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Item 1. Financial Statements

2023-02-02 compared with 2022-11-04 · 205 added, 178 removed, 816 unchanged (32% of the section changed)

1 unchanged sentence

Index to Condensed Consolidated Financial Statements

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)

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2022 and December 31, 2021 (unaudited)

Condensed Consolidated Statements of Comprehensive ( Loss ) Income for the Three and Nine Months Ended December 31, 2022 and December 31, 2021 (unaudited)

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

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2022 and December 31, 2021 (unaudited)

Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months Ended December 31, 2022 and December 31, 2021 (unaudited)

Notes to Condensed Consolidated Financial Statements (unaudited)

1 unchanged sentence

Note 2–Divestitures

Note 3 –Earnings (Loss) Per Share

Note 3–Earnings Per Share

Note 4–Receivables

1 unchanged sentence

Note 6–Fair Value

Note 7 –Derivative I nstruments

Note 7–Derivative Instruments

Note 8–Intangible Assets

Note 9–Goodwill

Note 1 0 –Debt

Note 11–Revenue

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(in millions, except per-share amounts) December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Revenues $ 3,566 $ 4,089 $ 10,839 $ 12,257

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Total costs and expenses 3,464 3,923 10,561 11,915

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

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

Net income (loss) 28 ( 187 ) 131 95

Income before income taxes 102 166 278 342

Income tax expense 41 64 86 145

Net income 61 102 192 197

net income attributable to non-controlling interest, net of tax 2 4 4 9

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

Income (loss) per common share:

Net income attributable to DXC common stockholders $ 59 $ 98 $ 188 $ 188

Income per common share:

Basic $ 0.26 $ 0.39 $ 0.82 $ 0.74

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DXC TECHNOLOGY COMPANY

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:

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

Three Months Ended Nine Months Ended

(in millions) December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Net income $ 61 $ 102 $ 192 $ 197

Other comprehensive (loss) income, net of taxes:

Foreign currency translation adjustments, net of tax (1)

1 unchanged sentence

Cash flow hedges adjustments, net of tax (2)

( 19 ) 1 ( 17 ) 9

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

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Pension and other post-retirement benefit plans, net of tax ( 1 ) ( 2 ) ( 5 ) ( 6 )

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

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

Other comprehensive (loss) income, net of taxes ( 10 ) 98 ( 353 ) ( 72 )

Comprehensive (loss) income 51 200 ( 161 ) 125

comprehensive (loss) income attributable to non-controlling interest 4 5 2 20

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.

Comprehensive (loss) income attributable to DXC common stockholders $ 47 $ 195 $ ( 163 ) $ 105

(1) Tax (benefit) expense related to foreign currency translation adjustments was $( 5 ) and $ 4 for the three and nine months ended December 31, 2022, respectively, and $( 3 ) and $( 2 ) for the three and nine months ended December 31, 2021, respectively.

(2) Tax (benefit) expense related to cash flow hedges adjustments was $( 5 ) and $( 6 ) for the three and nine months ended December 31, 2022, respectively, and $ 1 and $ 3 for the three and nine months ended December 31, 2021, respectively.

(3) Tax benefit related to amortization of prior service costs was $ 0 and $ 4 for the three and nine months ended December 31, 2022, respectively.

There was no tax benefit related to amortization of prior service costs for the three and nine months ended December 31, 2021, respectively.

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

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CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

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

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

Current assets:

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DXC stockholders’ equity:

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

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

Common stock, par value $ 0.01 per share, 750,000,000 shares authorized, 231,350,636 issued as of December 31, 2022 and 240,508,348 issued as of March 31, 2022

Additional paid-in capital 9,670 10,057

1 unchanged sentence

Accumulated other comprehensive loss ( 736 ) ( 385 )

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

Treasury stock, at cost, 3,278,690 and 2,878,079 shares as of December 31, 2022 and March 31, 2022

( 186 ) ( 173 )

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Six Months Ended

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

Nine Months Ended

(in millions) December 31, 2022 December 31, 2021

Cash flows from operating activities:

3 unchanged sentences

Operating right-of-use expense 311 371

Pension & other post-employment benefits, actuarial & settlement losses — 7

Share-based compensation 81 77

1 unchanged sentence

Gain on dispositions ( 43 ) ( 402 )

Provision for losses on accounts receivable — ( 2 )

