Divestitures

Fiscal 2019 Separation of USPS

On May 31, 2018, DXC completed the USPS Separation and Mergers to form Perspecta, an independent public company.

Implementation of the USPS Separation and DXC's post-Separation relationship with Perspecta is governed by several agreements, including the following:

•a Separation and Distribution Agreement;

•an Employee Matters Agreement;

•a Tax Matters Agreement;

•an Intellectual Property Matters Agreement;

•a Transition Services Agreement;

•a Real Estate Matters Agreement; and,

•a Non-US Agency Agreement.

These agreements provide for the allocation of assets, employees, liabilities and obligations (including property, employee benefits, litigation, and tax-related assets and liabilities) between DXC and Perspecta attributable to periods prior to, at and after the USPS Separation. In addition, DXC and Perspecta have service and commercial contracts that generally extend through fiscal 2023.

Pursuant to the Separation and Distribution Agreement, Perspecta made a net cash payment of $984 million to DXC, which reflects transaction consideration of $1,050 million less $66 million in principal amount of debt that was outstanding at a subsidiary of Perspecta. Perspecta financed the payment through borrowings under a new senior secured term loan facility.

J. Michael Lawrie serves as DXC's Chairman and Chief Executive Officer and Paul N. Saleh serves as DXC's Chief Financial Officer. Effective as of the Separation, Mr. Lawrie also serves as Chairman of Perspecta and Mr. Saleh also serves as a Director of Perspecta. Due to Mr. Lawrie's and Mr. Saleh's leadership positions at DXC and Perspecta, Perspecta is considered a related party under ASC 850 "Related Party Disclosures" for periods subsequent to the Separation. Transactions with Perspecta were immaterial to the Company's financial statements for the fiscal year ended March 31, 2019 and balances due to and from Perspecta were immaterial to the Company's balance sheet as of March 31, 2019.

The following is a summary of the assets and liabilities distributed as part of the Separation of USPS on May 31, 2018:



(in millions)	As of May 31, 2018
Assets:
Cash and cash equivalents	$	95
Receivables, net	458
Prepaid expenses	82
Other current assets	35
Total current assets of discontinued operations	670
Intangible assets, net⁽¹⁾	870
Goodwill	2,029
Property and equipment, net	294
Other assets⁽¹⁾	169
Total non-current assets of discontinued operations	3,362
Total assets	$	4,032

Liabilities:
Short-term debt and current maturities of long-term debt	$	161
Accounts payable	165
Accrued payroll and related costs	17
Accrued expenses and other current liabilities	358
Deferred revenue and advance contract payments	53
Income tax payable	18
Total current liabilities of discontinued operations	772
Long-term debt, net of current maturities	1,320
Non-current deferred revenue	5
Non-current income tax liabilities and deferred tax liabilities	196
Other long-term liabilities	71
Total long-term liabilities of discontinued operations	1,592
Total liabilities	$	2,364


⁽¹⁾	Previously reported amounts were adjusted to reflect the reclassification of transition and transformation contract costs from intangible assets to other assets to conform to the current year presentation.

The following is a summary of the assets and liabilities of USPS that have been classified as assets and liabilities of discontinued operations:



(in millions)	As of March 31, 2018
Assets:
Cash and cash equivalents	$	68
Receivables, net	432
Prepaid expenses	75
Other current assets	6
Total current assets of discontinued operations	581
Intangible assets, net⁽¹⁾	879
Goodwill	2,033
Property and equipment, net	283
Other assets⁽¹⁾	168
Total non-current assets of discontinued operations	3,363
Total assets	$	3,944

Liabilities:
Short-term debt and current maturities of long-term debt	$	155
Accounts payable	195
Accrued payroll and related costs	22
Accrued expenses and other current liabilities	346
Deferred revenue and advance contract payments	53
Income tax payable	18
Total current liabilities of discontinued operations	789
Long-term debt, net of current maturities	214
Non-current deferred revenue	7
Non-current income tax liabilities and deferred tax liabilities	163
Other long-term liabilities	72
Total long-term liabilities of discontinued operations	456
Total liabilities	$	1,245


⁽¹⁾	Previously reported amounts were adjusted to reflect the reclassification of transition and transformation contract costs from intangible assets to other assets to conform to the current year presentation.

The following is a summary of the operating results of USPS which have been reflected within income from discontinued operations, net of tax:



(in millions)	Fiscal Year Ended March 31, 2019 ⁽¹⁾			Fiscal Year Ended March 31, 2018
Revenue	$	431		$	2,823

Costs of services	311			2,104
Selling, general and administrative	50			152
Depreciation and amortization	33			169
Restructuring costs	1			14
Interest expense	8			15
Other (income) expense, net	(25		)	2
Total costs and expenses	378			2,456
Total income from discontinued operations, before income taxes	53			367
Income tax expense	18			131
Total income from discontinued operations	$	35		$	236

⁽¹⁾ Results for the fiscal year ended March 31, 2019 reflect operations through the Separation date of May 31, 2018, not the full twelve-month period as shown for the prior period.

There was no gain or loss on disposition recognized as a result of the Separation.

The following selected financial information of USPS is included in the statements of cash flows:



(in millions)	Fiscal Year Ended March 31, 2019 ⁽¹⁾		Fiscal Year Ended March 31, 2018
Depreciation	$	16	$	70
Amortization	$	17	$	99
Capital expenditures	$	—	$	(18	)
Significant operating non-cash items:
Gain on dispositions	$	24	$	—

⁽¹⁾ Results for the fiscal year ended March 31, 2019 reflect operations through the Separation date of May 31, 2018, not the full twelve-month period as shown for the prior period.