What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-11-04 compared with 2022-08-04 · 283 added, 219 removed, 711 unchanged (41% of the section changed)

1 unchanged sentence

Index to Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2022 and June 30, 2021 (unaudited)

Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three Months Ended June 30, 2022 and June 30, 2021 (unaudited)

Condensed Consolidated Balance Sheets as of June 30, 2022 and March 31, 2022 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2022 and June 30, 2021 (unaudited)

Condensed Consolidated Statements of Changes in Equity for the Three Months Ended June 30, 2022 and June 30, 2021 (unaudited)

Condensed Consolidated Statements of Operations for the Three and Six Months Ended September 30, 2022 and September 30, 2021 (unaudited)

Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended September 30, 2022 and September 30, 2021 (unaudited)

Condensed Consolidated Balance Sheets as of September 30, 2022 and March 31, 2022 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2022 and September 30, 2021 (unaudited)

Condensed Consolidated Statements of Changes in Equity for the Three and Six Months Ended September 30, 2022 and September 30, 2021 (unaudited)

Notes to Condensed Consolidated Financial Statements (unaudited)

1 unchanged sentence

Note 2 –Divestitures

Note 3–Earnings Per Share

Note 3 –Earnings (Loss) Per Share

Note 4 –Receivables

4 unchanged sentences

Note 9 –Goodwill

Note 1 0 –Debt

Note 1 1 –Revenue

9 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

Three Months Ended

(in millions, except per-share amounts) June 30, 2022 June 30, 2021

Three Months Ended Six Months Ended

(in millions, except per-share amounts) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Revenues $ 3,566 $ 4,027 $ 7,273 $ 8,168

6 unchanged sentences

Debt extinguishment costs — 281 — 309

Gain on disposition of businesses ( 29 ) ( 377 )

Loss (gain) on disposition of businesses 32 — 3 ( 377 )

Other income, net ( 68 ) ( 102 ) ( 172 ) ( 205 )

Total costs and expenses 3,512 4,275 7,097 7,992

Income before income taxes 122 424

Income tax expense 19 142

Net income 103 282

Income (loss) before income taxes 54 ( 248 ) 176 176

Income tax expense (benefit) 26 ( 61 ) 45 81

Net income (loss) 28 ( 187 ) 131 95

net income attributable to non-controlling interest, net of tax 1 1 2 5

Net income attributable to DXC common stockholders $ 102 $ 278

Income per common share:

Net income (loss) attributable to DXC common stockholders $ 27 $ ( 188 ) $ 129 $ 90

Income (loss) per common share:

Basic $ 0.12 $ ( 0.74 ) $ 0.56 $ 0.35

2 unchanged sentences

DXC TECHNOLOGY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (unaudited)

Three Months Ended

(in millions)

June 30, 2022 June 30, 2021

Net income $ 103 $ 282

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited)

Three Months Ended Six Months Ended

(in millions) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Net income (loss) $ 28 $ ( 187 ) $ 131 $ 95

Other comprehensive loss, net of taxes:

Foreign currency translation adjustments, net of tax expense (benefit) of $ 5 and $( 2 )

Foreign currency translation adjustments, net of tax (1)

( 165 ) ( 62 ) ( 341 ) ( 174 )

Cash flow hedges adjustments, net of tax benefit of $ 1 and $ 0

Cash flow hedges adjustments, net of tax (2)

Pension and other post-retirement benefit plans, net of tax:

Amortization of prior service cost, net of tax benefit of $ 4 and $ 0

Amortization of prior service cost, net of tax (3)

( 2 ) ( 2 ) ( 4 ) ( 4 )

Pension and other post-retirement benefit plans, net of tax ( 2 ) ( 2 ) ( 4 ) ( 4 )

Other comprehensive loss, net of taxes ( 165 ) ( 55 ) ( 343 ) ( 170 )

Comprehensive (loss) income ( 75 ) 167

comprehensive income attributable to non-controlling interest 1 13

Comprehensive (loss) income attributable to DXC common stockholders $ ( 76 ) $ 154

Comprehensive loss ( 137 ) ( 242 ) ( 212 ) ( 75 )

comprehensive (loss) income attributable to non-controlling interest ( 3 ) 2 ( 2 ) 15

Comprehensive loss attributable to DXC common stockholders $ ( 134 ) $ ( 244 ) $ ( 210 ) $ ( 90 )

(1) Tax expense related to foreign currency translation adjustments was $ 4 and $ 9 for the three and six months ended September 30, 2022, respectively, and $ 3 and $ 1 for the three and six months ended September 30, 2021, respectively.

(2) Tax expense (benefit) related to cash flow hedges adjustments was $ 0 and $( 1 ) for the three and six months ended September 30, 2022, respectively, and $ 2 and $ 2 for the three and six months ended September 30, 2021, respectively.

(3) Tax benefit related to amortization of prior service costs was $ 0 and $ 4 for the three and six months ended September 30, 2022, respectively.

There was no tax benefit related to amortization of prior service costs for the three and six months ended September 30, 2021, respectively.

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in millions, except per-share and share amounts) June 30, 2022 March 31, 2022

(in millions, except per-share and share amounts) September 30, 2022 March 31, 2022

Current assets:

33 unchanged sentences

DXC stockholders’ equity:

Preferred stock, par value $ 0.01 per share;

authorized 1,000,000 shares;

none issued as of June 30, 2022 and March 31, 2022

Common stock, par value $ 0.01 per share;

authorized 750,000,000 shares;

issued 232,994,878 as of June 30, 2022 and 240,508,348 as of March 31, 2022

Preferred stock, par value $ 0.01 per share, 1,000,000 shares authorized, none issued as of September 30, 2022 and March 31, 2022

Common stock, par value $ 0.01 per share, 750,000,000 shares authorized, 233,277,611 issued as of September 30, 2022 and 240,508,348 issued as of March 31, 2022

Additional paid-in capital 9,733 10,057

1 unchanged sentence

Accumulated other comprehensive loss ( 724 ) ( 385 )

Treasury stock, at cost, 3,160,188 and 2,878,079 shares as of June 30, 2022 and March 31, 2022

Treasury stock, at cost, 3,237,519 and 2,878,079 shares as of September 30, 2022 and March 31, 2022

( 185 ) ( 173 )

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Three Months Ended

(in millions)

June 30, 2022 June 30, 2021

Six Months Ended

(in millions) September 30, 2022 September 30, 2021

Cash flows from operating activities:

Net income $ 131 $ 95

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 786 879

5 unchanged sentences

Unrealized foreign currency exchange loss (gain) 69 ( 19 )

Impairment losses and contract write-offs 21 17

Debt extinguishment costs — 309

4 unchanged sentences

Decrease in other liabilities ( 365 ) ( 691 )

Net cash provided by (used in) operating activities 163 ( 29 )

Net cash provided by operating activities 375 534

Cash flows from investing activities:

2 unchanged sentences

Software purchased and developed ( 110 ) ( 162 )

Business dispositions, net of cash sold ( 36 ) 513

Business dispositions 51 513

Proceeds from sale of assets 109 87

Short-term investing — 24

Other investing activities, net 17 9

6 unchanged sentences

Payments on finance leases and borrowings for asset financing ( 274 ) ( 671 )

