UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to ____________

Commission File No.: 001-38033

DXC TECHNOLOGY COMPANY

(Exact name of registrant as specified in its charter)

Nevada	61-1800317
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
20408 Bashan Drive, Suite 231
Ashburn, Virginia 20147
(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (703) 972-7000

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	DXC	The New York Stock Exchange
1.750% Senior Notes Due 2026	DXC 26	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d)

of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x Yes  o No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes  o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	x	Accelerated Filer	o
Non-accelerated Filer	o	Smaller reporting company		☐
		Emerging growth company		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

       ☐ Yes  x   No

205,174,357 shares of common stock, par value $0.01 per share, were outstanding on July 24, 2023.

TABLE OF CONTENTS

Item		Page
	PART I – FINANCIAL INFORMATION
1.	Financial Statements (unaudited)	1
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
3.	Quantitative and Qualitative Disclosures About Market Risk	42
4.	Controls and Procedures	42
	PART II – OTHER INFORMATION
1.	Legal Proceedings	42
1A.	Risk Factors	42
2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
3.	Defaults Upon Senior Securities	43
4.	Mine Safety Disclosures	43
5.	Other Information	43
6.	Exhibits	45

PART I

ITEM 1. FINANCIAL STATEMENTS

Index to Condensed Consolidated Financial Statements

	Page
Condensed Consolidated Statements of Operations for the Three Months Ended June 30, 2023 and June 30, 2022 (unaudited)	2
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended June 30, 2023 and June 30, 2022 (unaudited)	3
Condensed Consolidated Balance Sheets as of June 30, 2023 and March 31, 2023 (unaudited)	4
Condensed Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2023 and June 30, 2022 (unaudited)	5
Condensed Consolidated Statements of Changes in Equity for the Three Months Ended June 30, 2023 and June 30, 2022 (unaudited)	6
Notes to Condensed Consolidated Financial Statements (unaudited)
Note 1–Summary of Significant Accounting Policies	7
Note 2–Divestitures	8
Note 3–Earnings Per Share	8
Note 4–Receivables	9
Note 5–Leases	9
Note 6–Fair Value	12
Note 7–Derivative Instruments	12
Note 8–Intangible Assets	15
Note 9–Goodwill	16
Note 10–Debt	17
Note 11–Revenue	18
Note 12–Restructuring Costs	19
Note 13–Pension and Other Benefit Plans	20
Note 14–Income Taxes	20
Note 15–Stockholders’ Equity	21
Note 16–Stock Incentive Plans	22
Note 17–Cash Flows	23
Note 18–Segment Information	23
Note 19–Commitments and Contingencies	25

1

DXC TECHNOLOGY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	Three Months Ended
(in millions, except per-share amounts)	June 30, 2023		June 30, 2022
Revenues	$	3,446	$	3,707
Costs of services (excludes depreciation and amortization and restructuring costs)	2,719		2,930
Selling, general and administrative (excludes depreciation and amortization and restructuring costs)	327		349
Depreciation and amortization	344		389
Restructuring costs	20		33
Interest expense	66		37
Interest income	(49)		(20)
Loss (gain) on disposition of businesses	5		(29)
Other income, net	(64)		(104)
Total costs and expenses	3,368		3,585
Income before income taxes	78		122
Income tax expense	36		19
Net income	42		103
Less: net income attributable to non-controlling interest, net of tax	6		1
Net income attributable to DXC common stockholders	$	36	$	102
Income per common share:
Basic	$	0.17	$	0.44
Diluted	$	0.17	$	0.43

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

2

DXC TECHNOLOGY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (unaudited)

			Three Months Ended
(in millions)			June 30, 2023		June 30, 2022
Net income			$	42	$	103
Other comprehensive income (loss), net of taxes:
	Foreign currency translation adjustments, net of tax expense (benefit) of $0 and $5		34		(176)
	Cash flow hedges adjustments, net of tax expense (benefit) of $1 and $(1)		3		—
	Pension and other post-retirement benefit plans, net of tax:
		Amortization of prior service cost, net of tax benefit of $0 and $4	(2)		(2)
	Pension and other post-retirement benefit plans, net of tax		(2)		(2)
Other comprehensive income (loss), net of taxes			35		(178)
Comprehensive income (loss)			77		(75)
	Less: comprehensive income attributable to non-controlling interest		6		1
Comprehensive income (loss) attributable to DXC common stockholders			$	71	$	(76)