Unrealized foreign currency exchange loss (gain) 80 ( 20 )

3 unchanged sentences

Changes in assets and liabilities, net of effects of acquisitions and dispositions:

(Increase) decrease in assets ( 185 ) 348

Decrease in assets 84 386

Decrease in operating lease liability ( 311 ) ( 371 )

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Payments for debt extinguishment costs — ( 344 )

Repurchase of common stock and advance payment for accelerated share repurchase ( 272 ) ( 150 )

Repurchase of common stock ( 325 ) ( 352 )

Other financing activities, net ( 6 ) 10

2 unchanged sentences

Net decrease in cash and cash equivalents including cash classified within current assets held for sale ( 87 ) ( 112 )

Cash classified within current assets held for sale 10 63

Change in cash classified within current assets held for sale ( 494 ) 63

Net decrease in cash and cash equivalents ( 581 ) ( 49 )

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (unaudited)

Three Months Ended September 30, 2022

Three Months Ended December 31, 2022

(in millions, except

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Shares Amount

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

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

Net Income 59 59 2 61

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Acquisition of treasury stock ( 1 ) ( 1 ) ( 1 )

Share repurchase program ( 2,064 ) ( 87 ) 30 ( 57 ) ( 57 )

Stock option exercises and other common stock transactions 137 — —

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

Balance at December 31, 2022 231,351 $ 2 $ 9,670 $ ( 4,123 ) $ ( 736 ) $ ( 186 ) $ 4,627 $ 325 $ 4,952

Three Months Ended December 31, 2021

(in millions, except

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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 )

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

Net income 98 98 4 102

Other comprehensive income 97 97 1 98

Share-based compensation expense 23 23 23

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Non-controlling interest distributions and other ( 4 ) ( 4 ) ( 1 ) ( 5 )

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

Balance at December 31, 2021 248,356 $ 3 $ 10,383 $ ( 5,058 ) $ ( 385 ) $ ( 171 ) $ 4,772 $ 315 $ 5,087

Nine Months Ended December 31, 2022

(in millions, except

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Stock option exercises and other common stock transactions 1,758 1 1 1

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

Balance at December 31, 2022 231,351 $ 2 $ 9,670 $ ( 4,123 ) $ ( 736 ) $ ( 186 ) $ 4,627 $ 325 $ 4,952

Nine Months Ended December 31, 2021

(in millions, except

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Non-controlling interest distributions and other ( 3 ) ( 1 ) ( 4 ) ( 40 ) ( 44 )

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.

Balance at December 31, 2021 248,356 $ 3 $ 10,383 $ ( 5,058 ) $ ( 385 ) $ ( 171 ) $ 4,772 $ 315 $ 5,087

(1) 3,278,690 treasury shares as of December 31, 2022.

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

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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 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.

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 (loss) 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.

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

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

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

All intercompany transactions and balances have been eliminated.

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However, because the use of estimates involves an inherent degree of uncertainty, actual results could differ from those estimates.

The severity, magnitude and duration, as well as the economic consequences of the ongoing coronavirus disease 2019 (“COVID-19”) crisis, are uncertain, rapidly changing and difficult to predict.

Therefore, accounting estimates and assumptions may change over time in response to the COVID-19 crisis and may change materially in future periods.

Estimates are used for, but are not limited to, contracts accounted for using the percentage-of-completion method, cash flows used in the evaluation of impairment of goodwill and other long-lived assets, reserves for uncertain tax positions, valuation allowances on deferred tax assets, loss accruals for litigation, and obligations related to our pension plans.

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Recent Accounting Pronouncements

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

Recently issued ASUs effective after December 31, 2022 are not expected to have a material effect on DXC’s condensed consolidated financial statements.

DXC TECHNOLOGY COMPANY

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Fiscal 2023 Divestitures

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

During the first nine months of fiscal 2023, the Company sold insignificant businesses that resulted in a loss of $ 12 million.

FDB Assets Held for Sale

During the third quarter of fiscal 2022, DXC entered into a purchase agreement to sell its German financial services subsidiary ("FDB" or the "FDB Business") to the FNZ Group ("FNZ").

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

During the third quarter of fiscal 2023, DXC obtained regulatory consent for the FDB sale.

As of December 31, 2022, the FDB Business met the requirements for presentation as assets held for sale under GAAP.