Proceeds from bond issuance — 2,918

Proceeds from stock options and other common stock transactions 1 12

13 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (unaudited)

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

(in millions, except

shares in thousands) Common Stock Additional

Paid-in Capital

Accumulated Deficit Accumulated

Paid-in Capital Accumulated Deficit Accumulated

Comprehensive Loss

Treasury Stock (1)

Controlling Interest

DXC Equity Non-

Controlling Interest Total Equity

Shares Amount

Balance at June 30, 2022 232,995 $ 2 $ 9,708 $ ( 4,239 ) $ ( 563 ) $ ( 183 ) $ 4,725 $ 324 $ 5,049

Net Income 27 27 1 28

Other comprehensive loss ( 161 ) ( 161 ) ( 4 ) ( 165 )

Share-based compensation expense 25 25 25

Acquisition of treasury stock ( 2 ) ( 2 ) ( 2 )

Stock option exercises and other common stock transactions 283 — —

Non-controlling interest distributions and other 1 1 1

Balance at September 30, 2022 233,278 $ 2 $ 9,733 $ ( 4,211 ) $ ( 724 ) $ ( 185 ) $ 4,615 $ 321 $ 4,936

Three Months Ended September 30, 2021

(in millions, except

shares in thousands) Common Stock Additional

Paid-in Capital Accumulated Deficit Accumulated

Comprehensive Loss Treasury Stock Total

DXC Equity Non-

Controlling Interest Total Equity

Shares Amount

Balance at June 30, 2021 256,681 $ 3 $ 10,713 $ ( 5,045 ) $ ( 426 ) $ ( 168 ) $ 5,077 $ 309 $ 5,386

Net loss ( 188 ) ( 188 ) 1 ( 187 )

Other comprehensive loss ( 56 ) ( 56 ) 1 ( 55 )

Share-based compensation expense 22 22 22

Acquisition of treasury stock ( 2 ) ( 2 ) ( 2 )

Share repurchase program ( 2,112 ) ( 89 ) 6 ( 83 ) ( 83 )

Stock option exercises and other common stock transactions 434 3 3 3

Non-controlling interest distributions and other $ ( 3 ) 2 ( 1 ) ( 1 )

Balance at September 30, 2021 255,003 $ 3 $ 10,646 $ ( 5,225 ) $ ( 482 ) $ ( 170 ) $ 4,772 $ 311 $ 5,083

Six Months Ended September 30, 2022

(in millions, except

shares in thousands) Common Stock Additional

Paid-in Capital Accumulated Deficit Accumulated

Comprehensive Loss

Treasury Stock (1)

DXC Equity Non-

Controlling Interest Total Equity

Shares Amount

Balance at March 31, 2022 240,508 $ 3 $ 10,057 $ ( 4,450 ) $ ( 385 ) $ ( 173 ) $ 5,052 $ 323 $ 5,375

5 unchanged sentences

Stock option exercises and other common stock transactions 1,621 1 1 1

Balance at June 30, 2022 232,995 $ 2 $ 9,708 $ ( 4,239 ) $ ( 563 ) $ ( 183 ) $ 4,725 $ 324 $ 5,049

Three Months Ended June 30, 2021

Non-controlling interest distributions and other 1 1 1

Balance at September 30, 2022 233,278 $ 2 $ 9,733 $ ( 4,211 ) $ ( 724 ) $ ( 185 ) $ 4,615 $ 321 $ 4,936

Six Months Ended September 30, 2021

(in millions, except

shares in thousands) Common Stock Additional

Paid-in Capital

Accumulated Deficit Accumulated

Paid-in Capital Accumulated Deficit Accumulated

Comprehensive Loss Treasury Stock Total

Controlling Interest

DXC Equity Non-

Controlling Interest Total Equity

Shares Amount

7 unchanged sentences

Non-controlling interest distributions and other ( 3 ) 3 — ( 39 ) ( 39 )

Balance at June 30, 2021 256,681 $ 3 $ 10,713 $ ( 5,045 ) $ ( 426 ) $ ( 168 ) $ 5,077 $ 309 $ 5,386

(1) 3,160,188 treasury shares as of June 30, 2022.

Balance at September 30, 2021 255,003 $ 3 $ 10,646 $ ( 5,225 ) $ ( 482 ) $ ( 170 ) $ 4,772 $ 311 $ 5,083

(1) 3,237,519 treasury shares as of September 30, 2022.

The accompanying notes are an integral part of these condensed consolidated financial statements.

5 unchanged sentences

Basis of Presentation

In order to make this report easier to read, DXC refers throughout to (i) the interim unaudited Condensed Consolidated Financial Statements as the “financial statements,” (ii) the Condensed Consolidated Statements of Operations as the “statements of operations,” (iii) the Condensed Consolidated Statements of Comprehensive (Loss) Income as the “statements of comprehensive income,” (iv) the Condensed Consolidated Balance Sheets as the “balance sheets,” and (v) the Condensed Consolidated Statements of Cash Flows as the “statements of cash flows.” In addition, references are made throughout to the numbered Notes to the Condensed Consolidated Financial Statements (“Notes”) in this Quarterly Report on Form 10-Q.

In order to make this report easier to read, DXC refers throughout to (i) the interim unaudited Condensed Consolidated Financial Statements as the “financial statements,” (ii) the Condensed Consolidated Statements of Operations as the “statements of operations,” (iii) the Condensed Consolidated Statements of Comprehensive Loss as the “statements of comprehensive loss,” (iv) the Condensed Consolidated Balance Sheets as the “balance sheets,” and (v) the Condensed Consolidated Statements of Cash Flows as the “statements of cash flows.” In addition, references are made throughout to the numbered Notes to the Condensed Consolidated Financial Statements (“Notes”) in this Quarterly Report on Form 10-Q.

The accompanying financial statements include the accounts of DXC, its consolidated subsidiaries, and those business entities in which DXC maintains a controlling interest.

2 unchanged sentences

Non-controlling interests are presented as a separate component within equity in the balance sheets.

Net earnings attributable to the non-controlling interests are presented separately in the statements of operations and comprehensive income attributable to non-controlling interests are presented separately in the statements of comprehensive income.

Net earnings attributable to the non-controlling interests are presented separately in the statements of operations and comprehensive loss attributable to non-controlling interests are presented separately in the statements of comprehensive loss.

All intercompany transactions and balances have been eliminated.

16 unchanged sentences

Recent Accounting Pronouncements

Recently issued ASUs effective after June 30, 2022 are not expected to have a material effect on DXC’s condensed consolidated financial statements.

Recently issued ASUs effective after September 30, 2022 are not expected to have a material effect on DXC’s condensed consolidated financial statements.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 2 – Divestitures

Fiscal 2023 Divestitures

During the first quarter of fiscal 2023, the Company sold insignificant businesses that resulted in a gain of $ 38 million.

During the first quarter of fiscal 2023, the Company also classified certain insignificant businesses as held for sale and recognized a loss of $ 9 million.

During the first six months of fiscal 2023, the Company sold insignificant businesses that resulted in a loss of $ 3 million.

