What changed in this filing

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Item 1. Financial Statements

2024-02-02 compared with 2023-11-02 · 185 added, 153 removed, 820 unchanged (29% 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, 2023 and September 30, 2022 (unaudited)

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended September 30, 2023 and September 30, 2022 (unaudited)

Condensed Consolidated Balance Sheets as of September 30, 2023 and March 31, 2023 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2023 and September 30, 2022 (unaudited)

Condensed Consolidated Statements of Changes in Equity for the Three and Six Months Ended September 30, 2023 and September 30, 2022 (unaudited)

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2023 and December 31, 2022 (unaudited)

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended December 31, 2023 and December 31, 2022 (unaudited)

Condensed Consolidated Balance Sheets as of December 31, 2023 and March 31, 2023 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2023 and December 31, 2022 (unaudited)

Condensed Consolidated Statements of Changes in Equity for the Three and Nine Months Ended December 31, 2023 and December 31, 2022 (unaudited)

Notes to Condensed Consolidated Financial Statements (unaudited)

19 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

Three Months Ended Six Months Ended

(in millions, except per-share amounts) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Three Months Ended Nine Months Ended

(in millions, except per-share amounts) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022

Revenues $ 3,399 $ 3,566 $ 10,281 $ 10,839

5 unchanged sentences

Interest income ( 56 ) ( 41 ) ( 158 ) ( 89 )

Loss on disposition of businesses 2 32 7 3

(Gain) loss on disposition of businesses

( 103 ) 9 ( 96 ) 12

Other income, net ( 48 ) ( 98 ) ( 188 ) ( 270 )

3 unchanged sentences

Net income 140 61 281 192

net income attributable to non-controlling interest, net of tax — 1 6 2

net (loss) income attributable to non-controlling interest, net of tax

( 16 ) 2 ( 10 ) 4

Net income attributable to DXC common stockholders $ 156 $ 59 $ 291 $ 188

5 unchanged sentences

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

Three Months Ended Six Months Ended

(in millions) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Three Months Ended Nine Months Ended

(in millions) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022

$ 140 $ 61 $ 281 $ 192

Other comprehensive loss, net of taxes:

Other comprehensive income (loss), net of taxes:

Foreign currency translation adjustments, net of tax (1)

1 unchanged sentence

Cash flow hedges adjustments, net of tax (2)

( 4 ) ( 19 ) 3 ( 17 )

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

Prior service cost, net of tax (3)

( 7 ) — ( 7 ) —

Amortization of prior service cost, net of tax (4)

1 unchanged sentence

Pension and other post-retirement benefit plans, net of tax ( 8 ) ( 1 ) ( 10 ) ( 5 )

Other comprehensive loss, net of taxes

Other comprehensive income (loss), net of taxes

25 ( 10 ) 24 ( 353 )

5 unchanged sentences

$ 188 $ 47 $ 323 $ ( 163 )

(1) Tax expense related to foreign currency translation adjustments was $ 2 and $ 2 for the three and six months ended September 30, 2023, respectively, and $ 4 and $ 9 for the three and six months ended September 30, 2022, respectively.

(2) Tax expense (benefit) related to cash flow hedges adjustments was $ 1 and $ 2 for the three and six months ended September 30, 2023, respectively, and $ 0 and $( 1 ) for the three and six months ended September 30, 2022, respectively.

(3) Tax benefit related to amortization of prior service costs was $ 1 and $ 1 for the three and six months ended September 30, 2023, respectively, and $ 0 and $ 4 for the three and six months ended September 30, 2022, respectively.

(1) Tax (benefit) expense related to foreign currency translation adjustments was $( 3 ) and $( 1 ) for the three and nine months ended December 31, 2023, respectively, and $( 5 ) and $ 4 for the three and nine months ended December 31, 2022, respectively.

(2) Tax (benefit) expense related to cash flow hedges adjustments was $( 1 ) and $ 1 for the three and nine months ended December 31, 2023, respectively, and $( 5 ) and $( 6 ) for the three and nine months ended December 31, 2022, respectively.

(3) Tax expense related to prior service costs was $ 0 for the three and nine months ended December 31, 2023, respectively.