On January 3, 2023, DXC completed the sale of its FDB Business for € 308 million (approximately $ 323 million as of January 3, 2023) resulting in an estimated pre-tax gain of approximately $ 180 million to be recognized in the fourth quarter of fiscal 2023.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Assets held for sale are reported at carrying value, which is less than fair value.

FDB’s assets held for sale and related liabilities as of December 31, 2022 were as follows:

(in millions) December 31, 2022

Cash and cash equivalents $ 509

Receivables and contract assets 67

Prepaid expenses 1

Total current assets held for sale 577

Intangible assets, net 45

Property and equipment, net 1

Other assets 12

Total non-current assets held for sale 106

Total assets held for sale $ 683

Accounts payable $ 5

Accrued expenses and other current liabilities 532

Income Taxes Payable 1

Total current liabilities related to assets held for sale 538

Non-current income tax liabilities and deferred tax liabilities 7

Other long-term liabilities 4

Total long-term liabilities related to assets held for sale 11

Total liabilities related to assets held for sale $ 549

In addition to the FDB Business, certain other insignificant divestitures are included in the Company’s balance sheets as assets held for sale.

Fiscal 2022 Divestitures

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

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 $ 337 million, net of closing costs for the nine months ended December 31, 2022.

During the first nine 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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 3 – Earnings (Loss) per Share

Note 3 – Earnings 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 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:

Three Months Ended Nine Months Ended

(in millions, except per-share amounts) December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Net income attributable to DXC common stockholders:

$ 59 $ 98 $ 188 $ 188

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Weighted average common shares outstanding for diluted EPS 233.00 254.82 234.38 257.59

Earnings (loss) per share:

Earnings per share:

Basic $ 0.26 $ 0.39 $ 0.82 $ 0.74

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The number of awards excluded were as follows:

Three Months Ended Six Months Ended

September 30, 2022 September 30, 2021 (1)

September 30, 2022 September 30, 2021

Three Months Ended Nine Months Ended

December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Stock Options 467,554 507,424 474,591 518,052

1 unchanged sentence

Performance Stock Units 1,086,398 1,937,752 850,623 1,089,869

(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) September 30, 2022 March 31, 2022

(in millions) December 31, 2022 March 31, 2022

Beginning balance $ 55 $ 91

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Receivables Facility

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 Company has an accounts receivable sales facility (as amended, restated, supplemented or otherwise modified as of December 31, 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.

As of December 31, 2022, the total availability under the Receivables Facility was $ 400 million, and the amount sold to the Purchasers was $ 400 million, which was derecognized from the Company’s balance sheet.

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.

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The components of operating lease expense were as follows:

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(in millions) December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Operating lease cost $ 97 $ 117 $ 311 $ 371

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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.

Six Months Ended

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

Nine Months Ended

(in millions) December 31, 2022 December 31, 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 $ 521 million and $ 509 million in lease modifications and terminations during the first six months of fiscal 2023 and 2022, respectively.

(1) Net of $ 911 million and $ 792 million in lease modifications and terminations during the nine 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 September 30, 2022 March 31, 2022

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

ROU operating lease assets Operating right-of-use assets, net $ 954 $ 1,133

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Total operating lease liabilities $ 1,011 $ 1,203

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:

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

The weighted-average operating lease discount rate was 3.7 % and 3.3 % as of December 31, 2022 and March 31, 2022, respectively.

The following maturity analysis presents expected undiscounted cash payments for operating leases as of December 31, 2022:

(in millions)

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The components of finance lease expense were as follows:

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(in millions) December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Amortization of right-of-use assets $ 50 $ 85 $ 166 $ 271

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

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

Nine Months Ended

(in millions) December 31, 2022 December 31, 2021

Interest paid for finance lease liabilities – Operating cash flows

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The following table presents finance lease balances:

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

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

ROU finance lease assets Property and Equipment, net $ 462 $ 602

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

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.

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

The weighted-average finance lease discount rate was 3.1 % and 2.9 % as of December 31, 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:

The following maturity analysis presents expected undiscounted cash payments for finance leases as of December 31, 2022:

(in millions)

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Fair Value Hierarchy

(in millions) September 30, 2022

(in millions) December 31, 2022

Fair Value Level 1 Level 2 Level 3

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(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 $ 47 million and $ 53 million as of September 30, 2022 and March 31, 2022, respectively.