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

3

DXC TECHNOLOGY COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

	As of
(in millions, except per-share and share amounts)	June 30, 2023		March 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	1,576	$	1,858
Receivables and contract assets, net of allowance of $43 and $47	3,285		3,441
Prepaid expenses	652		565
Other current assets	231		255
Assets held for sale	—		5
Total current assets	5,744		6,124
Intangible assets, net of accumulated amortization of $5,849 and $5,670	2,441		2,569
Operating right-of-use assets, net	849		909
Goodwill	539		539
Deferred income taxes, net	512		460
Property and equipment, net of accumulated depreciation of $4,166 and $4,111	1,922		1,979
Other assets	3,281		3,247
Assets held for sale - non-current	5		18
Total Assets	$	15,293	$	15,845
LIABILITIES and EQUITY
Current liabilities:
Short-term debt and current maturities of long-term debt	694		500
Accounts payable	701		782
Accrued payroll and related costs	613		569
Current operating lease liabilities	303		317
Accrued expenses and other current liabilities	1,587		1,836
Deferred revenue and advance contract payments	1,008		1,054
Income taxes payable	151		120
Liabilities related to assets held for sale	—		9
Total current liabilities	5,057		5,187
Long-term debt, net of current maturities	3,891		3,900
Non-current deferred revenue	749		788
Non-current operating lease liabilities	598		648
Non-current income tax liabilities and deferred tax liabilities	579		587
Other long-term liabilities	816		912
Liabilities related to assets held for sale - non-current	—		3
Total Liabilities	11,690		12,025
Commitments and contingencies
DXC stockholders’ equity:
Preferred stock, par value $0.01 per share; authorized 1,000,000 shares; none issued as of June 30, 2023 and March 31, 2023	—		—
Common stock, par value $0.01 per share; authorized 750,000,000 shares; issued 210,584,214 as of June 30, 2023 and 218,058,482 as of March 31, 2023	2		2
Additional paid-in capital	8,677		9,121
Accumulated deficit	(4,445)		(4,665)
Accumulated other comprehensive loss	(739)		(774)
Treasury stock, at cost, 4,507,506 and 3,333,592 shares as of June 30, 2023 and March 31, 2023	(217)		(187)
Total DXC stockholders’ equity	3,278		3,497
Non-controlling interest in subsidiaries	325		323
Total Equity	3,603		3,820
Total Liabilities and Equity	$	15,293	$	15,845

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

4

DXC TECHNOLOGY COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

	Three Months Ended
(in millions)	June 30, 2023		June 30, 2022
Cash flows from operating activities:
Net income	$	42	$	103
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	351		398
Operating right-of-use expense	90		106
Share-based compensation	23		28
Deferred taxes	(50)		(38)
Gain on dispositions	(9)		(62)
Provision for losses on accounts receivable	2		2
Unrealized foreign currency exchange loss	23		46
Impairment losses and contract write-offs	7		—
Other non-cash charges, net	(2)		3
Changes in assets and liabilities, net of effects of acquisitions and dispositions:
Decrease (Increase) in assets	63		(69)
Decrease in operating lease liability	(90)		(106)
Decrease in other liabilities	(323)		(248)
Net cash provided by operating activities	127		163
Cash flows from investing activities:
Purchases of property and equipment	(55)		(68)
Payments for transition and transformation contract costs	(62)		(57)
Software purchased and developed	(85)		(50)
Business dispositions, net of cash sold	(7)		(36)
Proceeds from sale of assets	11		14
Short-term investing	(3)		—
Other investing activities, net	2		5
Net cash used in investing activities	(199)		(192)
Cash flows from financing activities:
Borrowings of commercial paper	546		292
Repayments of commercial paper	(305)		(239)
Payments on finance leases and borrowings for asset financing	(131)		(159)
Proceeds from stock options and other common stock transactions	—		1
Taxes paid related to net share settlements of share-based compensation awards	(33)		(12)
Repurchase of common stock and advance payment for accelerated share repurchase	(285)		(272)
Other financing activities, net	(2)		(5)
Net cash used in financing activities	(210)		(394)
Effect of exchange rate changes on cash and cash equivalents	—		(50)
Net decrease in cash and cash equivalents including cash classified within current assets held for sale	(282)		(473)
Cash classified within current assets held for sale	—		10
Net decrease in cash and cash equivalents	(282)		(463)
Cash and cash equivalents at beginning of year	1,858		2,672
Cash and cash equivalents at end of period	$	1,576	$	2,209

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

5

DXC TECHNOLOGY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (unaudited)