In response to the ongoing sanctions against certain industry sectors and parties in Russia due to the impact of the “Russia-Ukraine Conflict”, the Company completed the sale of its primary Russian entity in the first quarter of fiscal 2023.

During the second quarter of fiscal 2023, the Company revised its estimate of proceeds from this divestiture based on the evolving conditions in the region.

Planned FDB Sale

During the third quarter of fiscal 2022, a subsidiary of DXC entered into a purchase agreement to sell (the "FDB Sale") its German financial services subsidiary ("FDB" or the "FDB Business") to the FNZ Group ("FNZ") for € 300 million (approximately $ 314 million as of June 30, 2022), subject to certain adjustments.

During the third quarter of fiscal 2022, a subsidiary of DXC entered into a purchase agreement to sell (the "FDB Sale") its German financial services subsidiary ("FDB" or the "FDB Business") to the FNZ Group ("FNZ") for € 300 million (approximately $ 294 million as of September 30, 2022), subject to certain adjustments.

The closing of the transaction is subject to certain conditions, including receipt of certain regulatory consents.

Until these regulatory constraints are satisfied, FDB continues to be reported within ongoing operations.

At June 30, 2022, FDB held approximately $ 566 million in cash which primarily related to customer deposit liabilities.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

At September 30, 2022, FDB held approximately $ 473 million in cash which primarily related to customer deposit liabilities.

Fiscal 2022 Divestitures

On April 1, 2021, DXC completed the sale of its HPS Business to Dedalus for € 468 million (approximately $ 551 million), which included € 10 million (approximately $ 12 million) related to future services to be provided by the Company.

The HPS Sale resulted in a pre-tax gain on sale of $ 341 million, net of closing costs, for the three months ended June 30, 2021.

The pre-tax gain on sale was further adjusted during subsequent quarters of fiscal 2022 resulting in a final pre-tax gain on sale of $ 331 million for fiscal 2022.

On April 1, 2021, DXC completed the sale of its HPS Business to Dedalus for approximately $ 551 million, resulting in a pre-tax gain on sale of $ 341 million, net of closing costs for the six months ended September 30, 2021.

Other Divestitures

During the first quarter of fiscal 2022, the Company also sold some insignificant businesses that resulted in a gain of $ 49 million.

During the first six months of fiscal 2022, the Company also sold certain insignificant businesses that resulted in a gain of $ 49 million.

This was partially offset by $ 13 million in sales price adjustments related to prior year dispositions, which resulted from changes in estimated net working capital.

Note 3 – Earnings per Share

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 3 – Earnings (Loss) per Share

Basic earnings per share (“EPS”) is computed using the weighted average number of shares of common stock outstanding during the period.

1 unchanged sentence

The following table reflects the calculation of basic and diluted EPS:

Three Months Ended

(in millions, except per-share amounts)

June 30, 2022 June 30, 2021

Net income attributable to DXC common shareholders:

Three Months Ended Six Months Ended

(in millions, except per-share amounts) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Net income (loss) attributable to DXC common stockholders:

$ 27 $ ( 188 ) $ 129 $ 90

Common share information:

2 unchanged sentences

Weighted average common shares outstanding for diluted EPS 233.17 252.40 234.93 258.90

Earnings per share:

Earnings (loss) per share:

Basic $ 0.12 $ ( 0.74 ) $ 0.56 $ 0.35

2 unchanged sentences

The number of awards excluded were as follows:

Three Months Ended

June 30, 2022 June 30, 2021

Three Months Ended Six Months Ended

September 30, 2022 September 30, 2021 (1)

September 30, 2022 September 30, 2021

Stock Options 475,559 745,357 478,128 521,967

1 unchanged sentence

Performance Stock Units 1,079,287 2,829,237 721,803 1,309,752

(1) Due to the Company’s net loss for the three months ended September 30, 2021, stock options, restricted stock units and performance stock units were excluded from the computation of dilutive EPS because they would have had an anti-dilutive effect.

DXC TECHNOLOGY COMPANY

3 unchanged sentences

The following table presents the change in balance for the allowance for doubtful accounts:

(in millions) June 30, 2022 March 31, 2022

(in millions) September 30, 2022 March 31, 2022

Beginning balance $ 55 $ 91

3 unchanged sentences

Receivables Facility

The Company has an accounts receivable sales facility (as amended, restated, supplemented or otherwise modified as of June 30, 2022, the “Receivables Facility”) with certain unaffiliated financial institutions for the sale of commercial accounts receivable in the United States.

As of June 30, 2022, the total availability under the Receivables Facility was $ 371 million, and the amount sold to the Purchasers was $ 400 million, which was derecognized from the Company’s balance sheet.

As of June 30, 2022, the Company recorded a $ 29 million liability within accounts payable because the amount of cash proceeds received by the Company under the Receivables Facility was more than the total availability.

The Company has an accounts receivable sales facility (as amended, restated, supplemented or otherwise modified as of September 30, 2022, the “Receivables Facility”) with certain unaffiliated financial institutions for the sale of commercial accounts receivable in the United States.

The Receivables Facility was amended on July 29, 2022 extending the termination date to July 28, 2023.

As of September 30, 2022, the total availability under the Receivables Facility was $ 344 million, and the amount sold to the Purchasers was $ 377 million, which was derecognized from the Company’s balance sheet.

As of September 30, 2022, the Company recorded a $ 33 million liability within accounts payable because the amount of cash proceeds received by the Company under the Receivables Facility was more than the total availability.

The fair value of the sold receivables approximated book value due to the short-term nature, and as a result, no gain or loss on sale of receivables was recorded.

4 unchanged sentences

The components of operating lease expense were as follows:

(in millions) Three Months Ended June 30, 2022 Three Months Ended June 30, 2021

Three Months Ended Six Months Ended

(in millions) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Operating lease cost $ 108 $ 124 $ 214 $ 254

6 unchanged sentences

Cash payments made for variable lease costs and short-term leases are not included in the measurement of operating lease liabilities, and as such, are excluded from the supplemental cash flow information stated below.

(in millions) Three Months Ended June 30, 2022 Three Months Ended June 30, 2021

Six Months Ended

(in millions) September 30, 2022 September 30, 2021

Cash paid for amounts included in the measurement of operating lease liabilities – operating cash flows

ROU assets obtained in exchange for operating lease liabilities (1)

(1) Net of $ 338 million and $ 242 million in lease modifications and terminations for the three months ended June 30, 2022 and June 30, 2021, respectively.

(1) Net of $ 521 million and $ 509 million in lease modifications and terminations during the first six months of fiscal 2023 and 2022, respectively.

See Note 17 – “Cash Flows” for further information on non-cash activities affecting cash flows.

The following table presents operating lease balances:

(in millions) Balance Sheet Line Item June 30, 2022 March 31, 2022

(in millions) Balance Sheet Line Item September 30, 2022 March 31, 2022

ROU operating lease assets Operating right-of-use assets, net $ 927 $ 1,133

2 unchanged sentences

Total operating lease liabilities $ 985 $ 1,203

The weighted-average operating lease term was 4.2 years and 4.4 years as of June 30, 2022 and March 31, 2022, respectively.