(2) Other securities include available-for-sale equity security investments with Level 2 inputs that have a cost basis of $ 51 million and $ 53 million as of December 31, 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 .

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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 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 notional amounts of foreign currency forward contracts designated as cash flow hedges as of December 31, 2022 and March 31, 2022 were $ 836 million and $ 727 million, respectively.

As of December 31, 2022, the related forecasted transactions extend through December 2024.

For the three and nine months ended December 31, 2022 and December 31, 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 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 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.

During the three and nine months ended December 31, 2022 and December 31, 2021, respectively, the Company had no cash flow hedges for which it was probable that the hedged transaction would not occur.

As of December 31, 2022, $ 5 million of the existing amount of loss 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) income and income before income taxes

During the three and nine months ended December 31, 2022, the pre-tax gain (loss) on derivatives designated for hedge accounting recognized in other comprehensive (loss) income was $( 23 ) million and $( 14 ) million, respectively, and recognized in income before income taxes was $ 1 million and $ 10 million, respectively.

Derivatives Not Designated for Hedge Accounting

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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 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 For the Six Months Ended

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

The net notional amounts of the foreign currency forward contracts outstanding as of December 31, 2022 and March 31, 2022 were $ 2.0 billion and $ 2.1 billion, respectively.

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

For the Three Months Ended For the Nine Months Ended

(in millions) Statement of Operations Line Item December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Foreign currency forward contracts Other (income) expense, net $ 52 $ ( 9 ) $ ( 27 ) $ 39

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

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

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

Derivatives designated for hedge accounting:

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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 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.

With respect to its foreign currency derivatives, as of December 31, 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 $ 1 million.

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

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Gains or losses on individual 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.

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

As of December 31, 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 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.

For the three and nine months ended December 31, 2022, the pre-tax impact of gain (loss) on foreign currency-denominated debt designated for hedge accounting recognized in other comprehensive (loss) income was $( 22 ) million and $ 11 million, respectively.

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.

subsidiaries .

DXC TECHNOLOGY COMPANY

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Intangible assets consisted of the following:

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

As of December 31, 2022 As of March 31, 2022

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

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The components of amortization expense were as follows:

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(in millions) December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Intangible asset amortization $ 201 $ 212 $ 598 $ 649

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(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:

Estimated future amortization related to intangible assets as of December 31, 2022 is as follows:

Fiscal Year (in millions)

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Note 9 – Goodwill

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

The following table summarizes the changes in the carrying amount of goodwill, by segment, as of December 31, 2022.

(in millions) GBS GIS Total

Goodwill, gross $ 5,107 $ 5,066 $ 10,173

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

Balance as of March 31, 2022, net $ 617 $ — $ 617

Divestitures ( 12 ) — ( 12 )

Assets held for sale ( 48 ) — ( 48 )

Foreign currency translation ( 22 ) — ( 22 )

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

Balance as of December 31, 2022, net $ 535 $ — $ 535

Goodwill, gross 5,025 5,066 10,091

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

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

Balance as of December 31, 2022, net $ 535 $ — $ 535

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.

On December 31, 2022, with the classification of the FDB Business as held for sale, $ 48 million in goodwill was transferred to assets held for sale on the balance sheet.

See Note 2 – “Divestitures” for additional information.

DXC TECHNOLOGY COMPANY

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Long-term debt, net of current maturities $ 3,850 $ 4,065

(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.

(1) The carrying amounts of the senior notes as of December 31, 2022 and March 31, 2022, include the remaining principal outstanding of $ 3,486 million and $ 3,575 million, respectively, net of total unamortized debt (discounts) and premiums, and deferred debt issuance costs of $( 23 ) 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 $.

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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.

The Company did not draw on the USD Term Loan as of December 31, 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.

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 December 31, 2022 and March 31, 2022, respectively, compared with carrying value of $ 3.8 billion and $ 4.0 billion as of December 31, 2022 and March 31, 2022, respectively.

DXC TECHNOLOGY COMPANY

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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 Six Months Ended

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

Three Months Ended Nine Months Ended

(in millions) December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

United States $ 1,054 $ 1,168 $ 3,278 $ 3,570

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Remaining Performance Obligations

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

As of December 31, 2022, approximately $ 19.6 billion of revenue is expected to be recognized from remaining performance obligations.

We expect to recognize revenue on approximately 13 % of these remaining performance obligations in fiscal 2023, with the remainder of the balance recognized thereafter.