	Three Months Ended June 30, 2023
(in millions, except shares in thousands)	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock(1)		Total DXC Equity		Non- Controlling Interest		Total Equity
	Shares	Amount
Balance at March 31, 2023	218,058	$	2	$	9,121	$	(4,665)	$	(774)	$	(187)	$	3,497	$	323	$	3,820
Net income						36						36		6		42
Other comprehensive income								35				35				35
Share-based compensation expense				22								22				22
Acquisition of treasury stock										(30)		(30)				(30)
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 June 30, 2023	210,584	$	2	$	8,677	$	(4,445)	$	(739)	$	(217)	$	3,278	$	325	$	3,603
	Three Months Ended June 30, 2022
(in millions, except shares in thousands)	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Treasury Stock		Total DXC Equity		Non- Controlling Interest		Total Equity
	Shares	Amount
Balance at March 31, 2022	240,508	$	3	$	10,057	$	(4,450)	$	(385)	$	(173)	$	5,052	$	323	$	5,375
Net income						102						102		1		103
Other comprehensive loss								(178)				(178)				(178)
Share-based compensation expense				24								24				24
Acquisition of treasury stock										(10)		(10)				(10)
Share repurchase program	(8,851)	(1)		(374)		109						(266)				(266)
Stock option exercises and other common stock transactions	1,338			1								1				1
Balance at June 30, 2022	232,995	$	2	$	9,708	$	(4,239)	$	(563)	$	(183)	$	4,725	$	324	$	5,049

(1) 4,507,506 treasury shares as of June 30, 2023.

(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 stock.

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

6

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 1 – Summary of Significant Accounting Policies

Business

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.

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,” (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. Investments in business entities in which the Company does not have control, but has the ability to exercise significant influence over operating and financial policies, are accounted for by the equity method. Other investments are accounted for by the cost method. Non-controlling interests are presented as a separate component within equity in the balance sheets. Net earnings attributable to the non-controlling interests are presented separately in the statements of operations and comprehensive income attributable to non-controlling interests are presented separately in the statements of comprehensive income. 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. Securities and Exchange Commission (“SEC”) for quarterly reports and accounting principles generally accepted in the United States (“GAAP”). Certain disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules. 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”).

Use of Estimates

The preparation of the financial statements, in accordance with GAAP, requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on assumptions regarding historical experience, currently available information, and anticipated developments that it believes are reasonable and appropriate. However, because the use of estimates involves an inherent degree of uncertainty, actual results could differ from those estimates. Estimates are used for, but are not limited to, contracts accounted for using the percentage-of-completion method, cash flows used in the evaluation of impairment of goodwill and other long-lived assets, reserves for uncertain tax positions, valuation allowances on deferred tax assets, loss accruals for litigation, and obligations related to our pension plans. In the opinion of the Company’s management, the accompanying financial statements contain all adjustments necessary, including those of a normal recurring nature, to fairly present the financial statements. 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 June 30, 2023 are not expected to have a material effect on DXC’s condensed consolidated financial statements.

7

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 2 – Divestitures

During the first quarters of fiscal 2024 and fiscal 2023, the Company sold insignificant businesses that resulted in a loss of $5 million and a gain of $38 million, respectively. During the first quarter of fiscal 2023, the Company also classified certain insignificant businesses as held for sale and recognized a loss of $9 million.

Note 3 – Earnings per Share

Basic earnings per share (“EPS”) is computed using the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects the incremental shares issuable upon the assumed exercise of stock options and equity awards. The following table reflects the calculation of basic and diluted EPS:

	Three Months Ended
(in millions, except per-share amounts)	June 30, 2023		June 30, 2022
Net income attributable to DXC common shareholders:	$	36	$	102
Common share information:
Weighted average common shares outstanding for basic EPS	210.11		232.48
Dilutive effect of stock options and equity awards	3.64		4.90
Weighted average common shares outstanding for diluted EPS	213.75		237.38
Earnings per share:
Basic	$	0.17	$	0.44
Diluted	$	0.17	$	0.43

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
	June 30, 2023	June 30, 2022
Stock Options	918,608	480,727
Restricted Stock Units	1,505,292	1,542,055
Performance Stock Units	1,287,186	234,731

8

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 4 – Receivables

Allowance for Doubtful Accounts

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

	As of
(in millions)	June 30, 2023		March 31, 2023
Beginning balance	$	47	$	55
Provisions for losses on accounts receivable	2		(1)
Other adjustments to allowance and write-offs	(6)		(7)
Ending balance	$	43	$	47

Receivables Facility

The Company has an accounts receivable sales facility (as amended, restated, supplemented or otherwise modified as of June 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 Receivables Facility was amended on July 28, 2023, extending the termination date to July 26, 2024.