The weighted-average operating lease discount rate was 3.4 % and 3.3 % as of June 30, 2022 and March 31, 2022, respectively.

The following maturity analysis presents expected undiscounted cash payments for operating leases as of June 30, 2022:

The weighted-average operating lease term was 4.1 years and 4.4 years as of September 30, 2022 and March 31, 2022, respectively.

The weighted-average operating lease discount rate was 3.6 % and 3.3 % as of September 30, 2022 and March 31, 2022, respectively.

The following maturity analysis presents expected undiscounted cash payments for operating leases as of September 30, 2022:

(in millions)

9 unchanged sentences

The components of finance lease expense were as follows:

(in millions) Three Months Ended June 30, 2022 Three Months Ended June 30, 2021

Three Months Ended Six Months Ended

(in millions) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Amortization of right-of-use assets $ 55 $ 99 $ 116 $ 186

Interest on lease liabilities 4 7 9 16

Total finance lease cost $ 66 $ 96

Total finance lease expense $ 59 $ 106 $ 125 $ 202

The following table provides supplemental cash flow information related to the Company’s finance leases:

(in millions) Three Months Ended June 30, 2022 Three Months Ended June 30, 2021

(in millions) Six Months Ended September 30, 2022 Six Months Ended September 30, 2021

Interest paid for finance lease liabilities – Operating cash flows

4 unchanged sentences

The following table presents finance lease balances:

(in millions) Balance Sheet Line Item June 30, 2022 March 31, 2022

(in millions) Balance Sheet Line Item September 30, 2022 March 31, 2022

ROU finance lease assets Property and Equipment, net $ 474 $ 602

3 unchanged sentences

(1) See Note 10 – “Debt” for further information on finance lease liabilities.

The weighted-average finance lease term was 2.8 years as of June 30, 2022 and March 31, 2022, respectively.

The weighted-average finance lease discount rate was 2.9 % as of June 30, 2022 and March 31, 2022, respectively.

The following maturity analysis presents expected undiscounted cash payments for finance leases as of June 30, 2022:

The weighted-average finance lease term was 2.8 years and 2.8 years as of September 30, 2022 and March 31, 2022, respectively.

The weighted-average finance lease discount rate was 3.0 % and 2.9 % as of September 30, 2022 and March 31, 2022, respectively.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The following maturity analysis presents expected undiscounted cash payments for finance leases as of September 30, 2022:

(in millions)

5 unchanged sentences

Total finance lease liabilities

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 6 – Fair Value

1 unchanged sentence

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis, excluding pension assets and derivative assets and liabilities.

See Note 7 – “Derivative Instruments” for information about derivative assets and liabilities.

See Note 7 – “Derivative Instruments” for information about the Company’s derivative instruments.

Note 10 – “Debt” includes information about the estimated fair value of the Company’s long-term debt.

1 unchanged sentence

Fair Value Hierarchy

(in millions) June 30, 2022

(in millions) September 30, 2022

Fair Value Level 1 Level 2 Level 3

14 unchanged sentences

(1) Cost basis approximated fair value due to the short period of time to maturity.

(2) Other securities include available-for-sale equity security investments with Level 2 inputs that have a cost basis of $ 50 million and $ 53 million, and accumulated (losses) of $( 6 ) million and $( 4 ) million, as of June 30, 2022 and March 31, 2022, respectively.

(Loss) gain included in other income, net in the Company’s statements of operations was $( 2 ) million and $ 1 million for the three months ended June 30, 2022 and June 30, 2021, respectively.

(2) Other securities include available-for-sale equity security investments with Level 2 inputs that have a cost basis of $ 47 million and $ 53 million as of September 30, 2022 and March 31, 2022, respectively.

For the periods presented, gains and losses are insignificant and are included in other income, net in the Company’s statements of operations .

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 7 – Derivative Instruments

3 unchanged sentences

The Company does not use derivative instruments for trading or any speculative purposes.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Derivatives Designated for Hedge Accounting

1 unchanged sentence

The Company has designated certain foreign currency forward contracts as cash flow hedges to reduce foreign currency risk related to certain Indian Rupee-denominated intercompany obligations and forecasted transactions.

The notional amounts of foreign currency forward contracts designated as cash flow hedges as of June 30, 2022 and March 31, 2022 were $ 787 million and $ 727 million, respectively.

As of June 30, 2022, the related forecasted transactions extend through June 2024.

For the three months ended June 30, 2022 and June 30, 2021, respectively, the Company performed an assessment at the inception of the cash flow hedge transactions and determined that all critical terms of the hedging instruments and hedged items matched.

The notional amounts of foreign currency forward contracts designated as cash flow hedges as of September 30, 2022 and March 31, 2022 were $ 801 million and $ 727 million, respectively.

As of September 30, 2022, the related forecasted transactions extend through September 2024.

For the three and six months ended September 30, 2022 and September 30, 2021, respectively, the Company performed an assessment at the inception of the cash flow hedge transactions and determined that all critical terms of the hedging instruments and hedged items matched.

The Company performs an assessment of critical terms on an on-going basis throughout the hedging period.

During the three months ended June 30, 2022 and June 30, 2021, respectively, the Company had no cash flow hedges for which it was probable that the hedged transaction would not occur.

As of June 30, 2022, $ 14 million of the existing amount of gain related to the cash flow hedge reported in accumulated other comprehensive loss is expected to be reclassified into earnings within the next 12 months.

During the three and six months ended September 30, 2022 and September 30, 2021, respectively, the Company had no cash flow hedges for which it was probable that the hedged transaction would not occur.

As of September 30, 2022, $ 17 million of the existing amount of gain related to the cash flow hedge reported in accumulated other comprehensive loss is expected to be reclassified into earnings within the next 12 months.

Amounts recognized in other comprehensive loss and income before income taxes

During the three months ended June 30, 2022, the pre-tax gain on derivatives designated for hedge accounting recognized in other comprehensive loss was $ 2 million and income before income taxes was $ 4 million.

During the three months ended June 30, 2021, the pre-tax gain (loss) on derivatives designated for hedge accounting was not material.

During the three and six months ended September 30, 2022, the pre-tax gain on derivatives designated for hedge accounting recognized in other comprehensive loss was $ 7 million and $ 10 million, respectively, and recognized in income before income taxes was $ 5 million and $ 9 million, respectively.

Derivatives Not Designated for Hedge Accounting

3 unchanged sentences

The Company manages the exposure to fluctuations in foreign currencies by using short-term foreign currency forward contracts to hedge certain foreign currency denominated assets and liabilities, including intercompany accounts and forecasted transactions.

The net notional amounts of the foreign currency forward contracts outstanding as of June 30, 2022 and March 31, 2022 were $ 1.7 billion and $ 2.1 billion, respectively.

The net notional amounts of the foreign currency forward contracts outstanding as of September 30, 2022 and March 31, 2022 were $ 1.9 billion and $ 2.1 billion, respectively.