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

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

(in millions) December 31, 2022 March 31, 2022

Trade receivables, net $ 2,364 $ 2,694

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Changes in contract liabilities were as follows:

Six Months Ended

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

Nine Months Ended

(in millions) December 31, 2022 December 31, 2021

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

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

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

(in millions) December 31, 2022 March 31, 2022

Accrued expenses and other current liabilities $ 79 $ 113

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Cash Paid Other (2)

Restructuring Liability as of September 30, 2022

Restructuring Liability as of December 31, 2022

Fiscal 2023 Plan

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(2) Foreign currency translation adjustments.

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.

For the nine months ended December 31, 2022, $ 16 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

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The components of net periodic pension income were:

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(in millions) December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Service cost $ 18 $ 22 $ 55 $ 67

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Note 14 – Income Taxes

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 Company’s effective tax rate (“ETR”) was 40.2 % and 38.6 % for the three months ended December 31, 2022 and December 31, 2021, respectively, and 30.9 % and 42.4 % for the nine months ended December 31, 2022 and December 31, 2021, respectively.

For the three months ended December 31, 2022, the primary drivers of the ETR were the global mix of income, U.S.

tax on foreign income, a decrease in the base erosion and anti-abuse tax, and an increase in unrecognized tax benefits primarily related to foreign tax credits.

For the nine months ended December 31, 2022, the primary drivers of the ETR were the global mix of income, U.S.

tax on foreign income, a decrease in the base erosion and anti-abuse tax, and the tax impact of business divestitures.

For the three months ended December 31, 2021, the primary drivers of the ETR were the global mix of income, an increase in unrecognized tax benefits primarily related to deductions taken in prior tax returns and tax rate changes in non-U.S.

jurisdictions.

For the nine months ended December 31, 2021, the primary drivers of the ETR were the global mix of income, gain on sale of HPS business, tax rate changes in non-U.S.

jurisdictions and recording a valuation allowance on certain deferred tax assets in non-U.S.

jurisdictions.

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

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The Company and the IRS Office of Appeals have settled various audit adjustments, and we disagree with the IRS’ disallowance of certain losses and deductions resulting from restructuring costs and tax planning strategies in previous years.

As we believe we will ultimately prevail on the technical merits of the disagreed items and are challenging them in the IRS Office of Appeals or the U.S.

As we believe we will ultimately prevail on the technical merits of the disagreed items and are challenging them in U.S.

Tax Court, these matters are not fully reserved and would result in a federal and state tax expense of approximately $ 472 million (including estimated interest and penalties) for the unreserved portion of these items and related cash cost if we do not prevail.

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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 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.

For the three months ended December 31, 2022, the Company’s liability for uncertain tax positions increased by $ 16 million (excluding interest and penalties and related tax attributes) primarily due to the benefit of U.S.

foreign tax credits.

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 $ 7 million.

3 unchanged sentences

Share Repurchases

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

The details of shares repurchased during the nine months ended December 31, 2022 and December 31, 2021 are shown below:

Fiscal 2023 Fiscal 2022

4 unchanged sentences

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

3rd Quarter 2,063,645 $ 27.41 57 6,755,555 $ 31.48 213

Total 10,914,557 $ 29.59 $ 323 10,617,767 $ 34.15 $ 363

3 unchanged sentences

Balance at March 31, 2022 $ ( 651 ) $ 10 $ 256 $ ( 385 )

Other comprehensive loss before reclassifications ( 337 ) 11 — ( 326 )

Other comprehensive (loss) income before reclassifications ( 329 ) ( 7 ) — ( 336 )

Amounts reclassified from accumulated other comprehensive loss — ( 10 ) ( 5 ) ( 15 )

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

Balance at December 31, 2022 $ ( 980 ) $ ( 7 ) $ 251 $ ( 736 )

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

Balance at March 31, 2021 $ ( 554 ) $ ( 1 ) $ 253 $ ( 302 )

Other comprehensive loss before reclassifications ( 92 ) 7 ( 5 ) ( 90 )

Other comprehensive (loss) income before reclassifications — 12 — 12

Amounts reclassified from accumulated other comprehensive loss (1)

( 86 ) ( 3 ) ( 6 ) ( 95 )

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

Balance at December 31, 2021 $ ( 640 ) $ 8 $ 247 $ ( 385 )

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

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The number of PSUs that ultimately vest is dependent upon the Company’s achievement of certain specified market- and performance-based criteria over the three-year vesting period.