As of June 30, 2023, the total availability under the Receivables Facility and the amount sold to the Purchasers was $380 million, which was derecognized from the Company’s balance sheet. As of June 30, 2023, the Company recorded a liability of $20 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.

Note 5 – Leases

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.

Operating Leases

The components of operating lease expense were as follows:

(in millions)	Three Months Ended June 30, 2023		Three Months Ended June 30, 2022
Operating lease cost	$	90	$	106
Short-term lease cost	7		8
Variable lease cost	15		22
Sublease income	(4)		(4)
Total operating costs	$	108	$	132

9

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.

(in millions)	Three Months Ended June 30, 2023		Three Months Ended June 30, 2022
Cash paid for amounts included in the measurement of operating lease liabilities – operating cash flows	$	90	$	106
ROU assets obtained in exchange for operating lease liabilities(1)	$	23	$	55

(1) Net of $230 million and $338 million in lease modifications and terminations for the three months ended June 30, 2023 and June 30, 2022, respectively. See Note 17 – “Cash Flows” for further information on non-cash activities affecting cash flows.

The following table presents operating lease balances:

		As of
(in millions)	Balance Sheet Line Item	June 30, 2023		March 31, 2023
ROU operating lease assets	Operating right-of-use assets, net	$	849	$	909
Operating lease liabilities	Current operating lease liabilities	$	303	$	317
Operating lease liabilities	Non-current operating lease liabilities	598		648
Total operating lease liabilities		$	901	$	965

The weighted-average operating lease term was 3.9 years and 3.9 years as of June 30, 2023 and March 31, 2023, respectively. The weighted-average operating lease discount rate was 4.1% and 3.9% as of June 30, 2023 and March 31, 2023, respectively.

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

	Fiscal Year
(in millions)	Remainder of 2024		2025		2026		2027		2028		Thereafter		Total
Operating lease payments	$	255	$	276	$	185	$	100	$	76	$	93	$	985
Less: imputed interest													(84)
Total operating lease liabilities													$	901

10

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Finance Leases

The components of finance lease expense were as follows:

(in millions)	Three Months Ended June 30, 2023		Three Months Ended June 30, 2022
Amortization of right-of-use assets	$	42	$	61
Interest on lease liabilities	4		5
Total finance lease cost	$	46	$	66

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

(in millions)	Three Months Ended June 30, 2023		Three Months Ended June 30, 2022
Interest paid for finance lease liabilities – Operating cash flows	$	4	$	5
Cash paid for amounts included in the measurement of finance lease obligations – financing cash flows	61		96
Total cash paid in the measurement of finance lease obligations	$	65	$	101
Capital expenditures through finance lease obligations(1)	$	17	$	26

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

The following table presents finance lease balances:

		As of
(in millions)	Balance Sheet Line Item	June 30, 2023		March 31, 2023
ROU finance lease assets	Property and Equipment, net	$	370	$	424
Finance lease	Short-term debt and current maturities of long-term debt	$	208	$	215
Finance lease	Long-term debt, net of current maturities	267		287
Total finance lease liabilities(1)		$	475	$	502

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

The weighted-average finance lease term was 2.8 years and 2.9 years as of June 30, 2023 and March 31, 2023, respectively. The weighted-average finance lease discount rate was 3.5% and 3.4% as of June 30, 2023 and March 31, 2023, respectively.

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

	Fiscal Year
(in millions)	Remainder of 2024		2025		2026		2027		2028		Thereafter		Total
Finance lease payments	$	164	$	161	$	99	$	53	$	14	$	—	$	491
Less: imputed interest													(16)
Total finance lease liabilities													$	475

11

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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)	As of June 30, 2023
Assets:	Fair Value		Level 1		Level 2		Level 3
Money market funds and money market deposit accounts	$	45	$	45	$	—	$	—
Time deposits(1)	82		82		—		—
Other securities(2)	48		—		46		2
Total assets	$	175	$	127	$	46	$	2

	As of March 31, 2023
Assets:	Fair Value		Level 1		Level 2		Level 3
Money market funds and money market deposit accounts	$	75	$	75	$	—	$	—
Time deposits(1)	37		37		—		—
Other securities(2)	48		—		46		2
Total assets	$	160	$	112	$	46	$	2
Liabilities:
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 $52 million as of both June 30, 2023 and March 31, 2023. For the periods presented, gains and losses are insignificant and are included in other income, net in the Company’s statements of operations.

