconciliation of Reportable Segment Profit to Income Before Taxes (Unaudited)
Fiscal Quarters Ended
(in millions) July 3, 2020 June 30, 2019
Total profit for
reportable segments $
119 $
151
Not allocated to
segments:
Share-based
compensation (7) (5)
Amortization of
acquired intangible
assets (61) (48)
Restructuring costs (18) (2)
Separation, transaction
and integration-
related costs (15) (19)
Interest expense, net (30) (35)
Other income and
expense, net 15
Income before taxes $
3 $
42
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SOURCE Perspecta Inc.
