What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-08-09 compared with 2024-02-02 · 222 added, 392 removed, 613 unchanged (50% of the section changed)

1 unchanged sentence

Index to Condensed Consolidated Financial Statements

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)

Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2024 and June 30, 2023 (unaudited)

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended June 30, 2024 and June 30, 2023 (unaudited)

Condensed Consolidated Balance Sheets as of June 30, 2024 and March 31, 2024 (unaudited)

Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2024, and June 30, 2023 (unaudited)

Condensed Consolidated Statements of Changes in Equity for the Three Months Ended June 30, 2024 and June 30, 2023 (unaudited)

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1–Summary of Significant Accounting Policies

Note 2–Divestitures

Note 2 –Earnings Per Share

1 unchanged sentence

Note 4 –Leases

Note 6–Fair Value

Note 5 –Derivative Instruments

12 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

Three Months Ended Nine Months Ended

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

Three Months Ended

(in millions, except per-share amounts) June 30, 2024 June 30, 2023

Revenues $ 3,236 $ 3,446

5 unchanged sentences

Interest income ( 51 ) ( 49 )

(Gain) loss on disposition of businesses

( 103 ) 9 ( 96 ) 12

Loss on disposition of businesses

Other income, net ( 45 ) ( 64 )

4 unchanged sentences

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

( 16 ) 2 ( 10 ) 4

Net income attributable to DXC common stockholders $ 26 $ 36

5 unchanged sentences

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

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 income (loss), net of taxes:

Foreign currency translation adjustments, net of tax (1)

37 10 31 ( 331 )

Cash flow hedges adjustments, net of tax (2)

( 4 ) ( 19 ) 3 ( 17 )

Three Months Ended

(in millions)

June 30, 2024 June 30, 2023

Net income $ 25 $ 42

Other comprehensive income, net of taxes:

Foreign currency translation adjustments, net of tax expense of $ 1 and $ 0

Cash flow hedges adjustments, net of tax expense of $ 1 and $ 1

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 ) ( 1 ) ( 3 ) ( 5 )

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

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

Other comprehensive income (loss), net of taxes

25 ( 10 ) 24 ( 353 )

Comprehensive income (loss)

165 51 305 ( 161 )

Other comprehensive income, net of taxes

Comprehensive income

comprehensive (loss) income attributable to non-controlling interest

( 23 ) 4 ( 18 ) 2

Comprehensive income (loss) attributable to DXC common stockholders

$ 188 $ 47 $ 323 $ ( 163 )

(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.

Comprehensive income attributable to DXC common stockholders

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) December 31, 2023 March 31, 2023

(in millions, except per-share and share amounts) June 30, 2024 March 31, 2024

Current assets:

3 unchanged sentences

Other current assets 109 146

Assets held for sale — 5

Total current assets 4,963 5,135

12 unchanged sentences

Accrued payroll and related costs 595 558

Current operating lease liabilities 295 317

Operating lease liabilities

Accrued expenses and other current liabilities 1,261 1,437

1 unchanged sentence

Income taxes payable 160 134

Liabilities related to assets held for sale — 9

Total current liabilities 4,093 4,394

4 unchanged sentences

Other long-term liabilities 789 869

Liabilities related to assets held for sale - non-current — 3

Total Liabilities 10,250 10,805

1 unchanged sentence

DXC stockholders’ equity:

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

Preferred stock, par value $ 0.01 per share;

authorized 1,000,000 shares;

none issued as of June 30, 2024 and March 31, 2024

Common stock, par value $ 0.01 per share;

authorized 750,000,000 shares;

issued 186,267,057 as of June 30, 2024 and 183,430,878 as of March 31, 2024

Additional paid-in capital 7,622 7,599

1 unchanged sentence

Accumulated other comprehensive loss ( 727 ) ( 732 )

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

Treasury stock, at cost, 5,491,373 and 4,591,340 shares as of June 30, 2024 and March 31, 2024

( 233 ) ( 219 )

6 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Nine Months Ended

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

Three Months Ended

(in millions)

June 30, 2024 June 30, 2023

Cash flows from operating activities:

6 unchanged sentences

Gain on dispositions ( 1 ) ( 9 )

Provision for losses on accounts receivable 7 2

Unrealized foreign currency exchange loss — 23

12 unchanged sentences

Proceeds from sale of assets 5 11

Proceeds from short-term investing — ( 3 )

Other investing activities, net — 2

4 unchanged sentences

Payments on finance leases and borrowings for asset financing ( 91 ) ( 131 )

Proceeds from stock options and other common stock transactions — 1

Taxes paid related to net share settlements of share-based compensation awards ( 17 ) ( 33 )

1 unchanged sentence

Other financing activities, net — ( 2 )

Net cash used in financing activities ( 877 ) ( 693 )

Net cash provided by (used in) financing activities 41 ( 210 )

Effect of exchange rate changes on cash and cash equivalents 2 —

Net decrease in cash and cash equivalents including cash classified within current assets held for sale ( 167 ) ( 87 )

Cash classified within current assets held for sale — ( 494 )

Net decrease in cash and cash equivalents ( 167 ) ( 581 )

Net increase (decrease) in cash and cash equivalents 93 ( 282 )

Cash and cash equivalents at beginning of year 1,224 1,858

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (unaudited)