(3) As of June 30, 2023, the Company completed the payment for its contingent consideration obligation.

Note 7 – Derivative Instruments

In the normal course of business, the Company is exposed to interest rate and foreign exchange rate fluctuations. As part of its risk management strategy, the Company uses derivative instruments, primarily foreign currency forward contracts and interest rate swaps, to hedge certain foreign currency and interest rate exposures. The Company’s objective is to reduce earnings volatility by offsetting gains and losses resulting from these exposures with losses and gains on the derivative contracts used to hedge them. The Company does not use derivative instruments for trading or any speculative purposes.

12

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Derivatives Designated for Hedge Accounting

Cash flow hedges

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 June 30, 2023 and March 31, 2023 were $893 million and $842 million, respectively. As of June 30, 2023, the related forecasted transactions extend through June 2025.

During the three months ended June 30, 2023 and June 30, 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 June 30, 2023, $7 million of loss 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

The derivative instruments not designated as hedges for purposes of hedge accounting include certain short-term foreign currency forward contracts. Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in the financial statement line item to which the derivative relates.

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

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

	For the Three Months Ended
(in millions)	June 30, 2023		June 30, 2022
Foreign currency remeasurement(1)	$	(4)	$	36
Undesignated foreign currency forward contracts(2)	(4)		(38)
Total - Foreign currency gain	$	(8)	$	(2)

(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.

13

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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:

		As of
(in millions)	Balance Sheet Line Item	June 30, 2023		March 31, 2023
Derivatives designated for hedge accounting:
Foreign currency forward contracts	Other current assets	$	8	$	6
	Accrued expenses and other current liabilities	$	11	$	13
Derivatives not designated for hedge accounting:
Foreign currency forward contracts	Other current assets	$	20	$	15
	Accrued expenses and other current liabilities	$	21	$	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

The Company is exposed to the risk of losses in the event of non-performance by the counterparties to its derivative contracts. The amount subject to credit risk related to derivative instruments is generally limited to the amount, if any, by which a counterparty’s obligations exceed the obligations of the Company with that counterparty. To mitigate counterparty credit risk, the Company regularly reviews its credit exposure and the creditworthiness of the counterparties. With respect to its foreign currency derivatives, as of June 30, 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 $7 million.

The Company also enters into enforceable master netting arrangements with some of its counterparties. However, for financial reporting purposes, it is the Company’s policy not to offset derivative assets and liabilities despite the existence of enforceable master netting arrangements. The potential effect of such netting arrangements on the Company’s balance sheets is not material for the periods presented.

Non-Derivative Financial Instruments Designated for Hedge Accounting

The Company applies hedge accounting for foreign currency-denominated debt used to manage foreign currency exposures on its net investments in certain non-U.S. operations. To qualify for hedge accounting, the hedging instrument must be highly effective at reducing the risk from the exposure being hedged.

Net Investment Hedges

DXC seeks to reduce the impact of fluctuations in foreign exchange rates on its net investments in certain non-U.S. operations with foreign currency-denominated debt. For foreign currency-denominated debt designated as a hedge, the effectiveness of the hedge is assessed based on changes in spot rates. For qualifying net investment hedges, all gains or losses on the hedging instruments are included in currency translation. Gains or losses on individual net investments in non-U.S. operations are reclassified to earnings from accumulated other comprehensive loss when such net investments are sold or substantially liquidated.

14

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

As of June 30, 2023 and March 31, 2023, DXC had $273 million and $272 million, respectively, of foreign currency-denominated debt designated as hedges of net investments in non-U.S. subsidiaries. For the three months ended June 30, 2023, the pre-tax impact of loss on foreign currency-denominated debt designated for hedge accounting recognized in other comprehensive income was $1 million.

Note 8 – Intangible Assets

Intangible assets consisted of the following:

	As of June 30, 2023						As of March 31, 2023
(in millions)	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Software	$	4,046	$	3,366	$	680	$	4,009	$	3,290	$	719
Customer related intangible assets	3,940		2,353		1,587		3,927		2,260		1,667
Other intangible assets	304		130		174		303		120		183
Total intangible assets	$	8,290	$	5,849	$	2,441	$	8,239	$	5,670	$	2,569

The components of amortization expense were as follows:

	Three Months Ended
(in millions)	June 30, 2023		June 30, 2022
Intangible assets amortization	$	183	$	199
Transition and transformation contract cost amortization(1)	48		52
Total amortization expense	$	231	$	251

(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, 2023 is as follows:

Fiscal Year	(in millions)
Remainder of 2024	$	538
2025	593
2026	530
2027	397
2028	173
Thereafter	210
Total	$	2,441