The fair value of RSUs and performance-based PSUs is based on the Company’s common stock closing price on the grant date.

The fair value of RSUs and PSUs is based on the Company’s common stock closing price on the grant date.

For PSUs with a market-based condition, DXC uses a Monte Carlo simulation model to value the grants.

7 unchanged sentences

Canceled/Forfeited ( 1,095,402 ) $ 38.72 — $ —

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

Outstanding as of December 31, 2022 7,593,025 $ 37.11 139,887 $ 36.15

Share-Based Compensation

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(in millions) December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Total share-based compensation cost $ 26 $ 26 $ 81 $ 77

4 unchanged sentences

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

Six Months Ended

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

Nine Months Ended

(in millions) December 31, 2022 December 31, 2021

Cash paid for:

7 unchanged sentences

Assets acquired under long-term financing $ 6 $ 44

(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 .

Shares repurchased but not settled in cash $ 4 $ 11

(1) Income tax refunds were $ 56 million and $ 46 million for the nine months ended December 31, 2022 and December 31, 2021, respectively.

(2) Net of $ 911 million and $ 792 million in lease modifications and terminations during the first nine 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 September 30, 2022

Three Months Ended December 31, 2022

Revenues $ 1,738 $ 1,828 $ 3,566 $ — $ 3,566

2 unchanged sentences

$ 42 $ 209 $ 251 $ 24 $ 275

Three Months Ended September 30, 2021

Three Months Ended December 31, 2021

Revenues $ 1,946 $ 2,143 $ 4,089 $ — $ 4,089

3 unchanged sentences

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

Six Months Ended September 30, 2022

Nine Months Ended December 31, 2022

Revenues $ 5,209 $ 5,630 $ 10,839 $ — $ 10,839

2 unchanged sentences

$ 123 $ 643 $ 766 $ 73 $ 839

Six Months Ended September 30, 2021

Nine Months Ended December 31, 2021

Revenues $ 5,706 $ 6,551 $ 12,257 $ — $ 12,257

2 unchanged sentences

$ 130 $ 755 $ 885 $ 84 $ 969

(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.

(1) Depreciation and amortization as presented excludes amortization of acquired intangible assets of $ 100 million and $ 106 million for the three months ended December 31, 2022 and 2021, respectively, and $ 305 million and $ 325 million for the nine months ended December 31, 2022 and 2021, respectively.

DXC TECHNOLOGY COMPANY

4 unchanged sentences

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 actuarial and settlement gains and losses, restructuring costs, transaction, separation, and integration-related costs and amortization of acquired intangible assets.

Three Months Ended Six Months Ended

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

These unallocated costs generally 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 Nine Months Ended

(in millions) December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021

Total profit for reportable segments $ 367 $ 417 $ 1,036 $ 1,236

10 unchanged sentences

(Losses) gains on dispositions ( 9 ) ( 4 ) ( 12 ) 343

Arbitration loss ( 9 ) — ( 9 ) —

Impairment losses ( 8 ) — ( 8 ) ( 10 )

1 unchanged sentence

Pension and OPEB actuarial and settlement losses — ( 7 ) ( 1 ) ( 7 )

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

Income before income taxes $ 102 $ 166 $ 278 $ 342

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 September 30, 2022 were as follows:

Minimum purchase commitments as of December 31, 2022 were as follows:

Fiscal year Minimum Purchase Commitment

33 unchanged sentences

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 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 November 2022, the Company entered into a settlement agreement with Oracle and HPE, resolving all matters in the litigation and the Company’s indemnification obligations to HPE.

In January 2023, the Court entered an order dismissing the case with prejudice.

The matter is now closed.

In re DXC Technology Company Securities Litigation:

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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.

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

In January 2023, the Court issued an order denying the Company’s motion to dismiss the second amended complaint.

The Court has scheduled a case management conference in February 2023 to discuss how the matter will progress.

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

1 unchanged sentence

The Company is under IRS examination in the U.S.

on its federal income tax returns for certain fiscal years and is in disagreement with the IRS on certain of our tax positions.

on its federal income tax returns for certain fiscal years and is in disagreement with the IRS on certain tax positions.

For more detail, see Note 14 – “Income Taxes” for further information.

62 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