(4) Tax benefit related to amortization of prior service costs was $ 0 and $ 1 for the three and nine months ended December 31, 2023, respectively, and $ 0 and $ 4 for the three and nine months ended December 31, 2022, 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) September 30, 2023 March 31, 2023

(in millions, except per-share and share amounts) December 31, 2023 March 31, 2023

Current assets:

33 unchanged sentences

DXC stockholders’ equity:

Preferred stock, par value $ 0.01 per share, 1,000,000 shares authorized, none issued as of September 30, 2023 and March 31, 2023

Common stock, par value $ 0.01 per share, 750,000,000 shares authorized, 200,789,520 issued as of September 30, 2023 and 218,058,482 issued as of March 31, 2023

Preferred stock, par value $ 0.01 per share, 1,000,000 shares authorized, none issued as of December 31, 2023 and March 31, 2023

Common stock, par value $ 0.01 per share, 750,000,000 shares authorized, 189,468,954 issued as of December 31, 2023 and 218,058,482 issued as of March 31, 2023

Additional paid-in capital 7,827 9,121

1 unchanged sentence

Accumulated other comprehensive loss ( 742 ) ( 774 )

Treasury stock, at cost, 4,541,145 and 3,333,592 shares as of September 30, 2023 and March 31, 2023

Treasury stock, at cost, 4,544,643 and 3,333,592 shares as of December 31, 2023 and March 31, 2023

( 218 ) ( 187 )

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Six Months Ended

(in millions) September 30, 2023 September 30, 2022

Nine Months Ended

(in millions) December 31, 2023 December 31, 2022

Cash flows from operating activities:

6 unchanged sentences

Gain on dispositions ( 153 ) ( 43 )

Provision for losses on accounts receivable 2 —

Unrealized foreign currency exchange loss 48 80

2 unchanged sentences

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

Decrease (increase) in assets 223 ( 185 )

Decrease in assets 431 84

Decrease in operating lease liability ( 269 ) ( 311 )

12 unchanged sentences

Repayments of commercial paper ( 1,281 ) ( 1,312 )

Principal payments on long-term debt — ( 1 )

Payments on finance leases and borrowings for asset financing ( 333 ) ( 399 )

1 unchanged sentence

Taxes paid related to net share settlements of share-based compensation awards ( 34 ) ( 15 )

Repurchase of common stock and advance payment for accelerated share repurchase ( 505 ) ( 272 )

Repurchase of common stock ( 755 ) ( 325 )

Other financing activities, net ( 10 ) ( 6 )

9 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (unaudited)

Three Months Ended September 30, 2023

Three Months Ended December 31, 2023

(in millions, except

6 unchanged sentences

Shares Amount

Balance at June 30, 2023

Balance at September 30, 2023

200,790 $ 2 $ 8,280 $ ( 4,143 ) $ ( 774 ) $ ( 218 ) $ 3,147 $ 320 $ 3,467

Net Income 156 156 ( 16 ) 140

Other comprehensive loss

Other comprehensive income

32 32 ( 7 ) 25

Share-based compensation expense 26 26 26

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

Share repurchase program (2)

2 unchanged sentences

Non-controlling interest distributions and other 1 1 ( 38 ) ( 37 )

Balance at September 30, 2023

Balance at December 31, 2023

189,469 $ 2 $ 7,827 $ ( 3,762 ) $ ( 742 ) $ ( 218 ) $ 3,107 $ 259 $ 3,366

Three Months Ended September 30, 2022

Three Months Ended December 31, 2022

(in millions, except

5 unchanged sentences

Shares Amount

Balance at June 30, 2022

Balance at September 30, 2022

233,278 $ 2 $ 9,733 $ ( 4,211 ) $ ( 724 ) $ ( 185 ) $ 4,615 $ 321 $ 4,936

2 unchanged sentences

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

Balance at December 31, 2022

231,351 $ 2 $ 9,670 $ ( 4,123 ) $ ( 736 ) $ ( 186 ) $ 4,627 $ 325 $ 4,952

Six Months Ended September 30, 2023

Nine Months Ended December 31, 2023

(in millions, except

9 unchanged sentences

Net income 291 291 ( 10 ) 281

Other comprehensive loss

Other comprehensive income

32 32 ( 8 ) 24

5 unchanged sentences

Non-controlling interest distributions and other — ( 46 ) ( 46 )

Balance at September 30, 2023

Balance at December 31, 2023

189,469 $ 2 $ 7,827 $ ( 3,762 ) $ ( 742 ) $ ( 218 ) $ 3,107 $ 259 $ 3,366

Six Months Ended September 30, 2022

Nine Months Ended December 31, 2022

(in millions, except

14 unchanged sentences

Non-controlling interest distributions and other — — —

Balance at September 30, 2022

Balance at December 31, 2022

231,351 $ 2 $ 9,670 $ ( 4,123 ) $ ( 736 ) $ ( 186 ) $ 4,627 $ 325 $ 4,952

(1) 4,541,145 treasury shares as of September 30, 2023.