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DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 9 – Goodwill

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

(in millions)	GBS		GIS		Total
Balance as of March 31, 2023, net	$	539	$	—	$	539
Balance as of June 30, 2023, net	$	539	$	—	$	539
Goodwill, gross	5,029		5,066		10,095
Accumulated impairment losses	(4,490)		(5,066)		(9,556)
Balance as of June 30, 2023, net	$	539	$	—	$	539

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DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 10 – Debt

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

(in millions)	Interest Rates	Fiscal Year Maturities	June 30, 2023(1)		March 31, 2023(1)
Short-term debt and current maturities of long-term debt
Commercial paper(2)	3.56% - 4.03%	2024	$	349	$	109
Current maturities of long-term debt	Various	2024 - 2025	137		176
Current maturities of finance lease liabilities	0.00% - 14.59%	2024 - 2025	208		215
Short-term debt and current maturities of long-term debt			$	694	$	500
Long-term debt, net of current maturities
€650 million Senior notes	1.75%	2026	707		704
$700 million Senior notes	1.80%	2027	696		696
€750 million Senior notes	0.45%	2028	814		810
$650 million Senior notes	2.375%	2029	645		645
€600 million Senior notes	0.95%	2032	649		646
Finance lease liabilities	0.00% - 14.59%	2024 - 2029	475		502
Borrowings for assets acquired under long-term financing	0.00% - 9.78%	2024 - 2029	248		285
Other borrowings	Various	2024	2		3
Long-term debt			4,236		4,291
Less: current maturities			345		391
Long-term debt, net of current maturities			$	3,891	$	3,900

(1)The carrying amounts of the senior notes as of June 30, 2023 and March 31, 2023, include the remaining principal outstanding of $3,532 million and $3,523 million, respectively, net of total unamortized debt (discounts) and premiums, and deferred debt issuance costs of $21 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 $.

Term Loan

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 is required to be drawn down by September 1, 2023 or the facility will terminate. The Company did not draw on the USD Term Loan as of June 30, 2023.

Fair Value of Debt

The estimated fair value of the Company’s long-term debt, excluding finance lease liabilities, was $3.2 billion and $3.3 billion as of June 30, 2023 and March 31, 2023, respectively, compared with carrying value of $3.8 billion and $3.8 billion as of June 30, 2023 and March 31, 2023, respectively.

17

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 11 – Revenue

Revenue Recognition

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

	Three Months Ended
(in millions)	June 30, 2023		June 30, 2022
United States	$	1,002	$	1,131
United Kingdom	465		473
Other Europe	1,064		1,138
Australia	342		391
Other International	573		574
Total Revenues	$	3,446	$	3,707

The revenue by geography pertains to both of the Company’s reportable segments. Refer to Note 18 – “Segment Information” for the Company’s segment disclosures.

Remaining Performance Obligations

As of June 30, 2023, approximately $19.4 billion of revenue is expected to be recognized from remaining performance obligations. We expect to recognize revenue on approximately 32% of these remaining performance obligations in fiscal 2024, with the remainder of the balance recognized thereafter.

Contract Balances

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

		As of
(in millions)	Balance Sheet Line Item	June 30, 2023		March 31, 2023
Trade receivables, net	Receivables and contract assets, net of allowance for doubtful accounts	$	2,210	$	2,269
Contract assets	Receivables and contract assets, net of allowance for doubtful accounts	$	363	$	366
Contract liabilities	Deferred revenue and advance contract payments and Non-current deferred revenue	$	1,757	$	1,842

Change in contract liabilities were as follows:

	Three Months Ended
(in millions)	June 30, 2023		June 30, 2022
Balance, beginning of period	$	1,842	$	1,915
Deferred revenue	464		612
Recognition of deferred revenue	(548)		(684)
Currency translation adjustment	13		(87)
Other	(14)		(12)
Balance, end of period	$	1,757	$	1,744

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DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 12 – Restructuring Costs

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

	As of
(in millions)	June 30, 2023		March 31, 2023
Accrued expenses and other current liabilities	$	77	$	105
Other long-term liabilities	18		22
Total	$	95	$	127

Summary of Restructuring Plans

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”).