The following table presents the pretax amounts impacting income related to designated and non-designated foreign currency forward contracts:

For the Three Months Ended

(in millions) Statement of Operations Line Item June 30, 2022 June 30, 2021

For the Three Months Ended For the Six Months Ended

(in millions) Statement of Operations Line Item September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Foreign currency forward contracts Other (income) expense, net $ ( 41 ) $ 13 $ ( 79 ) $ 48

5 unchanged sentences

The following tables present the fair values of derivative instruments included in the balance sheets:

Derivative Assets

(in millions) Balance Sheet Line Item June 30, 2022 March 31, 2022

(in millions) Balance Sheet Line Item September 30, 2022 March 31, 2022

Derivatives designated for hedge accounting:

Foreign currency forward contracts Other current assets $ 29 $ 18

Accrued expenses and other current liabilities $ 14 $ —

Derivatives not designated for hedge accounting:

Foreign currency forward contracts Other current assets $ 38 $ 9

Derivative Liabilities

(in millions) Balance Sheet Line Item June 30, 2022 March 31, 2022

Derivatives designated for hedge accounting:

Foreign currency forward contracts Accrued expenses and other current liabilities $ 5 $ —

Derivatives not designated for hedge accounting:

Foreign currency forward contracts Accrued expenses and other current liabilities $ 16 $ 15

Accrued expenses and other current liabilities $ 18 $ 15

The fair value of foreign currency forward contracts represents the estimated amount required to settle the contracts using current market exchange rates and is based on the period-end foreign currency exchange rates and forward points which are classified as Level 2 inputs.

3 unchanged sentences

To mitigate counterparty credit risk, the Company regularly reviews its credit exposure and the creditworthiness of the counterparties.

With respect to its foreign currency derivatives, as of June 30, 2022, there were eleven counterparties with concentration of credit risk, and based on gross fair value, the maximum amount of loss that the Company could incur is $ 27 million.

With respect to its foreign currency derivatives, as of September 30, 2022, there were 10 counterparties with concentration of credit risk, and based on gross fair value, the maximum amount of loss that the Company could incur is $ 38 million.

The Company also enters into enforceable master netting arrangements with some of its counterparties.

1 unchanged sentence

The potential effect of such netting arrangements on the Company’s balance sheets is not material for the periods presented.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Non-Derivative Financial Instruments Designated for Hedge Accounting

7 unchanged sentences

Gains or losses on individual net investments in non-U.S.

operations are reclassified to earnings from accumulated other comprehensive loss when such net investments are sold or substantially liquidated.

As of June 30, 2022, DXC had $ 0.3 billion of foreign currency-denominated debt designated as hedges of net investments in non-U.S.

subsidiaries.

For the three months ended June 30, 2022, the pre-tax impact of gain on foreign currency-denominated debt designated for hedge accounting recognized in other comprehensive loss was $ 17 million.

As of March 31, 2022, DXC had $ 0.3 billion of foreign currency-denominated debt designated as hedges of net investments in non-U.S.

operations are reclassified to earnings from accumulated other comprehensive income (loss) when such net investments are sold or substantially liquidated.

As of September 30, 2022 and March 31, 2022, DXC had $ 0.2 billion and $ 0.3 billion, respectively of foreign currency-denominated debt designated as hedges of net investments in non-U.S.

subsidiaries.

For the three and six months ended September 30, 2022, the pre-tax gain on foreign currency-denominated debt designated for hedge accounting recognized in other comprehensive loss was $ 17 million and $ 33 million, respectively.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 8 – Intangible Assets

Intangible assets consisted of the following:

As of June 30, 2022

(in millions) Gross Carrying Value Accumulated Amortization Net Carrying Value

Software $ 4,025 $ 3,071 $ 954

Customer related intangible assets 3,985 2,016 1,969

Other intangible assets 293 99 194

Total intangible assets $ 8,303 $ 5,186 $ 3,117

As of March 31, 2022

(in millions) Gross Carrying Value Accumulated Amortization Net Carrying Value

As of September 30, 2022 As of March 31, 2022

(in millions) Gross Carrying Value Accumulated Amortization Net Carrying Value Gross Carrying Value Accumulated Amortization Net Carrying Value

Software $ 3,981 $ 3,103 $ 878 $ 4,063 $ 3,039 $ 1,024

Customer related intangible assets 4,148 1,995 2,153

Other intangible assets 291 90 201

Customer related 3,873 2,048 1,825 4,148 1,995 2,153

Other 289 108 181 291 90 201

Total intangible assets $ 8,143 $ 5,259 $ 2,884 $ 8,502 $ 5,124 $ 3,378

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The components of amortization expense were as follows:

Three Months Ended

(in millions) June 30, 2022 June 30, 2021

Intangible assets amortization $ 199 $ 215

Three Months Ended Six Months Ended

(in millions) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Intangible asset amortization $ 198 $ 223 $ 397 $ 437

Transition and transformation contract cost amortization (1)

53 60 105 110

Total amortization expense $ 251 $ 283 $ 502 $ 547

(1) Transaction and transformation contract costs are included within other assets on the balance sheet.

Estimated future amortization related to intangible assets as of June 30, 2022 is as follows:

(1) Transition and transformation contract costs are included within other assets on the balance sheet.

Estimated future amortization related to intangible assets as of September 30, 2022 is as follows:

Fiscal Year (in millions)

1 unchanged sentence

Thereafter 365

Total $ 2,884

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 9 – Goodwill

The following table summarizes the changes in the carrying amount of goodwill, by segment, as of June 30, 2022.

The following table summarizes the changes in the carrying amount of goodwill, by segment, as of September 30, 2022.

(in millions) GBS GIS Total

1 unchanged sentence

Divestitures ( 12 ) — ( 12 )

Assets held for sale ( 3 ) — ( 3 )

Foreign currency translation ( 43 ) — ( 43 )

Balance as of June 30, 2022, net $ 582 $ — $ 582

Balance as of September 30, 2022, net $ 562 $ — $ 562

Goodwill, gross 5,052 5,066 10,118

Accumulated impairment losses ( 4,490 ) ( 5,066 ) ( 9,556 )

Balance as of June 30, 2022, net $ 582 $ — $ 582

The adjustments for divestitures and assets held for sale are described in Note 2 - "Divestitures." The foreign currency translation amount reflects the impact of currency movements on non-U.S.

Balance as of September 30, 2022, net $ 562 $ — $ 562

The foreign currency translation amount reflects the impact of currency movements on non-U.S.

dollar-denominated goodwill balances.

Goodwill Impairment Analyses

The Company tests goodwill for impairment on an annual basis, as of the first day of the second fiscal quarter, and between annual tests if circumstances change, or if an event occurs that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

The Company concluded that, as a result of its qualitative assessment performed on July 1, 2022, it remained more likely than not that the fair value of the GBS reporting unit exceeds its carrying amount.

As of September 30, 2022, the Company assessed whether there were events or changes in circumstances that would more likely than not reduce the fair value of any of its reporting units below its carrying amount and require goodwill to be tested for impairment.

The Company determined that there have been no such indicators and therefore, it was unnecessary to perform an interim goodwill impairment test as of September 30, 2022.