(1) 4,544,643 treasury shares as of December 31, 2023.

(2) On August 16, 2022, the U.S.

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

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

All intercompany transactions and balances have been eliminated.

4 unchanged sentences

These financial statements should therefore be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2023 (“fiscal 2023”).

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Use of Estimates

5 unchanged sentences

The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full fiscal year.

Recent Accounting Pronouncements

Recently issued Accounting Standards Updates (“ASUs”) effective after September 30, 2023 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)

Recent Accounting Pronouncements

During the three months ended December 31, 2023, the following Accounting Standards Update (“ASU”) were issued by the Financial Accounting Standards Board but have not yet been adopted by DXC:

Date Issued and ASU DXC Effective Date

Description Impact

November 2023

ASU 2023-07, “Improvements to Reportable Segment Disclosures”

This update requires disclosure of significant segment expenses used by the Chief Operating Decision Maker (“CODM”) to assess performance and allocate resources, disclose the title and position of the CODM and modifies other segment disclosures and the frequency thereof.

Early adoption of this update is permitted.

The Company is in the process of assessing the impacts and method of adoption.

This ASU will impact the Company’s segment disclosures, but not its consolidated financial statements.

December 2023

ASU 2023-09, “Improvements to Income Tax Disclosures”

The update requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures.

Early adoption of this update is permitted.

The Company is in the process of assessing the impacts and method of adoption.

This ASU will impact our income tax disclosures, but not its consolidated financial statements.

Other recently issued ASUs that have not yet been adopted are not expected to have a material effect on DXC’s consolidated financial statements.

Note 2 – Divestitures

During the first six months of fiscal 2024 and fiscal 2023, the Company sold insignificant businesses that resulted in a loss of $ 7 million and $ 3 million, respectively.

During the first nine months of fiscal 2024 and fiscal 2023, the Company sold insignificant businesses and made adjustments to estimated amounts from prior years’ dispositions that resulted in a gain of $ 96 million and loss of $ 12 million, respectively.

Note 3 – Earnings per Share

2 unchanged sentences

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, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Three Months Ended Nine Months Ended

(in millions, except per-share amounts) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022

Net income attributable to DXC common stockholders:

7 unchanged sentences

Diluted $ 0.81 $ 0.25 $ 1.43 $ 0.80

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Certain share-based equity awards were excluded from the computation of dilutive EPS because inclusion of these awards would have had an anti-dilutive effect.

The number of awards excluded were as follows:

Three Months Ended Six Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Three Months Ended Nine Months Ended

December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022

Stock Options 952,077 467,554 956,588 474,591

1 unchanged sentence

Performance Stock Units 1,104,305 1,086,398 37,610 850,623

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 4 – Receivables

1 unchanged sentence

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

(in millions) September 30, 2023 March 31, 2023

(in millions) December 31, 2023 March 31, 2023

Beginning balance $ 47 $ 55

3 unchanged sentences

Receivables Facility

The Company has an accounts receivable sales facility (as amended, restated, supplemented or otherwise modified as of September 30, 2023, the “Receivables Facility”) with certain unaffiliated financial institutions (the “Purchasers”) for the sale of commercial accounts receivable in the United States up to a maximum amount of $ 400 million.

The Company has an accounts receivable sales facility (as amended, restated, supplemented or otherwise modified as of December 31, 2023, the “Receivables Facility”) with certain unaffiliated financial institutions (the “Purchasers”) for the sale of commercial accounts receivable in the United States up to a maximum amount of $ 400 million.

The Receivables Facility was amended on July 28, 2023 extending the termination date to July 26, 2024.

As of September 30, 2023, the total availability under the Receivables Facility was $ 384 million and the amount sold to the Purchasers was $ 378 million, which was derecognized from the Company’s balance sheet.

As of September 30, 2023, the Company recorded an asset of $ 6 million within accounts receivable because the amount of cash proceeds received by the Company under the Receivables Facility was less than the total availability.

