Related Party Transactions and Parent Company Investment

Allocation of Corporate Expenses

The statements of operations include an allocation of general corporate expenses from Parent for certain management and support functions which are provided on a centralized basis within Parent. These management and support functions include, but are not limited to, executive management, finance, legal, IT, employee benefits administration, treasury, risk management, procurement and other shared services. These allocations were made on a direct usage basis when identifiable, with the remainder allocated on the basis of revenue, expenses, headcount or other relevant measures. These allocations were $24 million, $158 million, $58 million and $152 million for the period from April 1, 2018 to May 31, 2018, the fiscal year ended March 31, 2018, the five months ended March 31, 2017 and the fiscal year ended October 31, 2016, respectively, and they are recorded within costs of services and selling, general and administrative on the statements of operations.

Management of the Company and Parent consider these allocations to be a reasonable reflection of the utilization of services by, or the benefits provided to, USPS. These allocations may not, however, reflect the expense USPS would have incurred as a standalone company for the periods presented. Actual costs that may have been incurred if USPS had been a standalone company would depend on a number of factors, including the chosen organizational structure, what functions were outsourced or performed by employees and strategic decisions made in areas such as IT and infrastructure.

Parent Company Investment

Parent company investment on the balance sheets and statements of equity represents Parent’s historical investment in USPS, the net effect of transactions with and allocations from Parent and USPS’s accumulated earnings.

Transfers (to) from Parent, net

Transfers (to) from Parent, net are included within Parent company investment. The components of the transfers (to) from Parent, net on the statements of changes in equity for all periods presented were as follows:



	Successor						Predecessor
(in millions)	Two Months Ended May 31, 2018			Fiscal Year Ended March 31, 2018			Five Months Ended March 31, 2017			Fiscal Year Ended October 31, 2016
Cash pooling and general financing activities	$	(176	)	$	(506	)	$	(1	)	$	(512	)
Corporate allocations	24			158			58			152
Income taxes	7			19			(15		)	63
Transfers (to) from Parent, net	$	(145	)	$	(329	)	$	42		$	(297	)

Related Party Transactions

For the fiscal year ended March 31, 2019, the Company recognized $13 million of related party revenue from and $74 million of related party expenses to DXC.