DXC TECHNOLOGY COMPANY

2 unchanged sentences

The following is a summary of the Company’s debt:

(in millions) Interest Rates Fiscal Year Maturities June 30, 2022 (1)

March 31, 2022 (1)

(in millions) Interest Rates Fiscal Year Maturities 9/30/2022 (1)

3/31/2022 (1)

Short-term debt and

11 unchanged sentences

$ 700 million Senior notes

1.80 % 2027 695 694

€ 750 million Senior notes

13 unchanged sentences

Long-term debt, net of current maturities $ 3,695 $ 4,065

(1) The carrying amounts of the senior notes as of June 30, 2022 and March 31, 2022, include the remaining principal outstanding of $ 3,442 million and $ 3,575 million, respectively, net of total unamortized debt (discounts) and premiums, and deferred debt issuance costs of $( 25 ) million and $( 28 ) million respectively.

(1) The carrying amounts of the senior notes as of September 30, 2022 and March 31, 2022, include the remaining principal outstanding of $ 3,309 million and $ 3,575 million, respectively, net of total unamortized debt (discounts) and premiums, and deferred debt issuance costs of $( 22 ) million and $( 28 ) million respectively.

(2) At DXC’s option, DXC can borrow up to a maximum of € 1 billion or its equivalent in €, £, and $.

The estimated fair value of the Company’s long-term debt, excluding finance lease liabilities, was $ 3.3 billion and $ 3.7 billion as of June 30, 2022 and March 31, 2022, respectively, compared with carrying value of $ 3.8 billion and $ 4.0 billion as of June 30, 2022 and March 31, 2022, respectively .

During the second quarter of fiscal 2023, the Company entered into a $ 500 million term loan credit agreement (the “USD Term Loan”) with certain unaffiliated financial institutions that matures on September 1, 2024, unless the Company exercises its option to extend for one year until September 1, 2025.

The USD Term Loan is required to be drawn down by March 1, 2023.

The Company did not draw on the USD Term Loan as of September 30, 2022.

Fair Value of Debt

The estimated fair value of the Company’s long-term debt, excluding finance lease liabilities, was $ 3.1 billion and $ 3.7 billion as of September 30, 2022 and March 31, 2022, respectively, compared with carrying value of $ 3.6 billion and $ 4.0 billion as of September 30, 2022 and March 31, 2022, respectively.

DXC TECHNOLOGY COMPANY

3 unchanged sentences

The following table presents DXC’s revenues disaggregated by geography, based on the location of incorporation of the DXC entity providing the related goods or services:

Three Months Ended

(in millions) June 30, 2022 June 30, 2021

Three Months Ended Six Months Ended

(in millions) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

United States $ 1,093 $ 1,193 $ 2,224 $ 2,402

7 unchanged sentences

Remaining Performance Obligations

As of June 30, 2022, approximately $ 20 billion of revenue is expected to be recognized from remaining performance obligations.

As of September 30, 2022, approximately $ 19 billion of revenue is expected to be recognized from remaining performance obligations.

We expect to recognize revenue on approximately 24 % of these remaining performance obligations in fiscal 2023, with the remainder of the balance recognized thereafter.

1 unchanged sentence

The following table provides information about the balances of the Company’s trade receivables and contract assets and contract liabilities:

(in millions) Balance Sheet Line Item June 30, 2022 March 31, 2022

Trade receivables, net Receivables and contract assets, net of allowance for doubtful accounts $ 2,484 $ 2,694

Contract assets Receivables and contract assets, net of allowance for doubtful accounts $ 368 $ 371

Contract liabilities Deferred revenue and advance contract payments and Non-current deferred revenue $ 1,744 $ 1,915

Change in contract liabilities were as follows:

Three Months Ended

(in millions) June 30, 2022 June 30, 2021

(in millions) September 30, 2022 March 31, 2022

Trade receivables, net $ 2,369 $ 2,694

Contract assets $ 355 $ 371

Contract liabilities $ 1,656 $ 1,915

Changes in contract liabilities were as follows:

Six Months Ended

(in millions) September 30, 2022 September 30, 2021

Balance, beginning of period $ 1,915 $ 1,701

8 unchanged sentences

The composition of restructuring liabilities by financial statement line item is as follows:

(in millions) June 30, 2022 March 31, 2022

(in millions) September 30, 2022 March 31, 2022

Accrued expenses and other current liabilities $ 75 $ 113

7 unchanged sentences

Cash Paid Other (2)

Restructuring Liability as of June 30, 2022

Fiscal 2023 Plan

Workforce Reductions $ — $ 15 $ ( 1 ) $ ( 4 ) $ ( 1 ) $ 9

Facilities Costs — 9 ( 9 ) — — —

— 24 ( 10 ) ( 4 ) ( 1 ) 9

Restructuring Liability as of September 30, 2022

Fiscal 2023 Plan

6 unchanged sentences

85 26 ( 6 ) ( 59 ) ( 8 ) 38

Other Prior Year Plans

Workforce Reductions $ 10 $ 1 $ — $ ( 5 ) $ ( 1 ) $ 5

Facilities Costs 2 — — — — 2

12 1 — ( 5 ) ( 1 ) 7

Acquired Liabilities

Other Prior Year and Acquired Plans

Workforce Reductions $ 64 $ 1 $ — $ ( 23 ) $ ( 4 ) $ 38

2 unchanged sentences

Total $ 152 $ 86 $ ( 16 ) $ ( 111 ) $ ( 13 ) $ 98

(1) Pension benefit augmentations recorded as a pension liability, asset impairments and restructuring costs associated with right-of-use assets.

(1) Pension benefit augmentations recorded as pension liabilities, asset impairments and restructuring costs associated with right-of-use assets.

(2) Foreign currency translation adjustments.

Included in restructuring costs for the three months ended June 30, 2022 is $ 5 million related to amortization of the right-of-use asset and interest expense for leased facilities that we have vacated but are being actively marketed for sublease or we are in negotiations with the landlord to potentially terminate or modify those leases.

For the six months ended September 30, 2022, $ 11 million of restructuring costs is related to amortization of the right-of-use asset and interest expense for leased facilities that we have vacated but are being actively marketed for sublease or we are in negotiations with the landlord to potentially terminate or modify those leases.

DXC TECHNOLOGY COMPANY

3 unchanged sentences

The components of net periodic pension income were:

Three Months Ended

(in millions) June 30, 2022 June 30, 2021

Three Months Ended Six Months Ended

(in millions) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Service cost $ 18 $ 22 $ 37 $ 45

2 unchanged sentences

Amortization of prior service costs ( 2 ) ( 2 ) ( 4 ) ( 4 )

Contractual termination benefit — 1 — 1

Recognition of actuarial loss 1 — 1 —

Net periodic pension income $ ( 42 ) $ ( 74 ) $ ( 90 ) $ ( 148 )

1 unchanged sentence

Note 14 – Income Taxes

The Company’s effective tax rate (“ETR”) was 15.6 % and 33.5 % for the three months ended June 30, 2022 and June 30, 2021, respectively.

For the three months ended June 30, 2022, the primary drivers of the ETR were the global mix of income, U.S.

tax on foreign income and base erosion payments, and a decrease in uncertain tax positions due to statute of limitation expirations.

For the three months ended June 30, 2021, the primary drivers of the ETR were the global mix of income, gain on sale of the HPS business, and tax rate changes in non-U.S.

jurisdictions.