As of December 31, 2023, the total availability under the Receivables Facility was $ 373 million and the amount sold to the Purchasers was $ 374 million, which was derecognized from the Company’s balance sheet.

As of December 31, 2023, the Company recorded a liability of $ 1 million 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.

1 unchanged sentence

The Company has operating and finance leases for data centers, corporate offices, and certain equipment.

Its leases have remaining lease terms of one to ten years , some of which include options to extend the leases for up to ten years , and some of which include options to terminate the leases within one to three years .

Its leases have remaining lease terms of one to nine years , some of which include options to extend the leases for up to ten years , and some of which include options to terminate the leases within one to three years .

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Operating Leases

The components of operating lease expense were as follows:

Three Months Ended Six Months Ended

(in millions) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Three Months Ended Nine Months Ended

(in millions) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022

Operating lease cost $ 88 $ 97 $ 269 $ 311

3 unchanged sentences

Total operating costs $ 105 $ 118 $ 323 $ 380

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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, 2023 September 30, 2022

Nine Months Ended

(in millions) December 31, 2023 December 31, 2022

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 $ 557 million and $ 521 million in lease modifications and terminations during the first six months of fiscal 2024 and 2023, respectively.

(1) Net of $ 691 million and $ 911 million in lease modifications and terminations during the first nine months of fiscal 2024 and 2023, 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, 2023 March 31, 2023

(in millions) Balance Sheet Line Item December 31, 2023 March 31, 2023

ROU operating lease assets Operating right-of-use assets, net $ 784 $ 909

2 unchanged sentences

Total operating lease liabilities $ 837 $ 965

The weighted-average operating lease term was 4.0 years and 3.9 years as of September 30, 2023 and March 31, 2023, respectively.

The weighted-average operating lease discount rate was 4.4 % and 3.9 % as of September 30, 2023 and March 31, 2023, respectively.

The following maturity analysis presents expected undiscounted cash payments for operating leases as of September 30, 2023:

The weighted-average operating lease term was 3.8 years and 3.9 years as of December 31, 2023 and March 31, 2023, respectively.

The weighted-average operating lease discount rate was 4.5 % and 3.9 % as of December 31, 2023 and March 31, 2023, respectively.

The following maturity analysis presents expected undiscounted cash payments for operating leases as of December 31, 2023:

(in millions)

9 unchanged sentences

The components of finance lease expense were as follows:

Three Months Ended Six Months Ended

(in millions) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Three Months Ended Nine Months Ended

(in millions) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022

Amortization of right-of-use assets $ 31 $ 50 $ 110 $ 166

2 unchanged sentences

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

(in millions) Six Months Ended September 30, 2023 Six Months Ended September 30, 2022

(in millions) Nine Months Ended December 31, 2023

Nine Months Ended December 31, 2022

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 September 30, 2023 March 31, 2023

(in millions) Balance Sheet Line Item December 31, 2023 March 31, 2023

ROU finance lease assets Property and Equipment, net $ 292 $ 424

3 unchanged sentences

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

The weighted-average finance lease term was 2.9 years as of September 30, 2023 and March 31, 2023, respectively.

The weighted-average finance lease discount rate was 3.8 % and 3.4 % as of September 30, 2023 and March 31, 2023, respectively.

The weighted-average finance lease term was 2.9 years as of December 31, 2023 and March 31, 2023, respectively.

The weighted-average finance lease discount rate was 4.1 % and 3.4 % as of December 31, 2023 and March 31, 2023, 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, 2023:

The following maturity analysis presents expected undiscounted cash payments for finance leases as of December 31, 2023:

(in millions)

12 unchanged sentences

Fair Value Hierarchy

(in millions) September 30, 2023

(in millions) December 31, 2023

Fair Value Level 1 Level 2 Level 3

13 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 $ 51 million and $ 52 million as of September 30, 2023 and March 31, 2023, respectively.

(2) Other securities include available-for-sale equity security investments with Level 2 inputs that have a cost basis of $ 53 million and $ 52 million as of December 31, 2023 and March 31, 2023, respectively.

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

(3) During the first six months of fiscal 2024, the Company completed the payment for its contingent consideration obligation.

(3) During the first nine months of fiscal 2024, the Company completed the payment for its contingent consideration obligation.