Restructuring Liability Reconciliations by Plan

	Restructuring Liability as of March 31, 2023		Costs Expensed, Net of Reversals		Costs Not Affecting Restructuring Liability(1)		Cash Paid		Other(2)		Restructuring Liability as of June 30, 2023
Fiscal 2024 Plan
Facilities Costs	—		7		(6)		—		—		1
	—		7		(6)		—		—		1
Fiscal 2023 Plan
Workforce Reductions	$	79	$	3	$	—	$	(28)	$	—	$	54
Facilities Costs	1		7		(1)		(5)		(1)		1
	80		10		(1)		(33)		(1)		55
Other Prior Year and Acquired Plans
Workforce Reductions	$	45	$	(1)	$	—	$	(6)	$	—	$	38
Facilities Costs	2		4		(1)		(4)		—		1
	47		3		(1)		(10)		—		39
Total	$	127	$	20	$	(8)	$	(43)	$	(1)	$	95

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

(2) Foreign currency translation adjustments.

Included in restructuring costs for the three months ended June 30, 2023 is $6 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.

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DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 13 – Pension and Other Benefit Plans

Defined Benefit Plans

The components of net periodic pension income were:

	Three Months Ended
(in millions)	June 30, 2023		June 30, 2022
Service cost	$	15	$	19
Interest cost	79		67
Expected return on assets	(114)		(132)
Amortization of prior service credit	(2)		(2)
Net periodic pension income	$	(22)	$	(48)

The service cost component of net periodic pension income is presented in costs of services, and selling, general and administrative and the other components of net periodic pension income are presented in other income, net.

Note 14 – Income Taxes

The Company’s effective tax rate (“ETR”) was 46.2% and 15.6% for the three months ended June 30, 2023, and June 30, 2022, respectively. 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. For the three months ended June 30, 2022, the primary drivers of the ETR were the global mix of income, U.S. tax on foreign income and base erosion payments, and a decrease in uncertain tax positions due to statute of limitation expirations.

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. The following earnings are considered indefinitely reinvested: approximately $485 million that could be subject to U.S. federal tax when repatriated to the U.S. under section 1.245A-5(b) of the final Treasury regulations; and approximately $200 million of our accumulated earnings in India. A portion of these indefinitely reinvested earnings may be subject to foreign and U.S. state tax consequences when remitted. The Company will continue to evaluate its position in the future based on its future strategy and cash needs.

In connection with the merger of Computer Sciences Corporation (“CSC”) and the Enterprise Services business of Hewlett Packard Enterprise Company (the “HPES Merger”), the Company entered into a tax matters agreement with Hewlett Packard Enterprise Company (“HPE”). HPE generally will be responsible for tax liabilities arising prior to the HPES Merger, and DXC is liable to HPE for income tax receivables it receives related to pre-HPES Merger periods. Pursuant to the tax matters agreement, the Company recorded a $16 million tax indemnification receivable related to uncertain tax positions, a $53 million tax indemnification receivable related to other tax payables, and an $89 million tax indemnification payable related to other tax receivables.

In connection with the spin-off of the Company’s former U.S. public sector business (the “USPS Separation”), the Company entered into a tax matters agreement with Perspecta Inc. (including its successors and permitted assigns, “Perspecta”). The Company generally will be responsible for tax liabilities arising prior to the USPS Separation, and Perspecta is liable to the Company for income tax receivables related to pre-spin-off periods. Income tax liabilities transferred to Perspecta primarily relate to pre-HPES Merger periods, for which the Company is indemnified by HPE pursuant to the tax matters agreement between the Company and HPE. The Company remains liable to HPE for tax receivables transferred to Perspecta related to pre-HPES Merger periods. Pursuant to the tax matters agreement, the Company recorded an $18 million tax indemnification receivable from Perspecta related to other tax payables and a $6 million tax indemnification payable to Perspecta related to income tax and other tax receivables.

20

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

The Internal Revenue Service (the “IRS”) has examined, or is examining, the Company’s federal income tax returns for fiscal 2009 through the tax year ended October 31, 2018. With respect to CSC’s fiscal 2009 through 2017 federal tax returns, the Company participated in settlement negotiations with the IRS Office of Appeals. 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 $483 million (including estimated interest and penalties) for the unreserved portion of these items 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. Tax Court. During the first quarter 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.

The Company’s fiscal years 2009, 2010 and 2013 are in the U.S. Tax Court, and consequently these years will remain open until such proceedings have concluded. 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 may settle certain other tax examinations for different amounts than the Company has accrued as uncertain tax positions. Consequently, the Company may need to accrue and ultimately pay additional amounts or pay lower amounts than previously estimated and accrued when positions are settled in the future. For the three months ended June 30, 2023, the Company’s liability for uncertain tax positions decreased by $3 million (excluding interest and penalties and related tax attributes) primarily due to statute of limitation expirations. 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 $12 million.