Three Months Ended December 31, 2023

(in millions, except

shares in thousands) Common Stock Additional

Paid-in Capital Accumulated Deficit Accumulated

Comprehensive Loss

Treasury Stock (1)

DXC Equity Non-

Controlling Interest Total Equity

Shares Amount

Balance at 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 income

32 32 ( 7 ) 25

Share-based compensation expense 26 26 26

Share repurchase program (2)

( 11,341 ) ( 479 ) 224 ( 255 ) ( 255 )

Stock option exercises and other common stock transactions 20 — —

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

Balance at December 31, 2023

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

Three Months Ended December 31, 2022

(in millions, except

shares in thousands) Common Stock Additional

Paid-in Capital Accumulated Deficit Accumulated

Comprehensive Loss Treasury Stock Total

DXC Equity Non-

Controlling Interest Total Equity

Shares Amount

Balance at September 30, 2022

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

Other comprehensive loss ( 12 ) ( 12 ) 2 ( 10 )

Share-based compensation expense 24 24 24

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 December 31, 2022

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

Nine Months Ended December 31, 2023

Three Months Ended June 30, 2024

(in millions, except

shares in thousands) Common Stock Additional

Paid-in Capital Accumulated Deficit Accumulated

Paid-in Capital

Accumulated Deficit Accumulated

Comprehensive Loss

Treasury Stock (1)

DXC Equity Non-

Controlling Interest Total Equity

Controlling Interest

Shares Amount

3 unchanged sentences

Other comprehensive income 5 5 5

32 32 ( 8 ) 24

Share-based compensation expense 23 23 23

Acquisition of treasury stock ( 14 ) ( 14 ) ( 14 )

Share repurchase program (2)

( 32,275 ) ( 1,365 ) 612 ( 753 ) ( 753 )

Stock option exercises and other common stock transactions 2,836 — —

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

Balance at December 31, 2023

Balance at June 30, 2024

186,267 $ 2 $ 7,622 $ ( 3,814 ) $ ( 727 ) $ ( 233 ) $ 2,850 $ 253 $ 3,103

Nine Months Ended December 31, 2022

Three Months Ended June 30, 2023

(in millions, except

shares in thousands) Common Stock Additional

Paid-in Capital Accumulated Deficit Accumulated

Paid-in Capital

Accumulated Deficit Accumulated

Comprehensive Loss Treasury Stock Total

DXC Equity Non-

Controlling Interest Total Equity

Controlling Interest

Shares Amount

2 unchanged sentences

Net income 36 36 6 42

Other comprehensive loss ( 351 ) ( 351 ) ( 2 ) ( 353 )

Other comprehensive income

Share-based compensation expense 22 22 22

1 unchanged sentence

Share repurchase program (2)

( 10,976 ) ( 466 ) 184 ( 282 ) ( 282 )

Stock option exercises and other common stock transactions 3,502 — —

Non-controlling interest distributions and other — ( 4 ) ( 4 )

Balance at December 31, 2022

Balance at June 30, 2023

210,584 $ 2 $ 8,677 $ ( 4,445 ) $ ( 739 ) $ ( 217 ) $ 3,278 $ 325 $ 3,603

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

(1) 5,491,373 treasury shares as of June 30, 2024.

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

government enacted the Inflation Reduction Act (the "IRA") into law.

The IRA imposes a 1% excise tax on

share repurchases completed after December 31, 2022.

We reflect the excise tax within equity as part of the repurchase of the common

The IRA imposes a 1% excise tax on share repurchases completed after December 31, 2022.

We reflect the excise tax within equity as part of the repurchase of the common stock.

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

3 unchanged sentences

DXC Technology Company (“DXC,” the “Company,” “we,” “us,” or “our”) helps global companies run their mission critical systems and operations while modernizing IT, optimizing data architectures, and ensuring security and scalability across public, private and hybrid clouds.

The world’s largest companies and public sector organizations trust DXC to deploy services to drive new levels of performance, competitiveness and customer experience across their IT estates.

Many of the world’s largest companies and public sector organizations trust DXC to deploy services to drive new levels of performance, competitiveness, and customer experience across their IT estates.

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 Income (Loss) as the “statements of comprehensive income (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 Income (Loss) as the “statements of comprehensive income,” (iv) the Condensed Consolidated Balance Sheets as the “balance sheets,” and (v) the Condensed Consolidated Statements of Cash Flows as the “statements of cash flows.” In addition, references are made throughout to the numbered Notes to the Condensed Consolidated Financial Statements (“Notes”) in this Quarterly Report on Form 10-Q.

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

2 unchanged sentences

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

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

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

All intercompany transactions and balances have been eliminated.

Certain amounts reported in the previous year have been reclassified to conform to the current year presentation.

The financial statements of the Company have been prepared in accordance with the rules and regulations of the U.S.

2 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, 2024 (“fiscal 2024”).

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.

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:

During fiscal 2024, the following Accounting Standards Updates (“ASUs”) were issued by the Financial Accounting Standards Board but have not yet been adopted by DXC:

Date Issued and ASU DXC Effective Date

2 unchanged sentences

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.

Fiscal 2025 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.

7 unchanged sentences

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 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.