DXC TECHNOLOGY COMPANY

8 unchanged sentences

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

The notional amounts of foreign currency forward contracts designated as cash flow hedges as of September 30, 2023 and March 31, 2023 were $ 889 million and $ 842 million, respectively.

As of September 30, 2023, the related forecasted transactions extend through September 2025.

During the three and six months ended September 30, 2023 and September 30, 2022, respectively, the Company had no cash flow hedges for which it was probable that the hedged transaction would not occur.

The notional amounts of foreign currency forward contracts designated as cash flow hedges as of December 31, 2023 and March 31, 2023 were $ 893 million and $ 842 million, respectively.

As of December 31, 2023, the related forecasted transactions extend through January 2026.

During the three and nine months ended December 31, 2023 and December 31, 2022, respectively, the Company had no cash flow hedges for which it was probable that the hedged transaction would not occur.

See Note 15 - “Stockholders’ Equity” for changes in accumulated other comprehensive loss, net of taxes, related to the Company’s derivatives designated for hedge accounting.

As of September 30, 2023, $ 1 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.

As of December 31, 2023, $ 2 million 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.

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 September 30, 2023 and March 31, 2023 were $ 2.4 billion and $ 2.5 billion, respectively.

The net notional amounts of the foreign currency forward contracts outstanding as of December 31, 2023 and March 31, 2023 were $ 2.0 billion and $ 2.5 billion, respectively.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The following table presents the foreign currency (gain) loss to Other income, net:

For the Three Months Ended For the Six Months Ended

(in millions) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

The following table presents the foreign currency loss (gain) to Other income, net:

For the Three Months Ended For the Nine Months Ended

(in millions) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022

Foreign currency remeasurement (1)

2 unchanged sentences

22 52 ( 8 ) ( 27 )

Total - Foreign currency gain $ ( 1 ) $ ( 1 ) $ ( 9 ) $ ( 3 )

Total - Foreign currency loss (gain)

$ 5 $ ( 8 ) $ ( 4 ) $ ( 11 )

(1) Movements from exchange rates on the Company’s foreign currency-denominated assets and liabilities.

4 unchanged sentences

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

(in millions) Balance Sheet Line Item September 30, 2023 March 31, 2023

(in millions) Balance Sheet Line Item December 31, 2023 March 31, 2023

Derivatives designated for hedge accounting:

9 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 September 30, 2023, there were six counterparties with concentration of credit risk, and based on gross fair value, the maximum amount of loss that the Company could incur is $ 21 million.

With respect to its foreign currency derivatives, as of December 31, 2023, there were three counterparties with concentration of credit risk, and based on gross fair value, the maximum amount of loss that the Company could incur is $ 3 million.

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

13 unchanged sentences

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

As of September 30, 2023 and March 31, 2023, DXC had $ 265 million and $ 272 million, respectively, of foreign currency-denominated debt designated as hedges of net investments in non-U.S.

As of December 31, 2023 and March 31, 2023, DXC had $ 276 million and $ 272 million, 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, 2023, the pre-tax gain on foreign currency-denominated debt designated for hedge accounting recognized in other comprehensive loss was $ 8 million and $ 7 million, respectively.

For the three and nine months ended December 31, 2023, the pre-tax loss on foreign currency-denominated debt designated for hedge accounting recognized in other comprehensive loss was $ 11 million and $ 5 million, respectively.

DXC TECHNOLOGY COMPANY

2 unchanged sentences

Intangible assets consisted of the following:

As of September 30, 2023 As of March 31, 2023

As of December 31, 2023

As of March 31, 2023

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

6 unchanged sentences

The components of amortization expense were as follows:

Three Months Ended Six Months Ended

(in millions) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Three Months Ended Nine Months Ended

(in millions) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022

Intangible asset amortization $ 192 $ 201 $ 570 $ 598

2 unchanged sentences

Total amortization expense $ 245 $ 252 $ 725 $ 754

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

Estimated future amortization related to intangible assets as of September 30, 2023 is as follows:

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

Estimated future amortization related to intangible assets as of December 31, 2023 is as follows:

Fiscal Year (in millions)

5 unchanged sentences

Note 9 – Goodwill

The following table summarizes the changes in the carrying amount of goodwill, by segment, as of September 30, 2023.

The following table summarizes the changes in the carrying amount of goodwill, by segment, as of December 31, 2023.