Note 15 – Stockholders’ Equity

Share Repurchases

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

	Fiscal 2024					Fiscal 2023
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
Open market purchases	10,975,643	$	25.53	$	280	8,850,912	$	30.09	$	266
Total	10,975,643	$	25.53	$	280	8,850,912	$	30.09	$	266

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DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Accumulated Other Comprehensive Loss

The following table shows the changes in accumulated other comprehensive loss, net of taxes:

(in millions)	Foreign Currency Translation Adjustments		Cash Flow Hedges		Pension and Other Post-retirement Benefit Plans		Accumulated Other Comprehensive Loss
Balance at March 31, 2023	$	(985)	$	(7)	$	218	$	(774)
Other comprehensive income before reclassifications	34		3		—		37
Amounts reclassified from accumulated other comprehensive loss	—		—		(2)		(2)
Balance at June 30, 2023	$	(951)	$	(4)	$	216	$	(739)

(in millions)	Foreign Currency Translation Adjustments		Cash Flow Hedges		Pension and Other Post-retirement Benefit Plans		Accumulated Other Comprehensive Loss
Balance at March 31, 2022	$	(651)	$	10	$	256	$	(385)
Other comprehensive loss before reclassifications	(176)		4		—		(172)
Amounts reclassified from accumulated other comprehensive loss	—		(4)		(2)		(6)
Balance at June 30, 2022	$	(827)	$	10	$	254	$	(563)

Note 16 – Stock Incentive Plans

Restricted Stock Units and Performance-Based Restricted Stock Units

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 number of PSUs that ultimately vest is dependent upon the Company’s achievement of certain specified market- and performance-based criteria over the three-year vesting period. The fair value of RSUs and PSUs is based on the Company’s common stock closing price on the grant date. For PSUs with a market-based condition, DXC uses a Monte Carlo simulation model to value the grants.

	Employee Equity Plan			Director Equity Plan
	Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Grant Date Fair Value
Outstanding as of March 31, 2023	7,449,379	$	37.11	147,487	$	35.80
Granted	4,789,997	$	25.09	—	$	—
Settled	(3,816,958)	$	23.47	—	$	—
Canceled/Forfeited	(268,023)	$	46.32	—	$	—
Outstanding as of June 30, 2023	8,154,395	$	35.85	147,487	$	35.80

Share-Based Compensation

	Three Months Ended
(in millions)	June 30, 2023		June 30, 2022
Total share-based compensation cost	$	23	$	28
Related income tax benefit	$	3	$	3

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DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 17 – Cash Flows

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

	Three Months Ended
(in millions)	June 30, 2023		June 30, 2022
Cash paid for:
Interest	$	51	$	22
Taxes on income, net of refunds (1)	$	52	$	53
Non-cash activities:
Operating:
ROU assets obtained in exchange for lease, net (2)	$	23	$	55
Prepaid assets acquired under long-term financing	$	4	$	34
Investing:
Capital expenditures in accounts payable and accrued expenses	$	3	$	8
Capital expenditures through finance lease obligations	$	17	$	26
Assets acquired under long-term financing	$	27	$	2
Financing:
Shares repurchased but not settled in cash (3)	$	13	$	—

(1) Income tax refunds were $6 million and $13 million for the three months ended June 30, 2023 and June 30, 2022, respectively.

(2) Net of $230 million and $338 million in lease modifications and terminations for the three months ended June 30, 2023 and June 30, 2022, respectively.

(3) On August 16, 2022, the U.S. government enacted the IRA into law. The IRA imposes a 1% excise tax on share repurchases completed after December 31, 2022. In our cash flow statement, we reflect the excise tax as a financing activity relating to the repurchase of common stock.

23

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 18 – Segment Information

DXC has a matrix form of organization and is managed in several different and overlapping groupings including services, industries and geographic regions. As a result, and in accordance with accounting standards, operating segments are organized by the type of services provided. DXC's chief operating decision maker ("CODM"), the chief executive officer, obtains, reviews, and manages the Company’s financial performance based on these segments. 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:

•Security. 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.

24

DXC TECHNOLOGY COMPANY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Segment Measures

The following table summarizes operating results regularly provided to the CODM by reportable segment and a reconciliation to the financial statements:

(in millions)	GBS		GIS		Total Reportable Segments		All Other		Totals
Three Months Ended June 30, 2023
Revenues	$	1,703	$	1,743	$	3,446	$	—	$	3,446
Segment profit	$	192	$	91	$	283	$	(59)	$	224
Depreciation and amortization(1)	$	45	$	184	$	229