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

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 2 – Earnings per Share

2 unchanged sentences

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

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:

$ 156 $ 59 $ 291 $ 188

Three Months Ended

(in millions, except per-share amounts)

June 30, 2024 June 30, 2023

Net income attributable to DXC common shareholders:

Common share information:

5 unchanged sentences

Diluted $ 0.14 $ 0.17

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 Nine Months Ended

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

Three Months Ended

June 30, 2024 June 30, 2023

Stock Options 927,909 918,608

4 unchanged sentences

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

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

(in millions) June 30, 2024 March 31, 2024

Beginning balance $ 35 $ 47

3 unchanged sentences

Receivables Facility

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 Company has an accounts receivable sales facility (as amended, restated, supplemented or otherwise modified, 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 26, 2024, extending the termination date to July 25, 2025.

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.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

As of June 30, 2024, the total availability under the Receivables Facility was $ 400 million and the amount sold to the Purchasers was $ 381 million, which was derecognized from the Company’s balance sheet.

As of June 30, 2024, the Company recorded a $ 19 million asset within accounts receivable because the amount of cash proceeds received by the Company under the Receivables Facility was less 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 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)

Its leases have remaining lease terms of one to 10 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 .

Operating Leases

The components of operating lease expense were as follows:

Three Months Ended Nine Months Ended

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

(in millions) Three Months Ended June 30, 2024

Three Months Ended June 30, 2023

Operating lease cost $ 80 $ 90

4 unchanged sentences

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

Nine Months Ended

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

(in millions) Three Months Ended June 30, 2024

Three Months Ended June 30, 2023

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

(1) Net of $ 237 million and $ 230 million in lease modifications and terminations for the three months ended June 30, 2024 and June 30, 2023, respectively.

See Note 15 – “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 December 31, 2023 March 31, 2023

(in millions) Balance Sheet Line Item June 30, 2024 March 31, 2024

ROU operating lease assets Operating right-of-use assets, net $ 656 $ 731

2 unchanged sentences

Total operating lease liabilities $ 695 $ 779

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:

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

The weighted-average operating lease term was 3.7 years and 3.9 years as of June 30, 2024 and March 31, 2024, respectively.

The weighted-average operating lease discount rate was 4.7 % and 4.6 % as of June 30, 2024 and March 31, 2024, respectively.

The following maturity analysis presents expected undiscounted cash payments for operating leases as of June 30, 2024:

(in millions)

5 unchanged sentences

Total operating lease liabilities

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Finance Leases

The components of finance lease expense were as follows:

Three Months Ended Nine Months Ended

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

(in millions) Three Months Ended June 30, 2024

Three Months Ended June 30, 2023

Amortization of right-of-use assets $ 25 $ 42

Interest on lease liabilities 4 4

Total finance lease expense $ 35 $ 54 $ 121 $ 179

Total finance lease cost $ 29 $ 46

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

(in millions) Nine Months Ended December 31, 2023

Nine Months Ended December 31, 2022

(in millions) Three Months Ended June 30, 2024

Three Months Ended June 30, 2023

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 December 31, 2023 March 31, 2023

(in millions) Balance Sheet Line Item June 30, 2024 March 31, 2024

ROU finance lease assets Property and Equipment, net $ 233 $ 264

3 unchanged sentences

(1) See Note 8 – “Debt” for further information on finance lease liabilities.

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 December 31, 2023:

The weighted-average finance lease term was 2.8 years and 2.9 years as of June 30, 2024 and March 31, 2024, respectively.

The weighted-average finance lease discount rate was 4.5 % and 4.3 % as of June 30, 2024 and March 31, 2024, respectively.

The following maturity analysis presents expected undiscounted cash payments for finance leases as of June 30, 2024:

(in millions)

5 unchanged sentences

Total finance lease liabilities

Note 6 – Fair Value

Fair Value Measurements on a Recurring Basis

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

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

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

There were no transfers between any of the levels during the periods presented.

Fair Value Hierarchy

(in millions) December 31, 2023

Fair Value Level 1 Level 2 Level 3

Money market funds and money market deposit accounts $ 25 $ 25 $ — $ —

Time deposits (1)

Other securities (2)

Total assets $ 253 $ 202 $ 49 $ 2

March 31, 2023

Fair Value Level 1 Level 2 Level 3

Money market funds and money market deposit accounts $ 75 $ 75 $ — $ —

Time deposits (1)

Other securities (2)

Total assets $ 160 $ 112 $ 46 $ 2

Contingent consideration (3)

$ 2 $ — $ — $ 2

Total liabilities $ 2 $ — $ — $ 2

(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 $ 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 nine months of fiscal 2024, the Company completed the payment for its contingent consideration obligation.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 5 – Derivative Instruments

6 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 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.

The notional amounts of foreign currency forward contracts designated as cash flow hedges as of June 30, 2024 and March 31, 2024 were $ 838 million and $ 885 million, respectively.

As of June 30, 2024, the related forecasted transactions extend through August 2026.

During the three months ended June 30, 2024 and June 30, 2023, respectively, the Company had no cash flow hedges for which it was probable that the hedged transaction would not occur.

See Note 13 – “Stockholders’ Equity” for changes in accumulated other comprehensive loss, net of taxes, related to the Company’s derivatives designated for hedge accounting.

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.