(in millions) GBS GIS Total

Balance as of March 31, 2023, net $ 539 $ — $ 539

Divestitures ( 3 ) — ( 3 )

Foreign currency translation 5 — 5

Balance as of September 30, 2023, net $ 530 $ — $ 530

Balance as of December 31, 2023, net

$ 541 $ — $ 541

Goodwill, gross 5,031 5,066 10,097

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

Balance as of September 30, 2023, net $ 530 $ — $ 530

Balance as of December 31, 2023, net

$ 541 $ — $ 541

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, 2023, it remained more likely than not that the fair value of the GBS reporting unit exceeds its carrying amount.

As of September 30, 2023, 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, 2023.

DXC TECHNOLOGY COMPANY

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Long-term debt, net of current maturities $ 3,880 $ 3,900

(1) The carrying amounts of the senior notes as of September 30, 2023 and March 31, 2023, include the remaining principal outstanding of $ 3,468 million and $ 3,523 million, respectively, net of total unamortized debt discounts and premiums, and deferred debt issuance costs of $ 19 million and $ 22 million, respectively.

(1) The carrying amounts of the senior notes as of December 31, 2023 and March 31, 2023, include the remaining principal outstanding of $ 3,559 million and $ 3,523 million, respectively, net of total unamortized debt discounts and premiums, and deferred debt issuance costs of $ 18 million and $ 22 million, respectively.

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

During the second quarter of fiscal 2023, the Company entered into a $ 500 million term loan credit agreement (as amended, the “USD Term Loan”) with certain unaffiliated financial institutions.

The USD Term Loan was required to be drawn down by September 1, 2023.

The Company did not draw on the USD Term Loan and the facility has been terminated during the second quarter of fiscal 2024.

Fair Value of Debt

The estimated fair value of the Company’s long-term debt, excluding finance lease liabilities, was $ 3.1 billion and $ 3.3 billion as of September 30, 2023 and March 31, 2023, respectively, compared with carrying value of $ 3.7 billion and $ 3.8 billion as of September 30, 2023 and March 31, 2023, respectively.

The estimated fair value of the Company’s long-term debt, excluding finance lease liabilities, was $ 3.4 billion and $ 3.3 billion as of December 31, 2023 and March 31, 2023, respectively, compared with carrying value of $ 3.7 billion and $ 3.8 billion as of December 31, 2023 and March 31, 2023, 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, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Three Months Ended Nine Months Ended

(in millions) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022

United States $ 967 $ 1,054 $ 2,971 $ 3,278

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Remaining Performance Obligations

As of September 30, 2023, approximately $ 18.5 billion of revenue is expected to be recognized from remaining performance obligations.

As of December 31, 2023, approximately $ 18.5 billion of revenue is expected to be recognized from remaining performance obligations.

We expect to recognize revenue on approximately 14 % of these remaining performance obligations in fiscal 2024, 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, 2023 March 31, 2023

(in millions) December 31, 2023 March 31, 2023

Trade receivables, net $ 2,090 $ 2,269

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Change in contract liabilities were as follows:

Six Months Ended

(in millions) September 30, 2023 September 30, 2022

Nine Months Ended

(in millions) December 31, 2023 December 31, 2022

Balance, beginning of period $ 1,842 $ 1,915

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

(in millions) September 30, 2023 March 31, 2023

(in millions) December 31, 2023 March 31, 2023

Accrued expenses and other current liabilities $ 53 $ 105

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Fiscal 2024 Plan

During fiscal 2024, management approved global cost savings initiatives designed to better align the Company’s facilities and data centers (the “Fiscal 2024 Plan”).

During fiscal 2024, management approved global cost savings initiatives designed to better align the Company’s workforce, facilities and data centers (the “Fiscal 2024 Plan”).

Restructuring Liability Reconciliations by Plan

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Cash Paid Other (2)

Restructuring Liability as of September 30, 2023

Restructuring Liability as of December 31, 2023

Fiscal 2024 Plan

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(2) Foreign currency translation adjustments.

Included in restructuring costs for the six months ended September 30, 2023 is $ 14 million related to amortization of the right-of-use asset and interest expense for leased facilities that have been vacated but are being actively marketed for sublease or we are in negotiations with the landlord to potentially terminate or modify those leases.