The Company’s effective tax rate (“ETR”) was 48.1 % and 24.6 % for the three months ended September 30, 2022 and September 30, 2021, respectively, and 25.6 % and 46.0 % for the six months ended September 30, 2022 and September 30, 2021, respectively.

For the three months ended September 30, 2022, the primary drivers of the ETR were the global mix of income, U.S.

tax on foreign income, and the tax impact of business divestitures.

For the six months ended September 30, 2022, the primary drivers of the ETR were the global mix of income, tax impact of business divestitures, U.S.

tax on foreign income, and a decrease in unrecognized tax benefits due to income tax audit settlements and statute of limitation expirations.

For the three months ended September 30, 2021, the primary drivers of the ETR were the global mix of income, and a decrease in unrecognized tax benefits due to income tax audit settlements and statute of limitation expirations.

For the six months ended September 30, 2021, the primary drivers of the ETR were the global mix of income, gain on sale of the HPS business, tax rate changes in non-U.S.

jurisdictions, and a decrease in unrecognized tax benefits due to income tax audit settlements and statute of limitation expirations.

The majority of our global unremitted foreign earnings have been taxed or would be exempt from U.S.

12 unchanged sentences

Pursuant to the tax matters agreement, the Company recorded a $ 27 million tax indemnification receivable related to uncertain tax positions, a $ 68 million tax indemnification receivable related to other tax payables, and a $ 112 million tax indemnification payable related to other tax receivables.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

In connection with the spin-off of the Company’s former U.S.

7 unchanged sentences

Pursuant to the tax matters agreement, the Company generally will be responsible for tax liabilities arising prior to the sale of the HPS business.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The Internal Revenue Service (the “IRS”) has examined, or is examining, the Company’s federal income tax returns for fiscal 2009 through the tax year ended October 31, 2018.

10 unchanged sentences

The statute of limitations on assessments related to a refund claim for fiscal year 2012 is open through February 28, 2025.

The Company has agreed to extend the statute of limitations generally for fiscal years 2014 through fiscal 2017 to February 28, 2023, and for the tax years ended October 31, 2017 and October 31, 2018 to September 30, 2023.

The Company has agreed to extend the statute of limitations for fiscal years 2014 and 2015 through February 28, 2023 and fiscal and tax return years 2016 through 2020 to September 30, 2024.

The statute of limitations is also open on assessments related to certain refund claims for fiscal years 2014 to 2017 through August 15, 2023.

The Company expects to reach resolution with regard to disagreed items for fiscal years 2009 through 2013 no earlier than fiscal 2025, and to reach resolution for fiscal years 2014 through 2017 no earlier than fiscal 2024.

The Company expects to reach resolution with regard to disagreed items for fiscal years 2009 through 2013 no earlier than fiscal 2025, to reach resolution for fiscal years 2014 and 2015 no earlier than fiscal 2024, and to reach resolution for fiscal years 2016 through 2020 no earlier than fiscal 2025.

The Company may settle certain other tax examinations for different amounts than the Company has accrued as uncertain tax positions.

Consequently, the Company may need to accrue and ultimately pay additional amounts or pay lower amounts than previously estimated and accrued when positions are settled in the future.

For the three months ended June 30, 2022, the Company’s liability for uncertain tax positions decreased by $ 44 million (excluding interest and penalties and related tax attributes) primarily due to income tax audit settlements and statute of limitation expirations.

For the three months ended September 30, 2022, the Company’s liability for uncertain tax positions increased by $ 8 million (excluding interest and penalties and related tax attributes) primarily due to foreign tax benefits.

The Company believes the outcomes that are reasonably possible within the next 12 months to result in a reduction in its liability for uncertain tax positions, excluding interest, penalties, and tax carryforwards, would be approximately $ 15 million.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 15 – Stockholders’ Equity

Share Repurchases

The details of shares repurchased during the three months ended June 30, 2022 and June 30, 2021 are shown below:

The details of shares repurchased during the six months ended September 30, 2022 and September 30, 2021 are shown below:

Fiscal 2023 Fiscal 2022

2 unchanged sentences

(in millions)

Open market purchases 8,850,912 $ 30.09 $ 266 1,750,000 $ 38.52 $ 67

1st Quarter 8,850,912 $ 30.09 $ 266 1,750,000 $ 38.52 $ 67

2nd Quarter — $ — — 2,112,212 $ 39.10 83

Total 8,850,912 $ 30.09 $ 266 3,862,212 $ 38.84 $ 150

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Accumulated Other Comprehensive Loss

4 unchanged sentences

Amounts reclassified from accumulated other comprehensive loss — ( 9 ) ( 4 ) ( 13 )

Balance at June 30, 2022 $ ( 827 ) $ 10 $ 254 $ ( 563 )

Balance at September 30, 2022 $ ( 988 ) $ 12 $ 252 $ ( 724 )

(in millions) Foreign Currency Translation Adjustments Cash Flow Hedges Pension and Other Post-retirement Benefit Plans Accumulated Other Comprehensive Loss

3 unchanged sentences

( 86 ) — ( 4 ) ( 90 )

Balance at June 30, 2021 $ ( 675 ) $ ( 2 ) $ 251 $ ( 426 )

Balance at September 30, 2021 $ ( 732 ) $ 6 $ 244 $ ( 482 )

(1) Includes net cumulative foreign currency translation losses of $ 86 million upon sale of foreign entities primarily related to the HPS business divestiture.

See Note 2 – “Divestitures” for additional information.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 16 – Stock Incentive Plans

13 unchanged sentences

Canceled/Forfeited ( 842,644 ) $ 39.34 — $ —

Outstanding as of June 30, 2022 8,495,628 $ 36.90 158,522 $ 36.11

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Outstanding as of September 30, 2022 7,988,465 $ 37.00 139,887 $ 36.15

Share-Based Compensation

Three Months Ended

(in millions) June 30, 2022 June 30, 2021

Three Months Ended Six Months Ended

(in millions) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Total share-based compensation cost $ 27 $ 26 $ 55 $ 51

Related income tax benefit $ 3 $ 4 $ 6 $ 7

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 17 – Cash Flows

Cash payments for interest on indebtedness and income taxes and other select non-cash activities are as follows:

Three Months Ended

(in millions) June 30, 2022 June 30, 2021

Six Months Ended

(in millions) September 30, 2022 September 30, 2021

Cash paid for:

3 unchanged sentences

ROU assets obtained in exchange for lease, net (2)

Prepaid assets acquired under long-term financing $ 34 $ 111

Assets acquired under long-term financing $ 37 $ 111

Capital expenditures in accounts payable and accrued expenses $ — $ 2

1 unchanged sentence

Assets acquired under long-term financing $ 6 $ 44

Shares repurchased but not settled in cash $ — $ 19

(1) Income tax refunds were $ 13 million and $ 14 million for the three months ended June 30, 2022 and June 30, 2021, respectively.

(2) Net of $ 338 million and $ 242 million in lease modifications and terminations for the three months ended .June 30, 2022 and June 30, 2021, respectively.