As of June 30, 2024, $ 5 million of gain related to cash flow hedges reported in accumulated other comprehensive loss is expected to be reclassified into earnings within the next 12 months.

Derivatives Not Designated for Hedge Accounting

2 unchanged sentences

Foreign currency forward contracts

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 December 31, 2023 and March 31, 2023 were $ 2.0 billion and $ 2.5 billion, respectively.

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

The net notional amounts of the foreign currency forward contracts outstanding as of June 30, 2024 and March 31, 2024 were $ 1.4 billion and $ 1.5 billion, respectively.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

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

For the Three Months Ended

(in millions) June 30, 2024 June 30, 2023

Foreign currency remeasurement (1)

$ ( 17 ) $ ( 60 ) $ 4 $ 16

Undesignated foreign currency forward contracts (2)

22 52 ( 8 ) ( 27 )

Total - Foreign currency loss (gain)

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

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

(2) Movements from hedges used to manage the Company’s foreign currency remeasurement exposure, and the associated costs of the hedging program.

Fair Value of Derivative Instruments

All derivative instruments are recorded at fair value.

The Company’s accounting treatment for these derivative instruments is based on its hedge designation.

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

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

Derivatives designated for hedge accounting:

Foreign currency forward contracts Other current assets $ 5 $ 6

Accrued expenses and other current liabilities $ 8 $ 13

Derivatives not designated for hedge accounting:

Foreign currency forward contracts Other current assets $ 14 $ 15

Accrued expenses and other current liabilities $ 29 $ 16

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

Other Risks for Derivative Instruments

2 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 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.

With respect to its foreign currency derivatives, as of June 30, 2024, there were eight counterparties with concentration of credit risk, and based on gross fair value, the maximum amount of loss that the Company could incur is $ 11 million.

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

1 unchanged sentence

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

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Non-Derivative Financial Instruments Designated for Hedge Accounting

7 unchanged sentences

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

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

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.

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

As of June 30, 2024 and March 31, 2024, DXC had $ 697 million and $ 702 million, respectively, of foreign currency-denominated debt designated as hedges of net investments in non-U.S.

subsidiaries.

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.

For the three months ended June 30, 2024, the pre-tax impact of gain on foreign currency-denominated debt designated for hedge accounting recognized in other comprehensive income was $ 5 million.

DXC TECHNOLOGY COMPANY

2 unchanged sentences

Intangible assets consisted of the following:

As of December 31, 2023

As of June 30, 2024

As of March 31, 2024

2 unchanged sentences

Customer related intangible assets 3,886 2,672 1,214 3,892 2,588 1,304

3,924 2,522 1,402 3,927 2,260 1,667

Other intangible assets 308 141 167 309 134 175

311 125 186 303 120 183

Total intangible assets $ 7,956 $ 5,945 $ 2,011 $ 7,922 $ 5,792 $ 2,130

The components of amortization expense were as follows:

Three Months Ended Nine Months Ended

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

Three Months Ended

(in millions) June 30, 2024 June 30, 2023

Intangible asset amortization

Transition and transformation contract cost amortization (1)

53 51 155 156

Total amortization expense $ 232 $ 231

(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:

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

Estimated future amortization related to intangible assets as of June 30, 2024 is as follows:

Fiscal Year (in millions)

5 unchanged sentences

Note 7 – Goodwill

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

The following table summarizes the changes in the carrying amount of goodwill, by segment, as of June 30, 2024.

(in millions) GBS GIS Total

Balance as of March 31, 2024, net $ 532 $ — $ 532

Divestitures ( 3 ) — ( 3 )

Foreign currency translation ( 1 ) — ( 1 )

Balance as of December 31, 2023, net

$ 541 $ — $ 541

Balance as of June 30, 2024, net $ 531 $ — $ 531

Goodwill, gross 5,021 5,066 10,087

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

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.

Balance as of June 30, 2024, net $ 531 $ — $ 531

DXC TECHNOLOGY COMPANY

2 unchanged sentences

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

(in millions) Interest Rates Fiscal Year Maturities 12/31/2023 (1)

3/31/2023 (1)

(in millions) Interest Rates Fiscal Year Maturities June 30, 2024 (1)

March 31, 2024 (1)

Short-term debt and

11 unchanged sentences

$ 700 million Senior notes

1.80 % 2027 696 696

€ 750 million Senior notes

8 unchanged sentences

2025 - 2029 141 177

Other borrowings Various 2024 — 3

Long-term debt 3,997 4,089

1 unchanged sentence

Long-term debt, net of current maturities $ 3,766 $ 3,818

(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.

(1) The carrying amounts of the senior notes as of June 30, 2024 and March 31, 2024, include the remaining principal outstanding of $ 3,493 million and $ 3,509 million, respectively, net of total unamortized debt (discounts) and premiums, and deferred debt issuance costs of $ 15 million and $ 17 million, respectively.

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

Fair Value of Debt

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.

The estimated fair value of the Company’s long-term debt excluding finance lease liabilities was $ 3.3 billion as of both June 30, 2024 and March 31, 2024, compared with carrying value of $ 3.6 billion and $ 3.7 billion as of June 30, 2024 and March 31, 2024, respectively.

Long-term debt excluding finance lease liabilities are classified as Level 1 or Level 2 within the fair value hierarchy.

DXC TECHNOLOGY COMPANY

3 unchanged sentences

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

Three Months Ended Nine Months Ended

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

Three Months Ended

(in millions) June 30, 2024 June 30, 2023

United States $ 897 $ 1,002

7 unchanged sentences

Remaining Performance Obligations

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

As of June 30, 2024, approximately $ 16.7 billion of revenue is expected to be recognized from remaining performance obligations.

We expect to recognize revenue on approximately 34 % of these remaining performance obligations in fiscal 2025, with the remainder of the balance recognized thereafter.

Contract Balances

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

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

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

Contract assets $ 356 $ 366

Contract liabilities $ 1,544 $ 1,842

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

(in millions) Balance Sheet Line Item June 30, 2024 March 31, 2024

Trade receivables, net Receivables and contract assets, net of allowance for doubtful accounts $ 2,036 $ 2,195

Contract assets Receivables and contract assets, net of allowance for doubtful accounts $ 366 $ 362

Contract liabilities Deferred revenue and advance contract payments and Non-current deferred revenue $ 1,381 $ 1,537

Change in contract liabilities were as follows:

Nine Months Ended

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

Three Months Ended

(in millions) June 30, 2024 June 30, 2023

Balance, beginning of period $ 1,537 $ 1,842

7 unchanged sentences

Note 10 – Restructuring Costs

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

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

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

(in millions) June 30, 2024 March 31, 2024

Accrued expenses and other current liabilities $ 40 $ 40

3 unchanged sentences

Fiscal 2025 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”).

During fiscal 2025, management approved global cost savings initiatives designed to better align the Company’s workforce, facility and data center requirements (the “Fiscal 2025 Plan ” ) .

Restructuring Liability Reconciliations by Plan

Restructuring Liability as of March 31, 2023 Costs Expensed, Net of Reversals Costs Not Affecting Restructuring Liability (1)

Restructuring Liability as of March 31, 2024

Costs Expensed, Net of Reversals Costs Not Affecting Restructuring Liability (1)

Cash Paid Other (2)

Restructuring Liability as of December 31, 2023

Restructuring Liability as of June 30, 2024

Fiscal 2025 Plan

11 unchanged sentences

Total $ 51 $ 39 $ ( 16 ) $ ( 24 ) $ ( 2 ) $ 48

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

(1) Restructuring costs associated with right-of-use assets.

(2) Foreign currency translation adjustments.

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.

Restructuring costs for the three months ended June 30, 2024 includes $ 4 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

3 unchanged sentences

The components of net periodic pension income were:

Three Months Ended Nine Months Ended

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

Three Months Ended

(in millions) June 30, 2024 June 30, 2023

Service cost $ 13 $ 15

1 unchanged sentence

Expected return on assets ( 113 ) ( 114 )

Amortization of prior service costs ( 1 ) ( 2 ) ( 4 ) ( 6 )

Recognition of actuarial loss — — — 1

Amortization of prior service credit ( 1 ) ( 2 )

Net periodic pension income $ ( 27 ) $ ( 22 )

1 unchanged sentence

Note 12 – Income Taxes

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 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 Company’s effective tax rate (“ETR”) was 63.2 % and 46.2 % for the three months ended June 30, 2024, and June 30, 2023, respectively.

For the three months ended June 30, 2024, the primary drivers of the ETR were the global mix of income, U.S.

tax on foreign income, a reduction in a deferred tax asset for stock based compensation, and a decrease in a deferred tax liability for estimated taxes associated with the repatriation of foreign earnings.

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

tax on foreign income, and a decrease in uncertain tax positions due to an income tax audit settlement.

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

tax upon repatriation.

Such earnings and all current foreign earnings are not indefinitely reinvested.

Such earnings and the majority of current foreign earnings are not indefinitely reinvested.

The following earnings are considered indefinitely reinvested:

2 unchanged sentences

under section 1.245A-5(b) of the final Treasury regulations;

and approximately $ 200 million of our accumulated earnings in India.

and approximately $ 349 million of earnings in foreign subsidiaries.

A portion of these indefinitely reinvested earnings may be subject to foreign and U.S.

4 unchanged sentences

Pursuant to the tax matters agreement, the Company recorded a $ 17 million tax indemnification receivable related to uncertain tax positions, a $ 52 million tax indemnification receivable related to other tax payables, and a $ 91 million tax indemnification payable related to other tax receivables.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

5 unchanged sentences

Pursuant to the tax matters agreement, the Company recorded a $ 15 million tax indemnification receivable from Perspecta related to other tax receivables and a $ 4 million tax indemnification payable to Perspecta related to income tax and other tax payables.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

In connection with the sale of its healthcare provider software business (“HPS”), the Company entered into a tax matters agreement with Dedalus.

3 unchanged sentences

The IRS examined several issues for these tax years that resulted in various audit adjustments.

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 U.S.

Tax Court, these matters are not fully reserved and would result in incremental federal and state tax expense and cash tax payments of approximately $ 499 million (including estimated interest and penalties) for the unreserved portion of these items if we do not prevail.

Tax Court, these matters are not fully reserved and would result in incremental federal and state tax expense of approximately $ 517 million (including estimated interest and penalties) for the unreserved portion of these items and cash tax payments of approximately $ 592 million if we do not prevail.