Included in restructuring costs for the nine months ended December 31, 2023 is $ 20 million related to amortization of the right-of-use asset and interest expense for leased facilities that have been 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, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Three Months Ended Nine Months Ended

(in millions) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022

Service cost $ 11 $ 18 $ 41 $ 55

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Note 14 – Income Taxes

The Company’s effective tax rate (“ETR”) was 22.7 % and 48.1 % for the three months ended September 30, 2023 and September 30, 2022, respectively, and 31.6 % and 25.6 % for the six months ended September 30, 2023 and September 30, 2022, respectively.

For the three and six months ended September 30, 2023, the primary drivers of the ETR were the global mix of income, U.S.

The Company’s effective tax rate (“ETR”) was 34.0 % and 40.2 % for the three months ended December 31, 2023 and December 31, 2022, respectively, and 32.8 % and 30.9 % for the nine months ended December 31, 2023 and December 31, 2022, respectively.

For the three months ended December 31, 2023, the primary drivers of the ETR were the global mix of income, U.S.

tax on foreign income, and the foreign tax credit.

For the nine months ended December 31, 2023, the primary drivers of the ETR were the global mix of income, U.S.

tax on foreign income, a decrease in valuation allowances on deferred tax assets, and the foreign tax credit.

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 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.

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

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We have received notices of deficiency with respect to fiscal 2009, 2010, 2011 and 2013 and have timely filed petitions with the U.S.

During the first six months of fiscal 2024, some of these cases were dismissed, but the dismissals were procedural in nature only and do not impact the Company’s potential liability for the aforementioned fiscal years.

During the first nine months of fiscal 2024, some of these cases were dismissed, but the dismissals were procedural in nature only and do not impact the Company’s potential liability for the aforementioned fiscal years.

We do not expect the U.S.

Tax Court matters to be resolved in the next 12 months.

During the third quarter of fiscal 2024, the Company determined there were omissions on previously filed tax returns related to gain recognition agreements and certain related tax forms and disclosures.

The Company notified the IRS in December of 2023 and filed for relief under Treas.

1.367(a)-8(p) in January 2024 to correct the issue.

The Company’s fiscal years 2009, 2010, and 2013 are in the U.S.

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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 for fiscal and tax return years 2014 through 2020 to September 30, 2024.

The Company expects to reach resolution for fiscal and tax return years 2009 through 2020 no earlier than fiscal 2025.

The Company has agreed to extend the statute of limitations for fiscal and tax return years 2014 through 2021 to December 31, 2025.

The Company expects to reach resolution for fiscal and tax return years 2009 through 2021 no earlier than fiscal 2026, except fiscal year 2012 for which it is 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 September 30, 2023, the Company’s liability for uncertain tax positions increased by $ 2 million (excluding interest and penalties and related tax attributes) primarily due to the benefit of U.S.

research and development income tax credits.

For the three months ended December 31, 2023, the Company’s liability for uncertain tax positions decreased by $ 46 million (excluding interest and penalties and related tax attributes) primarily due to decreases in uncertain tax positions recorded against the foreign tax credit and capitalized research and experimental expenditures.

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 $ 13 million.

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Share Repurchases

The details of shares repurchased during the six months ended September 30, 2023 and September 30, 2022 are shown below:

The details of shares repurchased during the nine months ended December 31, 2023 and December 31, 2022 are shown below:

Fiscal 2024 Fiscal 2023

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2nd Quarter 9,958,585 $ 21.50 214 — $ — —

11,340,699 $ 22.18 $ 252 2,063,645 $ 27.41 $ 57

Total 32,274,927 $ 23.11 $ 746 10,914,557 $ 29.59 $ 323

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Other comprehensive income before reclassifications

39 ( 3 ) — 36

Amounts reclassified from accumulated other comprehensive loss — 6 ( 10 ) ( 4 )

Balance at September 30, 2023 $ ( 990 ) $ — $ 216 $ ( 774 )

Balance at December 31, 2023

$ ( 946 ) $ ( 4 ) $ 208 $ ( 742 )

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

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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 )

Note 16 – Stock Incentive Plans

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Canceled/Forfeited ( 984,638 ) $ 41.39 — $ —

Outstanding as of September 30, 2023 7,916,903 $ 35.29 202,298 $ 27.13

Outstanding as of December 31, 2023

8,172,996 $ 34.45 202,298 $ 27.13

Share-Based Compensation

Three Months Ended Six Months Ended

(in millions) September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Three Months Ended Nine Months Ended

(in millions) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022

Total share-based compensation cost $ 28 $ 26 $ 75 $ 81

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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, 2023 September 30, 2022

Nine Months Ended

(in millions) December 31, 2023 December 31, 2022

Cash paid for:

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Shares repurchased but not settled in cash (3)

(1) Income tax refunds were $ 18 million and $ 30 million for the six months ended September 30, 2023 and September 30, 2022, respectively.

