Acquisitions (Tables)

12 Months Ended

Mar. 31, 2020

Schedule of Business Acquisitions, Consideration Exchanged

Under the acquisition method of accounting, total consideration exchanged was:



(in millions)	Amount
Preliminary fair value of equity purchase consideration received by Vencore Stockholders⁽¹⁾	$	578
Preliminary fair value of cash purchase consideration received by Vencore Stockholders	400
Preliminary fair value of cash consideration paid by USPS to extinguish certain existing Vencore indebtedness	994
Consideration transferred	$	1,972

⁽¹⁾

Represents the fair value of consideration received by the Vencore HC Stockholder and the KeyPoint Stockholder for approximately 14% ownership in the combined company. The fair value of the purchase consideration transferred was based on 18,877,244 shares of Perspecta common stock distributed to Vencore HC Stockholder and 4,396,097 shares of Perspecta common stock distributed to the KeyPoint Stockholder as of the close of business on the record date for the Mergers, at the closing price of $24.86 per share on May 31, 2018.

Intangible Assets Acquired

Intangible assets acquired were as follows:



(in millions, except years)	Weighted-average Amortization Period (in years)	Fair Value
Program assets	13	$	625
Developed technology	6	105
Backlog	1	22
Favorable leases	4	1
Total intangible assets	12	$	753

Summary of Pro Forma Information

The following unaudited pro forma financial information presents results as if the Spin-Off and the Mergers and the related financing had occurred on April 1, 2017. The historical consolidated financial information of Perspecta has been adjusted in the pro forma information to give effect to the events that are (1) directly attributable to the transactions, (2) factually supportable and (3) expected to have a continuing impact on the combined results. The effects of the Spin-Off are primarily attributable to interest expense associated with the incurrence of debt in connection with the Spin-Off. The effects of the Mergers primarily relate to amortization of acquired intangible assets. The consolidated financial information of Perspecta includes merger and integration-related costs that are not expected to recur and impact the combined results over the long-term. The unaudited pro forma results do not reflect future events that have occurred or may occur after the transactions, including but not limited to, the impact of any actual or anticipated synergies expected to result from the Mergers. Accordingly, the unaudited pro forma financial information is not necessarily indicative of the results of operations as they would have been had the transactions been effected on April 1, 2017, nor is it necessarily an indication of future operating results.



	Fiscal Year Ended March 31, 2019 Historical Perspecta ⁽¹⁾		Period from April 1, 2018 to May 31, 2018 Historical Vencore			Fiscal Year Ended March 31, 2019
(in millions, except per share amounts)	Fiscal Year Ended March 31, 2019 Historical Perspecta ⁽¹⁾					Effects of the Spin-Off			Effects of the Mergers		Pro Forma Combined for the Spin-Off and Mergers
Revenue	$	4,030	$	244		$	—		$	—	$	4,274
Net income (loss)	$	72	$	(57	)	$	(7	)	$	20	$	28

Earnings per common share⁽²⁾:
Basic	$	0.44									$	0.17
Diluted	$	0.44									$	0.17

⁽¹⁾Revenue and pre-tax income includes $1.27 billion and $185 million, respectively, associated with Vencore HC and KGS HC for the period of June 1, 2018 through March 31, 2019. The pre-tax income excludes amortization of acquired intangible assets, acquisition financing and the allocation of certain corporate overhead costs.

⁽²⁾Historical and pro forma combined earnings per common share information is computed based on 164.56 million basic weighted average shares and 164.82 million diluted shares. See Note 4 – “(Loss) Earnings Per Share.”



	Fiscal Year Ended March 31, 2018
(in millions, except per share amounts)	Historical Perspecta		Historical Vencore		Effects of the Spin-Off			Effects of the Mergers			Pro Forma Combined for the Spin-Off and Mergers
Revenue	$	2,819	$	1,384	$	—		$	—		$	4,203
Net income	$	208	$	33	$	(1	)	$	(112	)	$	128

Earnings per common share⁽³⁾:
Basic	$	1.46									$	0.77
Diluted	$	1.46									$	0.77

⁽³⁾Historical earnings per common share information for the year ended March 31, 2018 is computed using the 142.43 million shares of Perspecta common stock resulting from the Distribution. See Note 4 – “(Loss) Earnings Per Share.” Pro forma combined earnings per common share includes the shares issued by Perspecta in connection with the Mergers on May 31, 2018. As a result, both basic and diluted; pro forma combined earnings per common share information is computed based on 165.70 million shares of Perspecta common stock as Perspecta did not operate as a stand-alone entity during the period, and therefore, no Perspecta common stock, stock options or other equity awards were outstanding and no dividends were declared or paid by Perspecta.

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The major classes of assets and liabilities to which the purchase price was allocated were as follows:



(in millions)	Fair Value
Cash and cash equivalents	$	—
Accounts receivable	403
Prepaid expenses	86
Other current assets	22
Total current assets	511
Property and equipment	183
Intangible assets	976
Other assets	28
Total assets acquired	1,698
Current finance lease obligations, accounts payable, accrued payroll, accrued expenses, and other current liabilities	418
Deferred revenue	71
Non-current finance lease obligations	162
Deferred tax liabilities	204
Other liabilities	15
Total liabilities assumed	870
Net identifiable assets acquired	828
Goodwill	2,022
Total estimated consideration transferred	$	2,850

The major classes of assets and liabilities to which the purchase price was allocated were as follows:



(in millions)	Fair Value
Current assets	$	333
Property and equipment	35
Intangible assets	753
Other assets	40
Accounts payable, accrued payroll, accrued expenses, and other current liabilities	(194		)
Deferred revenue	(12		)
Deferred tax liabilities	(10		)
Other liabilities	(119		)
Net identifiable assets acquired	826
Goodwill	1,146
Consideration transferred	$	1,972