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 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.

During 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.

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

The Company notified the IRS promptly and filed for relief under Treas.

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

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

2 unchanged sentences

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 expects to reach resolution for fiscal and tax return years 2009 through 2011, no earlier than the end of fiscal year 2026.

The Company expects to reach resolution for the fiscal and tax return years 2012 and 2013 no earlier than fiscal year 2028.

The Company expects to reach resolution for fiscal and tax return years 2014 through 2021 no earlier than the end of fiscal year 2026.

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 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.

For the three months ended June 30, 2024, the Company’s liability for uncertain tax positions increased by $ 5 million (excluding interest and penalties and related tax attributes) primarily due to the benefit of the U.S.

research and development income tax credit .

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 $ 63 million.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 13 – Stockholders’ Equity

Share Repurchases

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

Fiscal 2024 Fiscal 2023

Share Repurchase Program

During the first quarter of fiscal 2025, there were no share repurchases under our Share Repurchase Program.

The details of shares repurchased during the three months ended June 30, 2023 are shown below:

Fiscal Period Number of Shares Repurchased Average Price Per Share Amount

(in millions) Number of Shares Repurchased Average Price Per Share Amount

(in millions)

1st Quarter 10,975,643 $ 25.53 $ 280 8,850,912 $ 30.09 $ 266

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

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

Open market purchases 10,975,643 $ 25.53 $ 280

Total 10,975,643 $ 25.53 $ 280

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Accumulated Other Comprehensive Loss

2 unchanged sentences

Balance at March 31, 2024

Other comprehensive income before reclassifications

$ ( 939 ) $ — $ 207 $ ( 732 )

Other comprehensive income before reclassifications 3 3 — 6

Amounts reclassified from accumulated other comprehensive loss — — ( 1 ) ( 1 )

Balance at December 31, 2023

Balance at June 30, 2024

$ ( 936 ) $ 3 $ 206 $ ( 727 )

2 unchanged sentences

$ ( 985 ) $ ( 7 ) $ 218 $ ( 774 )

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

Other comprehensive income before reclassifications

Amounts reclassified from accumulated other comprehensive loss — — ( 2 ) ( 2 )

Balance at December 31, 2022

Balance at June 30, 2023

$ ( 951 ) $ ( 4 ) $ 216 $ ( 739 )

2 unchanged sentences

Restricted stock units ("RSUs") represent the right to receive one share of DXC common stock upon a future settlement date, subject to vesting and other terms and conditions of the award, plus any dividend equivalents accrued during the award period.

The Company also grants performance-based restricted stock units (“PSUs”), which generally vest over a three-year period.

The Company also grants performance-based restricted stock units (“PSUs”), which generally vest at the end of a three year period.

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.

1 unchanged sentence

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

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Employee Equity Plan Director Equity Plan

3 unchanged sentences

Outstanding as of March 31, 2024

8,311,293 $ 33.97 213,755 $ 26.82

Granted 6,881,052 $ 21.73 12,040 $ 17.86

1 unchanged sentence

Canceled/Forfeited ( 1,012,310 ) $ 30.28 — $ —

Outstanding as of December 31, 2023

Outstanding as of June 30, 2024

11,321,237 $ 22.51 225,795 $ 26.34

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Share-Based Compensation

Three Months Ended Nine Months Ended

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

Three Months Ended

(in millions) June 30, 2024 June 30, 2023

Total share-based compensation cost $ 23 $ 23

2 unchanged sentences

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

Nine Months Ended

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

Three Months Ended

(in millions) June 30, 2024 June 30, 2023

Cash paid for:

3 unchanged sentences

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

Assets acquired under long-term financing $ 18 $ 74

Prepaid assets acquired under long-term financing $ — $ 4

Capital expenditures in accounts payable and accrued expenses $ 3 $ 3

2 unchanged sentences

Shares repurchased but not settled in cash (3)

(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.

(1) Income tax refunds were $ 16 million and $ 6 million for the three months ended June 30, 2024 and June 30, 2023, respectively.

(2) Net of $ 237 million and $ 230 million in lease modifications and terminations for the three months ended June 30, 2024 and June 30, 2023, respectively.

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

9 unchanged sentences

The CODM uses these results, in part, to evaluate the performance of, and allocate resources to, each of the segments.

Global Business Services (“GBS”)

GBS provides innovative technology solutions that help our customers address key business challenges and accelerate transformations tailored to each customer’s industry and specific objectives.

GBS offerings include:

• Analytics and Engineering.

Our portfolio of analytics services and extensive partner ecosystem help customers gain rapid insights, automate operations, and accelerate their transformation journeys.

We provide software engineering, consulting, and data analytics solutions that enable businesses to run and manage their mission-critical functions, transform their operations, and develop new ways of doing business.

• Applications .

We help simplify, modernize, and accelerate mission-critical applications that support business agility and growth through our Applications services.

We are the engineers that enable our customers to take advantage of the latest digital platforms with both customized and pre-packaged applications, ensure resiliency, launch new products and enter new markets with minimal disruption.

We help customers define, execute and manage their enterprise applications strategy.

• Insurance Software and Business Process Services.

We partner with insurance clients, to modernize and run IT systems, provide proprietary modular insurance software and platforms, and operate the full spectrum of insurance business process services.