(1) Income tax refunds were $ 30 million and $ 41 million for the six months ended September 30, 2022 and September 30, 2021, respectively.

(2) Net of $ 521 million and $ 509 million in lease modifications and terminations during the first six months of fiscal 2023 and 2022, respectively .

DXC TECHNOLOGY COMPANY

39 unchanged sentences

(in millions) GBS GIS Total Reportable Segments All Other Totals

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Revenues $ 1,713 $ 1,853 $ 3,566 $ — $ 3,566

2 unchanged sentences

$ 40 $ 216 $ 256 $ 23 $ 279

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Revenues $ 1,873 $ 2,154 $ 4,027 $ — $ 4,027

2 unchanged sentences

$ 51 $ 257 $ 308 $ 30 $ 338

(1) Depreciation and amortization as presented excludes amortization of acquired intangible assets of $ 104 million and $ 109 million for the

three months ended June 30, 2022 and June 30, 2021, respectively .

(in millions) GBS GIS Total Reportable Segments All Other Totals

Six Months Ended September 30, 2022

Revenues $ 3,471 $ 3,802 $ 7,273 $ — $ 7,273

Segment profit $ 428 $ 241 $ 669 $ ( 141 ) $ 528

Depreciation and amortization (1)

$ 81 $ 434 $ 515 $ 49 $ 564

Six Months Ended September 30, 2021

Revenues $ 3,760 $ 4,408 $ 8,168 $ — $ 8,168

Segment profit $ 570 $ 249 $ 819 $ ( 141 ) $ 678

Depreciation and amortization (1)

$ 91 $ 503 $ 594 $ 57 $ 651

(1) Depreciation and amortization as presented excludes amortization of acquired intangible assets of $ 101 million and $ 110 million for the three months ended September 30, 2022 and 2021, respectively, and $ 205 million and $ 219 million for the six months ended September 30, 2022 and 2021, respectively.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Reconciliation of Reportable Segment Profit to Consolidated Total

3 unchanged sentences

These unallocated costs include certain corporate function costs, stock-based compensation expense, pension and OPEB actuarial and settlement gains and losses, restructuring costs, transaction, separation, and integration-related costs and amortization of acquired intangible assets.

Three Months Ended

(in millions) June 30, 2022 June 30, 2021

Three Months Ended Six Months Ended

(in millions) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021

Total profit for reportable segments $ 332 $ 416 $ 669 $ 819

5 unchanged sentences

Transaction, separation and integration-related costs

( 4 ) ( 3 ) ( 6 ) ( 12 )

Amortization of acquired intangible assets ( 101 ) ( 110 ) ( 205 ) ( 219 )

Merger related indemnification — — ( 10 ) —

Gains on dispositions 29 347

SEC Matter ( 8 ) — ( 8 ) —

(Losses) gains on dispositions ( 32 ) — ( 3 ) 347

Impairment losses — ( 10 ) — ( 10 )

Debt extinguishment costs — ( 281 ) — ( 309 )

Income before income taxes $ 122 $ 424

Pension and OPEB actuarial and settlement losses ( 1 ) — ( 1 ) —

Income (loss) before income taxes $ 54 $ ( 248 ) $ 176 $ 176

Management does not use total assets by segment to evaluate segment performance or allocate resources.

3 unchanged sentences

Note 19 – Commitments and Contingencies

Minimum purchase commitments as of June 30, 2022 were as follows:

Minimum purchase commitments as of September 30, 2022 were as follows:

Fiscal year Minimum Purchase Commitment

2 unchanged sentences

Total $ 1,294

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Contingencies

25 unchanged sentences

In June 2021, the Court issued a decision denying HPE’s motion for summary judgment and granting Oracle’s motion for summary judgment on various HPE defenses.

In November 2021, the court issued an order continuing the trial to May 2022.

I n November 2021, the court issued an order continuing the trial to May 2022.

A jury trial was held in May - June 2022, after which a jury awarded Oracle $ 30 million in damages.

A final judgment has yet to be entered, pending the resolution of certain post-trial motions the parties will be filing in July - November 2022.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

A final judgment has yet to be entered, pending the resolution of various post-trial motions.

In September 2022, Oracle filed a motion seeking $ 27 million in attorneys’ fees and prejudgment interest.

A hearing on Oracle’s motion is scheduled for December 2022.

In re DXC Technology Company Securities Litigation:

3 unchanged sentences

The putative class of plaintiffs includes all persons who acquired shares of the Company’s common stock pursuant to the offering documents filed with the Securities and Exchange Commission in connection with the April 2017 transaction that formed DXC.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The State of California action had been stayed pending the outcome of the substantially similar federal action filed in the United States District Court for the Northern District of California.

1 unchanged sentence

Thereafter, the state court lifted the stay and entered an order permitting additional briefing by the parties.

In March 2022, Plaintiffs filed an amended complaint.

In April 2022, the Company moved to dismiss the amended complaint.

A hearing on the Company’s motion to dismiss is scheduled for August 2022.

In March 2022, Plaintiffs filed an amended complaint, which the Company moved to dismiss.

In August 2022, the Court granted the Company’s motion to dismiss, but permitted Plaintiffs to amend and refile their complaint.

In September 2022, Plaintiffs filed a second amended complaint, which the Company has moved to dismiss.

A hearing on the Company’s motion is scheduled for January 2023.

The Company believes that the final remaining lawsuit described above is also without merit, and intends to vigorously defend it.

10 unchanged sentences

The Company intends to continue its voluntary cooperation with the SEC while seeking to resolve the matter.

There can be no guarantee that any final resolution will be reached or, if one is reached, as to the timing or final terms of any such resolution.

However, in the second quarter of the Company’s fiscal year 2023, the Company accrued $ 8 million, representing its current estimate of the settlement costs based on its ongoing discussions with the SEC.

In addition to the matters noted above, the Company is currently subject in the normal course of business to various claims and contingencies arising from, among other things, disputes with customers, vendors, employees, contract counterparties and other parties, as well as securities matters, environmental matters, matters concerning the licensing and use of intellectual property, and inquiries and investigations by regulatory authorities and government agencies.

24 unchanged sentences

• our inability to retain and hire key personnel and maintain relationships with key partners;

• the risks associated with prolonged periods of inflation;

• the risks associated with prolonged periods of inflation or current macroeconomic conditions, including the current decline in economic growth rates in the United States and in other countries, including the possibility of reduced spending by customers in the areas we serve, the success of our cost-takeout efforts, continuing unfavorable foreign exchange rate movements, and our ability to close new deals in the event of an economic slowdown;

• the risks associated with our international operations, such as risks related to currency exchange rates and the withdrawal of U.K.

18 unchanged sentences

Public Sector business (the “USPS”) and its related mergers with Vencore Holding Corp.

and KeyPoint Government Solutions in June 2018 to form Perspecta Inc, (including its successors and permitted assigns, “Perspecta”), which was acquired by Peraton in May 2021;

and KeyPoint Government Solutions in June 2018 to form Perspecta Inc.

(including its successors and permitted assigns, “Perspecta”), which was acquired by Peraton in May 2021;

• the other factors described in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended March 31, 2022 and subsequent SEC filings, including Part II Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements