Segment Information

USPS was a reportable segment of DXC through May 31, 2018. As a result of the Spin-Off and Mergers on that date, during the first quarter of fiscal year 2019, Perspecta’s management reevaluated its operating segments and segment reporting, and determined that the Company’s chief operating decision maker, the chief executive officer, evaluates Perspecta’s combined operations based on two reportable segments: (1) Defense and Intelligence, and (2) Civilian and Health Care. Management believes that these changes provide investors with a more precise view of field operations and corporate costs that accurately aligns with the chief operating decision maker’s view of the business. In the following tables, corporate activity is reported separately to reconcile to the Statements of Operations. The accounting policies of the reportable segments are the same as those described in Note 1 – “Overview and Basis of Presentation.” Reportable segments and their respective operations are defined as follows:

Defense and Intelligence

Through its Defense and Intelligence business, Perspecta provides cybersecurity, data analytics, digital transformation, information technology modernization, and agile software development, as well as technology to support intelligence, surveillance, and reconnaissance services to the DoD, intelligence community, branches of the U.S. Armed Forces, and other DoD agencies.

Key competitive differentiators for the Defense and Intelligence segment include global scale, solution objectivity, depth of industry expertise, strong partnerships, vendor and product independence and end-to-end solutions and capabilities. Evolving business demands such as globalization, fast-developing economies, government regulation and growing concerns around risk, security, and compliance drive demand for these offerings.

Civilian and Health Care

Through its Civilian and Health Care business, Perspecta provides enterprise IT transformation and modernization, application development and modernization, enterprise security, risk decision support, operations and sustainment, systems engineering, applied research, cyber services, and cloud transformation to the Departments of Homeland Security, Justice, and Health and Human Services, as well as other federal civilian and state and local government agencies.

Segment Measures

The following table summarizes operating results regularly provided to the chief operating decision maker by reportable segment and a reconciliation to the financial statements:



(in millions)	Defense and Intelligence		Civilian and Health Care		Total Reportable Segments
Three Months Ended September 30, 2018
Revenue	$	702	$	366	$	1,068
Segment profit	$	71	$	21	$	92
Depreciation and amortization⁽¹⁾	$	34	$	40	$	74

Three Months Ended September 30, 2017
Revenue	$	357	$	349	$	706
Segment profit	$	27	$	53	$	80
Depreciation and amortization⁽¹⁾	$	15	$	18	$	33

⁽¹⁾Depreciation and amortization as presented includes amortization of acquired intangible assets of $36 million and $18 million for the three months ended September 30, 2018 and September 30, 2017, respectively.



(in millions)	Defense and Intelligence		Civilian and Health Care		Total Reportable Segments
Six Months Ended September 30, 2018
Revenue	$	1,139	$	722	$	1,861
Segment profit	$	96	$	68	$	164
Depreciation and amortization⁽²⁾	$	64	$	74	$	138

Six Months Ended September 30, 2017
Revenue	$	677	$	705	$	1,382
Segment profit	$	50	$	99	$	149
Depreciation and amortization⁽²⁾	$	33	$	37	$	70

⁽²⁾Depreciation and amortization as presented includes amortization of acquired intangible assets of $61 million and $35 million for the six months ended September 30, 2018 and September 30, 2017, respectively.

Reconciliation of Reportable Segment Profit to Consolidated Income Before Taxes

The Company’s management uses segment profit as the measure for assessing performance of its segments. Segment profit is defined as segment revenue less segment cost of services, selling, general and administrative, and depreciation and amortization. The Company does not allocate to its segments certain operating expenses managed at the corporate level. These unallocated costs include certain corporate function costs, stock-based compensation expense, pension and OPEB net periodic pension cost, restructuring costs, transaction and integration-related costs.



	Three Months Ended						Six Months Ended
(in millions)	September 30, 2018			September 30, 2017			September 30, 2018			September 30, 2017
Total profit for reportable segments	$	92		$	80		$	164		$	149
Less:
Stock-based compensation	1			(1		)	3			—
Restructuring costs	—			4			—			7
Separation and integration-related costs	21			6			65			17
Interest expense	37			5			47			7
Other income, net	(3		)	—			(28		)	—
Income before taxes	$	36		$	66		$	77		$	118

Management does not use total assets by segment to evaluate segment performance or allocate resources. As a result, assets are not tracked by segment and therefore, total assets by segment is not disclosed.