We also help operate and continuously improve bank cards, payment and lending processes and operations, and customer experience operations.

Global Infrastructure Services (“GIS”)

GIS provides a portfolio of technology offerings that deliver predictable outcomes and measurable results while reducing business risk and operational costs for customers.

GIS offerings include:

Our Security services help customers assess risk and proactively address all facets of the security environment, from threat intelligence to compliance.

We leverage proven methodologies, intelligent automation and industry-leading partners to tailor security solutions to customers’ unique business needs.

Our experts weave cyber resilience into IT security, operations and culture.

Whether migrating to the cloud, protecting data with a Zero Trust strategy or managing a security operations center, our Security services enable our customers to focus on their business.

• Cloud Infrastructure and IT Outsourcing (“ITO”) .

We enable customers to do Cloud Right™, making the right investments at the right time and on the right platforms.

We orchestrate hybrid cloud and multicloud environments, ensuring private and public clouds, servers and mainframes operate effectively together.

We provide companies with tailored plans for cloud migration and optimization to enable successful transformation.

We leverage our deep expertise in legacy IT and drive innovation with reliable, secure, mission-critical IT Outsourcing services – from compute and data center, to storage and backup, to network, to mainframe and to business continuity – providing a clear path to modernization.

• Modern Workplace.

Our Modern Workplace services put the employee experience first, helping them achieve new levels of productivity, engagement and collaboration while working seamlessly and securely on any device.

Organizations are empowered to deliver a consumer-like experience, centralize IT management and support services, and improve the total cost of ownership.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Global Business Services ("GBS") provides innovative technology solutions that help our customers address key business challenges and accelerate transformations tailored to each customer’s industry and specific objectives.

Global Infrastructure Services ("GIS") provides a portfolio of technology offerings that deliver predictable outcomes and measurable results while reducing business risk and operational costs for customers.

Segment Measures

1 unchanged sentence

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

Three Months Ended December 31, 2023

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

Segment profit $ 202 $ 121 $ 323 $ ( 65 ) $ 258

Depreciation and amortization (1)

$ 45 $ 191 $ 236 $ 26 $ 262

Three Months Ended December 31, 2022

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

Segment profit $ 244 $ 123 $ 367 $ ( 58 ) $ 309

Depreciation and amortization (1)

$ 42 $ 209 $ 251 $ 24 $ 275

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

Nine Months Ended December 31, 2023

Three Months Ended June 30, 2024

Revenues $ 1,673 $ 1,563 $ 3,236 $ — $ 3,236

2 unchanged sentences

$ 40 $ 175 $ 215 $ 24 $ 239

Nine Months Ended December 31, 2022

Three Months Ended June 30, 2023

Revenues $ 1,703 $ 1,743 $ 3,446 $ — $ 3,446

2 unchanged sentences

$ 45 $ 184 $ 229 $ 26 $ 255

(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.

(1) Depreciation and amortization as presented excludes amortization of acquired intangible assets of $ 87 million and $ 89 million for the

three months ended June 30, 2024 and June 30, 2023, respectively.

DXC TECHNOLOGY COMPANY

5 unchanged sentences

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 Nine Months Ended

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

Three Months Ended

(in millions) June 30, 2024 June 30, 2023

Total profit for reportable segments $ 295 $ 283

5 unchanged sentences

Transaction, separation and integration-related costs

( 2 ) ( 6 ) ( 6 ) ( 12 )

Amortization of acquired intangible assets ( 87 ) ( 89 )

Merger related indemnification — ( 11 )

SEC Matter — — — ( 8 )

Gains (losses) on dispositions

104 ( 9 ) 132 ( 12 )

Arbitration loss — ( 9 ) — ( 9 )

Loss on disposition of businesses

Impairment losses — ( 3 )

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

Income before income taxes $ 68 $ 78

$ 212 $ 102 $ 418 $ 278

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

3 unchanged sentences

Note 17 – Commitments and Contingencies

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

Minimum purchase commitments as of June 30, 2024 were as follows:

Fiscal year Minimum Purchase Commitment

1 unchanged sentence

Remainder of 2025

Thereafter 23

Total $ 1,237

Contingencies

Forsyth, et al.

and Hewlett Packard Enterprise:

On August 18, 2016, this purported class and collective action was filed in the U.S.

District Court for the Northern District of California, against HP and HPE alleging violations of the Federal Age Discrimination in Employment Act (“ADEA”) and California state law, in connection with workforce reductions that occurred in or after August 2012 in California, and in or after as early as December 2014 in other U.S.

Former business units of HPE now owned by the Company, and former business units of the Company now owned by Peraton (formerly Perspecta), may be proportionately liable for any recovery by plaintiffs in this matter.

In December 2020, Plaintiffs filed a motion for preliminary certification of the collective action, which Defendants opposed.

In April 2021, the court granted Plaintiffs’ motion for preliminary certification and lifted the previously imposed stay of the action.

In November 2021, notice was sent to putative members of the ADEA collectives regarding participation in the case.

In February 2022, the notice period closed.

In September 2023, the parties entered into a settlement agreement to resolve the matter and submitted it to the District Court for approval.

In October 2023, the District Court entered an order preliminarily approving the proposed settlement.