(2) Net of $ 557 million and $ 521 million in lease modifications and terminations during the first six months of fiscal 2024 and 2023, respectively.

(1) Income tax refunds were $ 26 million and $ 56 million for the nine months ended December 31, 2023 and December 31, 2022, respectively.

(2) Net of $ 691 million and $ 911 million in lease modifications and terminations during the first nine months of fiscal 2024 and 2023, respectively.

(3) On August 16, 2022, the U.S.

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

Three Months Ended September 30, 2023

Three Months Ended December 31, 2023

Revenues $ 1,696 $ 1,703 $ 3,399 $ — $ 3,399

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$ 45 $ 191 $ 236 $ 26 $ 262

Three Months Ended September 30, 2022

Three Months Ended December 31, 2022

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

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

Six Months Ended September 30, 2023

Nine Months Ended December 31, 2023

Revenues $ 5,108 $ 5,173 $ 10,281 $ — $ 10,281

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$ 139 $ 572 $ 711 $ 78 $ 789

Six Months Ended September 30, 2022

Nine Months Ended December 31, 2022

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

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$ 123 $ 643 $ 766 $ 73 $ 839

(1) Depreciation and amortization as presented excludes amortization of acquired intangible assets of $ 89 million and $ 101 million for the three months ended September 30, 2023 and 2022, respectively, and $ 178 million and $ 205 million for the six months ended September 30, 2023 and 2022, respectively.

(1) Depreciation and amortization as presented excludes amortization of acquired intangible assets of $ 88 million and $ 100 million for the three months ended December 31, 2023 and 2022, respectively, and $ 266 million and $ 305 million for the nine months ended December 31, 2023 and 2022, respectively.

DXC TECHNOLOGY COMPANY

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These unallocated costs generally include certain corporate function costs, stock-based compensation expense, pension and other post-retirement benefit (“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, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Three Months Ended Nine Months Ended

(in millions) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022

Total profit for reportable segments $ 323 $ 367 $ 920 $ 1,036

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104 ( 9 ) 132 ( 12 )

Arbitration loss — ( 9 ) — ( 9 )

Impairment losses — ( 8 ) ( 5 ) ( 8 )

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Note 19 – Commitments and Contingencies

Minimum purchase commitments as of September 30, 2023 were as follows:

Minimum purchase commitments as of December 31, 2023 were as follows:

Fiscal year Minimum Purchase Commitment

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In March 2023, the Court entered a scheduling order setting a trial date for September 2025.

A hearing on Plaintiffs’ motion for class certification is scheduled for January 2024.

A hearing on Plaintiffs’ motion for class certification is scheduled for March 2024.

The case is otherwise in discovery.

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on its federal income tax returns for certain fiscal years and is in disagreement with the IRS on certain tax positions, which are currently being contested in the U.S.

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

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

OFAC Matter :

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Department of Commerce, Bureau of Industry and Security (“BIS”) regarding potential export control violations in connection with its exit from the Russian market.

The Company’s review of potential sanctions violations is ongoing, and the Company may make further disclosures to relevant agencies as its review continues.

In August 2023, the Company submitted its Final Report of Voluntary Self-Disclosure to OFAC, and in November 2023, the Company submitted its Final Report of Voluntary Self-Disclosure to BIS.

The matters remain under review by OFAC and BIS.

TCS Litigation :

In April 2019, the Company filed a lawsuit against Tata Consultancy Services Limited and Tata America International Corporation (collectively “TCS”) alleging misappropriation of certain of the Company’s trade secrets.

In November 2023, a trial was held in the United States District Court for the Northern District of Texas, and a jury found TCS liable for misappropriating the Company’s trade secrets and awarded the Company $ 70 million in compensatory damages and $ 140 million in punitive damages, for a total award of $ 210 million.

The jury verdict is considered advisory and remains subject to the court’s review.

A final verdict is expected to be entered after the parties complete post-trial briefing, which the Company estimates will conclude in the second quarter of fiscal 2025.

The Company has not recognized any portion of the award in its financial statements and will continue to monitor the progress of the case.

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.

52 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