Securities Litigation:

Previously disclosed securities litigation matters have been dismissed, with one case remaining, in the Superior Court of the State of California.

On August 20, 2019, a purported class action lawsuit was filed in the Superior Court of the State of California, County of Santa Clara, against the Company, directors of the Company, and a former officer of the Company, among other defendants.

9 unchanged sentences

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 March 2024.

The trial date has since been extended to February 2026.

In May 2024, the Court entered an order granting Plaintiffs’ motion for class certification.

In July 2024, notice was provided to potential class members.

The case is otherwise in discovery.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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

On August 2, 2024, a purported class action lawsuit was filed in the United States District Court for the Eastern District of Virginia against the Company and certain of its current and former officers.

The complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and is premised on allegedly false and/or misleading statements regarding the Company’s transformation journey.

The putative class of plaintiffs includes investors who acquired DXC stock during the period of May 26, 2021 to May 16, 2024.

The Company believes that the lawsuits described above are without merit and intends to vigorously defend all claims asserted.

Tax Examinations:

1 unchanged sentence

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.”

OFAC Matter :

In August 2022, the Company submitted an initial notification of voluntary self-disclosure to the U.S.

Department of the Treasury, Office of Foreign Assets Control (“OFAC”) regarding potential violations of U.S.

sanctions on Russia.

The self-disclosure pertains to the Company’s sale of Luxoft’s Russia business to IBS Holding LLC in April 2022, as part of the Company’s exit from the Russian market following Russia’s invasion of Ukraine.

The Company has also submitted an initial notification of voluntary self-disclosure to the U.S.

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

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.

For more detail, see Note 12 – “Income Taxes” for further information.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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 April 2019, the Company filed a lawsuit against Tata Consultancy Services Limited (“TCS”) and Tata America International Corporation 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.

In June 2024, the Court entered a final order in the case, affirming the jury’s verdict in the Company’s favor and revising the monetary award to $ 56 million in compensatory damages and $ 112 million in punitive damages.

The Court also awarded the Company $ 26 million in prejudgment interest, post-judgment interest at an annual rate of 4.824 %, and its attorney’s fees and costs, in an amount to be determined in a later order.

The total award to the Company is $ 194 million, plus its attorney’s fees and costs.

The Court also issued a permanent injunction enjoining TCS from, among other things, possessing, accessing, or using any of the Company’s trade secrets that were at issue in the case, and appointing a monitor to confirm, among other things, that TCS does not do so.

TCS may choose to appeal the decision of the District Court.

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

5 unchanged sentences

Unless otherwise noted, the Company is unable to determine at this time a reasonable estimate of a possible loss or range of losses associated with the foregoing disclosed contingent matters.

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

5 unchanged sentences

• our inability to succeed in our strategic objectives;

• the risk of liability or damage to our reputation resulting from security incidents, including breaches, and cyber-attacks to our systems and networks and those of our business partners, insider threats, disclosure of sensitive data or failure to comply with data protection laws and regulations in a rapidly evolving regulatory environment;

in each case, whether deliberate or accidental;

• the risk of liability, reputational damages or adverse impact to business due to service interruptions, from security breaches, cyber-attacks, other security incidents or disclosure of confidential information or personal data;

• compliance, or failure to comply with obligations arising under new or existing laws, regulations, and customer contracts relating to the privacy, security and handling of personal data;

• our product and service quality issues;

• our inability to develop and expand our service offerings to address emerging business demands and technological trends, including our inability to sell differentiated services amongst our offerings;

• our inability to compete in certain markets and expand our capacity in certain offshore locations and risks associated with such offshore locations, such as the on-going conflict between Russia and Ukraine and the conflict between Israel and Hamas;

• failure to maintain our credit rating and ability to manage working capital, refinance and raise additional capital for future needs;

• difficulty in understanding the changes to our business model by financial or industry analysts or our failure to meet our publicly announced financial guidance;

• public health crises such as the COVID-19 pandemic;

• our indebtedness;

• our indebtedness and potential material adverse effect on our financial condition and results of operations;

• the competitive pressures faced by our business;

• our inability to accurately estimate the cost of services, and the completion timeline of contracts;

• execution risks by us and our suppliers, customers, and partners;

• failure by us or third party partners to deliver on commitments or otherwise breach obligations to our customers;

• the risks associated with climate change and natural disasters;

• increased scrutiny of, and evolving expectations for, sustainability and environmental, social and governance (“ESG”) initiatives;

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

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

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

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

• the risks associated with our international operations, such as risks related to currency exchange rates;

1 unchanged sentence

• our inability to achieve the expected benefits of our restructuring plans;

• inadvertent infringement of third-party intellectual property rights or our inability to protect our own intellectual property assets;

• our inadvertent infringement of third-party intellectual property rights or infringement of our intellectual property rights by third parties;

• our inability to procure third-party licenses required for the operation of our products and service offerings;

15 unchanged sentences

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

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

(including its successors and permitted assigns, “Perspecta”) (collectively, the “USPS Separation and Mergers”);

• volatility of the price of our securities, which is subject to market and other conditions;

• the other factors described in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended March 31, 2024 and subsequent SEC filings, including Part II, Item 1A “Risk Factors” of this Quarterly Report on Form 10-Q.

3 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements