10-Q 1 dxc-20240930.htm 10-Q dxc-20240930
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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 September 30, 2024
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 Logo_Purple+Black RGB.jpg
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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareDXCThe New York Stock Exchange
1.750% Senior Notes Due 2026DXC 26The 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 FilerxAccelerated Filero
Non-accelerated Filer oSmaller 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

181,024,487 shares of common stock, par value $0.01 per share, were outstanding on October 21, 2024.


TABLE OF CONTENTS





PART I

ITEM 1. FINANCIAL STATEMENTS

Index to Condensed Consolidated Financial Statements
Page



1

DXC TECHNOLOGY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

Three Months EndedSix Months Ended
(in millions, except per-share amounts)September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Revenues$3,241 $3,436 $6,477 $6,882 
Costs of services (excludes depreciation and amortization and restructuring costs)2,427 2,633 4,953 5,352 
Selling, general and administrative (excludes depreciation and amortization and restructuring costs)353 328 654 655 
Depreciation and amortization329 361 655 705 
Restructuring costs42 35 81 55 
Interest expense69 78 141 144 
Interest income(51)(53)(102)(102)
Loss on disposition of businesses— 2 — 7 
Other income, net(21)(76)(66)(140)
Total costs and expenses3,148 3,308 6,316 6,676 
Income before income taxes93 128 161 206 
Income tax expense48 29 91 65 
Net income45 99 70 141 
Less: net income attributable to non-controlling interest, net of tax3 — 2 6 
Net income attributable to DXC common stockholders$42 $99 $68 $135 
Income per common share:
Basic$0.23 $0.49 $0.38 $0.66 
Diluted$0.23 $0.49 $0.37 $0.65 


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
Six Months Ended
(in millions)September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Net income
$45 $99 $70 $141 
Other comprehensive income (loss), net of taxes:
Foreign currency translation adjustments, net of tax (1)
79 (40)82 (6)
Cash flow hedges adjustments, net of tax (2)
(14)4 (11)7 
Pension and other post-retirement benefit plans, net of tax:
Amortization of prior service cost, net of tax (3)
(1)— (2)(2)
Pension and other post-retirement benefit plans, net of tax(1)— (2)(2)
Other comprehensive income (loss), net of taxes
64 (36)69 (1)
Comprehensive income
109 63 139 140 
Less: comprehensive income (loss) attributable to non-controlling interest
3 (1)2 5 
Comprehensive income attributable to DXC common stockholders
$106 $64 $137 $135 
    
(1) Tax (benefit) expense related to foreign currency translation adjustments was $(7) and $(6) for the three and six months ended September 30, 2024, respectively, and $2 and $2 for the three and six months ended September 30, 2023, respectively.
(2) Tax (benefit) expense related to cash flow hedges adjustments was $(4) and $(3) for the three and six months ended September 30, 2024, respectively, and $1 and $2 for the three and six months ended September 30, 2023, respectively.
(3) Tax benefit related to amortization of prior service costs was $1 and $1 for the three and six months ended September 30, 2024, respectively, and $1 and $1 for the three and six months ended September 30, 2023, respectively.



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)September 30, 2024March 31, 2024
ASSETS
Current assets:
Cash and cash equivalents$1,245 $1,224 
Receivables and contract assets, net of allowance of $39 and $35
3,104 3,253 
Prepaid expenses550 512 
Other current assets100 146 
Assets held for sale
8 — 
Total current assets5,007 5,135 
Intangible assets, net of accumulated amortization of $6,023 and $5,792
1,981 2,130 
Operating right-of-use assets, net632 731 
Goodwill541 532 
Deferred income taxes, net908 804 
Property and equipment, net of accumulated depreciation of $3,550 and $3,515
1,455 1,671 
Other assets2,961 2,857 
Assets held for sale - non-current19 11 
Total Assets$13,504 $13,871 
LIABILITIES and EQUITY
Current liabilities:
Short-term debt and current maturities of long-term debt226 271 
Accounts payable708 846 
Accrued payroll and related costs592 558 
Current operating lease liabilities250 282 
Accrued expenses and other current liabilities1,346 1,437 
Deferred revenue and advance contract payments703 866 
Income taxes payable 172 134 
Liabilities related to assets held for sale
7 — 
Total current liabilities4,004 4,394 
Long-term debt, net of current maturities3,825 3,818 
Non-current deferred revenue 645 671 
Non-current operating lease liabilities420 497 
Non-current income tax liabilities and deferred tax liabilities562 556 
Other long-term liabilities 812 869 
Total Liabilities10,268 10,805 
Commitments and contingencies
DXC stockholders’ equity:
Preferred stock, par value $0.01 per share, 1,000,000 shares authorized, none issued as of September 30, 2024 and March 31, 2024
— — 
Common stock, par value $0.01 per share, 750,000,000 shares authorized, 186,520,916 issued as of September 30, 2024 and 183,430,878 issued as of March 31, 2024
2 2 
Additional paid-in capital7,647 7,599 
Accumulated deficit(3,771)(3,839)
Accumulated other comprehensive loss(663)(732)
Treasury stock, at cost, 5,528,105 and 4,591,340 shares as of September 30, 2024 and March 31, 2024
(234)(219)
Total DXC stockholders’ equity2,981 2,811 
Non-controlling interest in subsidiaries255 255 
Total Equity3,236 3,066 
Total Liabilities and Equity$13,504 $13,871 

The accompanying notes are an integral part of these condensed consolidated financial statements.
4

DXC TECHNOLOGY COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Six Months Ended
(in millions)September 30, 2024September 30, 2023
Cash flows from operating activities:
Net income$70 $141 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization668 719 
Operating right-of-use expense 160 181 
Share-based compensation48 47 
Deferred taxes(95)(102)
Loss (gain) on dispositions23 (39)
Provision for losses on accounts receivable10 2 
Unrealized foreign currency exchange (gain) loss(2)22 
Impairment losses and contract write-offs9 14 
Other non-cash charges, net3 — 
Changes in assets and liabilities:
Decrease in assets133 223 
Decrease in operating lease liability(160)(181)
Decrease in other liabilities(434)(652)
Net cash provided by operating activities433 375 
Cash flows from investing activities:
Purchases of property and equipment(89)(108)
Payments for transition and transformation contract costs(73)(110)
Software purchased and developed(178)(141)
Proceeds from sale of assets70 65 
Other investing activities, net12 10 
Net cash used in investing activities(258)(284)
Cash flows from financing activities:
Borrowings of commercial paper367 1,098 
Repayments of commercial paper(369)(841)
Payments on finance leases and borrowings for asset financing(165)(231)
Taxes paid related to net share settlements of share-based compensation awards(18)(34)
Repurchase of common stock(2)(505)
Other financing activities, net(2)(8)
Net cash used in financing activities(189)(521)
Effect of exchange rate changes on cash and cash equivalents38 (16)
Net increase (decrease) in cash and cash equivalents including cash classified within current assets held for sale24 (446)
Cash classified within current assets held for sale(3)— 
Net increase (decrease) in cash and cash equivalents21 (446)
Cash and cash equivalents at beginning of year1,224 1,858 
Cash and cash equivalents at end of period$1,245 $1,412 

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 September 30, 2024
(in millions, except
shares in thousands)		Common StockAdditional
Paid-in Capital		 Accumulated Deficit
Accumulated
Other
Comprehensive Loss
Treasury Stock(1)
Total
DXC Equity		Non-
Controlling Interest		Total Equity
SharesAmount
Balance at June 30, 2024
186,267 $2 $7,622 $(3,814)$(727)$(233)$2,850 $253 $3,103 
Net Income42 42 3 45 
Other comprehensive income
64 64 64 
Share-based compensation expense25 25 25 
Acquisition of treasury stock(1)(1)(1)
Stock option exercises and other common stock transactions254 — — 
Non-controlling interest distributions and other1 1 (1)— 
Balance at September 30, 2024
186,521$2 $7,647 $(3,771)$(663)$(234)$2,981 $255 $3,236 
Three Months Ended September 30, 2023
(in millions, except
shares in thousands)		Common StockAdditional
Paid-in Capital		Accumulated DeficitAccumulated
Other
Comprehensive Loss		Treasury Stock Total
DXC Equity		Non-
Controlling Interest		Total Equity
SharesAmount
Balance at June 30, 2023
210,584 $2 $8,677 $(4,445)$(739)$(217)$3,278 $325 $3,603 
Net income
99 99 99 
Other comprehensive loss(35)(35)(1)(36)
Share-based compensation expense23 23 23 
Acquisition of treasury stock(1)(1)(1)
Share repurchase program(2)
(9,958)(420)204(216)(216)
Stock option exercises and other common stock transactions164 — — 
Non-controlling interest distributions and other(1)(1)$(4)(5)
Balance at September 30, 2023
200,790 $2 $8,280 $(4,143)$(774)$(218)$3,147 $320 $3,467 
6

Six Months Ended September 30, 2024
(in millions, except
shares in thousands)		Common StockAdditional
Paid-in Capital		 Accumulated Deficit
Accumulated
Other
Comprehensive Loss
Treasury Stock(1)
Total
DXC Equity		Non-
Controlling Interest		Total Equity
SharesAmount
Balance at March 31, 2024
183,431 $2 $7,599 $(3,839)$(732)$(219)$2,811 $255 $3,066 
Net income68 68 2 70 
Other comprehensive income
69 69 69 
Share-based compensation expense48 48 48 
Acquisition of treasury stock(15)(15)(15)
Stock option exercises and other common stock transactions3,090 — — 
Non-controlling interest distributions and other— (2)(2)
Balance at September 30, 2024
186,521 $2 $7,647 $(3,771)$(663)$(234)$2,981 $255 $3,236 
Six Months Ended September 30, 2023
(in millions, except
shares in thousands)		Common StockAdditional
Paid-in Capital		Accumulated DeficitAccumulated
Other
Comprehensive Loss		Treasury Stock Total
DXC Equity		Non-
Controlling Interest		Total Equity
SharesAmount
Balance at March 31, 2023
218,058 $2 $9,121 $(4,665)$(774)$(187)$3,497 $323 $3,820 
Net income135 135 6 141 
Other comprehensive loss— (1)(1)
Share-based compensation expense45 45 45 
Acquisition of treasury stock(31)(31)(31)
Share repurchase program(2)
(20,934)(886)388(498)(498)
Stock option exercises and other common stock transactions3,666 — — 
Non-controlling interest distributions and other(1)(1)(8)(9)
Balance at September 30, 2023
200,790 $2 $8,280 $(4,143)$(774)$(218)$3,147 $320 $3,467 
        
(1) 5,528,105 treasury shares as of September 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
stock.



The accompanying notes are an integral part of these condensed consolidated financial statements.
7


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. 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,” (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.

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, 2024 (“fiscal 2024”).
8
DXC TECHNOLOGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)


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

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
DescriptionImpact
November 2023

ASU 2023-07, “Improvements to Reportable Segment Disclosures”
Fiscal 2025This update requires disclosure of significant segment expenses used by the Chief Operating Decision Maker (“CODM”) to assess performance and allocate resources, disclose the title and position of the CODM and modifies other segment disclosures and the frequency thereof. Early adoption of this update is permitted.The Company is in the process of assessing the impacts and method of adoption. This ASU will impact the Company’s segment disclosures, but not its consolidated financial statements.
December 2023

ASU 2023-09, “Improvements to Income Tax Disclosures”
Fiscal 2026
The update requires disclosure of disaggregated income taxes paid, prescribes standard categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. Early adoption of this update is permitted.The Company is in the process of assessing the impacts and method of adoption. This ASU will impact our income tax disclosures, but not its consolidated financial statements.

Other recently issued ASUs that have not yet been adopted are not expected to have a material effect on DXC’s condensed consolidated financial statements.
9
DXC TECHNOLOGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)


Note 2 – 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 EndedSix Months Ended
(in millions, except per-share amounts)September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Net income attributable to DXC common stockholders:
$42 $99 $68 $135 
Common share information:
Weighted average common shares outstanding for basic EPS180.93 201.72 180.30 205.90 
Dilutive effect of stock options and equity awards2.95 1.34 3.71 3.00 
Weighted average common shares outstanding for diluted EPS183.88 203.06 184.01 208.90 
Earnings per share:
Basic$0.23 $0.49 $0.38 $0.66 
Diluted$0.23 $0.49 $0.37 $0.65 

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 EndedSix Months Ended
September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Stock Options906,745 960,455 917,260 924,990 
Restricted Stock Units1,700,549 1,556,542 1,742,251 1,480,781 
Performance Stock Units107,406 1,700,588 114,745 35,604 


10
DXC TECHNOLOGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)


Note 3 – Receivables

Allowance for Doubtful Accounts

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

As of
(in millions)September 30, 2024March 31, 2024
Beginning balance$35 $47 
Provisions for losses on accounts receivable10 — 
Other adjustments to allowance and write-offs(6)(12)
Ending balance$39 $35 

Receivables Facility

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

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

Note 4 – 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 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 EndedSix Months Ended
(in millions)September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Operating lease cost$80 $91 $160 $181 
Short-term lease cost 6 9 12 16 
Variable lease cost 13 16 26 31 
Sublease income(5)(6)(10)(10)
Total operating costs$94 $110 $188 $218 

11
DXC TECHNOLOGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)


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

Six Months Ended
(in millions)September 30, 2024September 30, 2023
Cash paid for amounts included in the measurement of operating lease liabilities – operating cash flows
$160 $181 
ROU assets obtained in exchange for operating lease liabilities(1)
$72 $95 
    
(1) Net of $332 million and $557 million in lease modifications and terminations during the first six months of fiscal 2025 and 2024, respectively. See Note 15 – “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 ItemSeptember 30, 2024March 31, 2024
ROU operating lease assetsOperating right-of-use assets, net$632 $731 
Operating lease liabilitiesCurrent operating lease liabilities$250 $282 
Operating lease liabilities Non-current operating lease liabilities420 497 
Total operating lease liabilities $670 $779 

The weighted-average operating lease term was 3.7 years and 3.9 years as of September 30, 2024 and March 31, 2024, respectively. The weighted-average operating lease discount rate was 4.7% and 4.6% as of September 30, 2024 and March 31, 2024, respectively.

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

Fiscal Year
(in millions)
Remainder of 2025
2026202720282029
Thereafter
Total
Operating lease payments
$150 $219 $139 $109 $67 $43 $727 
Less: imputed interest
(57)
Total operating lease liabilities
$670 

12
DXC TECHNOLOGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Finance Leases

The components of finance lease expense were as follows:

Three Months EndedSix Months Ended
(in millions)September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Amortization of right-of-use assets$24 $37 $49 $79 
Interest on lease liabilities3 3 7 7 
Total finance lease expense$27 $40 $56 $86 

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

(in millions)Six Months Ended September 30, 2024Six Months Ended September 30, 2023
Interest paid for finance lease liabilities – Operating cash flows
$7 $7 
Cash paid for amounts included in the measurement of finance lease obligations – financing cash flows
105 124 
Total cash paid in the measurement of finance lease obligations$112 $131 
Capital expenditures through finance lease obligations(1)
$17 $41 
    

(1) See Note 15 – ”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 ItemSeptember 30, 2024March 31, 2024
ROU finance lease assetsProperty and Equipment, net $205 $264 
Finance lease Short-term debt and current maturities of long-term debt $158 $178 
Finance leaseLong-term debt, net of current maturities 207 242 
Total finance lease liabilities(1)
$365 $420 
    

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

The weighted-average finance lease term was 2.9 years as of both September 30, 2024 and March 31, 2024. The weighted-average finance lease discount rate was 5.1% and 4.3% as of September 30, 2024 and March 31, 2024, respectively.

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

Fiscal Year
(in millions)
Remainder of 2025
2026202720282029
Thereafter
Total
Finance lease payments
$88 $138 $93 $48 $17 $4 $388 
Less: imputed interest
(23)
Total finance lease liabilities
$365 
13
DXC TECHNOLOGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)


Note 5 – 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.

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 September 30, 2024 and March 31, 2024 were $721 million and $885 million, respectively. As of September 30, 2024, the related forecasted transactions extend through August 2026.

During the three and six months ended September 30, 2024 and September 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 September 30, 2024, $9 million of loss related to the cash flow hedge reported in accumulated other comprehensive loss is expected to be reclassified into earnings within the next 12 months.

Derivatives Not Designated for Hedge Accounting

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 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 September 30, 2024 and March 31, 2024 were $1.7 billion and $1.5 billion, respectively.
14
DXC TECHNOLOGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)


The following table presents the foreign currency (gain) loss to Other income, net:
For the Three Months EndedFor the Six Months Ended
(in millions)September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Foreign currency remeasurement (1)
$(25)$25 $(18)$21 
Undesignated foreign currency forward contracts (2)
25 (26)19 (30)
Total - Foreign currency (gain) loss
$— $(1)$1 $(9)
        

(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.

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 September 30, 2024, there were four counterparties with concentration of credit risk, and based on gross fair value, the maximum amount of loss that the Company could incur is $2 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 income (loss) when such net investments are sold or substantially liquidated.

As of September 30, 2024 and March 31, 2024, DXC had $725 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 six months ended September 30, 2024, the pre-tax loss on foreign currency-denominated debt designated for hedge accounting recognized in other comprehensive income was $29 million and $24 million, respectively.
15
DXC TECHNOLOGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)


Note 6 – Intangible Assets

Intangible assets consisted of the following:

As of September 30, 2024
As of March 31, 2024
(in millions)Gross Carrying ValueAccumulated AmortizationNet Carrying ValueGross Carrying ValueAccumulated AmortizationNet Carrying Value
Software$3,747 $3,075 $672 $3,721 $3,070 $651 
Customer related intangible assets
3,959 2,810 1,149 3,892 2,588 1,304 
Other intangible assets
298 138 160 309 134 175 
Total intangible assets$8,004 $6,023 $1,981 $7,922 $5,792 $2,130 


The components of amortization expense were as follows:

Three Months EndedSix Months Ended
(in millions)September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Intangible asset amortization$187 $195 $366 $378 
Transition and transformation contract cost amortization(1)
48 54 101 102 
Total amortization expense$235 $249 $467 $480 
        

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

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

Fiscal Year (in millions)
Remainder of 2025$379 
2026674 
2027477 
2028199 
202990 
Thereafter162 
Total$1,981 

16
DXC TECHNOLOGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)


Note 7 – Goodwill

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

(in millions)GBSGISTotal
Balance as of March 31, 2024, net
$532 $— $532 
Assets held for sale(3)— (3)
Foreign currency translation 12 — 12 
Balance as of September 30, 2024, net
$541 $— $541 
Goodwill, gross5,031 5,066 10,097 
Accumulated impairment losses(4,490)(5,066)(9,556)
Balance as of September 30, 2024, net
$541 $— $541 

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

Goodwill Impairment Analyses

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

For the Company’s annual goodwill impairment assessment as of July 1, 2024, the Company chose to perform a quantitative goodwill impairment test. This quantitative test concluded that the fair value of the Company’s GBS reporting unit exceeded its carrying amount and, thereby, the goodwill balance for GBS is not impaired.

As of September 30, 2024, the Company assessed whether there were events or changes in circumstances that would more likely than not reduce the fair value of any of its reporting units below its carrying amount and require goodwill to be tested for impairment. The Company determined that there have been no such indicators and therefore, it was unnecessary to perform an interim goodwill impairment test as of September 30, 2024.
17
DXC TECHNOLOGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Note 8 – Debt

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

(in millions)Interest RatesFiscal Year Maturities
9/30/2024(1)
3/31/2024(1)
Short-term debt and
current maturities of long-term debt
Current maturities of long-term debtVarious2025 - 202668 93 
Current maturities of finance lease liabilities
0.46% - 14.59%
2025 - 2026158 178 
Short-term debt and current maturities of long-term debt$226 $271 
Long-term debt, net of current maturities
€650 million Senior notes
1.75%2026725 700 
$700 million Senior notes
1.80%2027697 697 
€750 million Senior notes
0.45%2028834 806 
$650 million Senior notes
2.375%2029646 646 
€600 million Senior notes
0.95%2032665 643 
Finance lease liabilities
0.46% - 14.59%
2025 - 2035365 420 
Borrowings for assets acquired under long-term financing
0.00% - 9.78%
2025 - 2029119 177 
Long-term debt4,051 4,089 
Less: current maturities 226 271 
Long-term debt, net of current maturities$3,825 $3,818 
        

(1)The carrying amounts of the senior notes as of September 30, 2024 and March 31, 2024, include the remaining principal outstanding of $3,582 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.


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 September 30, 2024 and March 31, 2024, respectively, compared with carrying value of $3.7 billion and $3.7 billion as of September 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.

18
DXC TECHNOLOGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)


Note 9 – 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 EndedSix Months Ended
(in millions)September 30, 2024September 30, 2023September 30, 2024September 30, 2023
United States$889 $1,002 $1,786 $2,004 
United Kingdom451 460 899 925 
Other Europe1,035 1,051 2,065 2,115 
Australia309 330 608 672 
Other International557 593 1,119 1,166 
Total Revenues$3,241 $3,436 $6,477 $6,882 

The revenue by geography pertains to both of the Company’s reportable segments. Refer to Note 16 – “Segment Information” for the Company’s segment disclosures.

Remaining Performance Obligations

As of September 30, 2024, approximately $16.4 billion of revenue is expected to be recognized from remaining performance obligations. We expect to recognize revenue on approximately 26% 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:
As of
(in millions)
Balance Sheet Line Item
September 30, 2024March 31, 2024
Trade receivables, net
Receivables and contract assets, net of allowance for doubtful accounts
$2,117 $2,195 
Contract assets
Receivables and contract assets, net of allowance for doubtful accounts
$394 $362 
Contract liabilities
Deferred revenue and advance contract payments and Non-current deferred revenue
$1,348 $1,537 

Change in contract liabilities were as follows:
Six Months Ended
(in millions)September 30, 2024September 30, 2023
Balance, beginning of period$1,537 $1,842 
Deferred revenue 737 873 
Recognition of deferred revenue(879)(1,085)
Currency translation adjustment39 (23)
Other(86)(29)
Balance, end of period$1,348 $1,578 
19
DXC TECHNOLOGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)


Note 10 – Restructuring Costs

The composition of restructuring liabilities by financial statement line item is as follows:
As of
(in millions)September 30, 2024March 31, 2024
Accrued expenses and other current liabilities$35 $40 
Other long-term liabilities6 11 
Total$41 $51 

Summary of Restructuring Plans

Fiscal 2025 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, 2024
Costs Expensed, Net of Reversals
Costs Not Affecting Restructuring Liability(1)
Cash Paid
Other(2)
Restructuring Liability as of September 30, 2024
Fiscal 2025 Plan
Workforce Reductions$— $42 $— $(28)$— $14 
Facilities Costs— 23 (17)(5)(1)— 
— 65 (17)(33)(1)14 
Fiscal 2024 Plan
Workforce Reductions$8 $— $— $(6)$(1)$1 
Facilities Costs2 10 (1)(10)— 1 
10 10 (1)(16)(1)2 
Other Prior Year and Acquired Plans
Workforce Reductions$40 $(2)$— $(14)$— $24 
Facilities Costs1 8 (3)(6)1 1 
41 6 (3)(20)1 25 
Total$51 $81 $(21)$(69)$(1)$41 
        

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

Restructuring costs for the six months ended September 30, 2024 includes $8 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.
20
DXC TECHNOLOGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)


Note 11 – Pension and Other Benefit Plans

Defined Benefit Plans

The components of net periodic pension income were:
Three Months EndedSix Months Ended
(in millions)September 30, 2024September 30, 2023September 30, 2024September 30, 2023
Service cost$13 $15 $26 $30 
Interest cost76 77 150 156 
Expected return on assets(115)(112)(228)(226)
Amortization of prior service costs(1)(1)(2)(3)
Net periodic pension income$(27)$(21)$(54)$(43)

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 12 – Income Taxes

The Company’s effective tax rate (“ETR”) was 51.6% and 22.7% for the three months ended September 30, 2024, and September 30, 2023, respectively, and 56.5% and 31.6% for the six months ended September 30, 2024, and September 30, 2023, respectively. For the three months ended September 30, 2024, the primary drivers of the ETR were the global mix of income, U.S. tax on foreign income, the foreign tax credit, and an increase in interest receivables due from tax authorities. For the six months ended September 30, 2024, the primary drivers of the ETR were the global mix of income, U.S. tax on foreign income, the foreign tax credit, an increase in interest receivables due from tax authorities, and a decrease in a deferred tax asset for stock based compensation. For the three and six months ended September 30, 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.

The majority of our global unremitted foreign earnings have been taxed or would be exempt from U.S. tax upon repatriation. Such earnings and the majority of current foreign earnings are not indefinitely reinvested. The following earnings are considered indefinitely reinvested: approximately $497 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 $424 million of earnings in foreign subsidiaries. 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 $15 million tax indemnification receivable related to uncertain tax positions, a $52 million tax indemnification receivable related to other tax payables, and a $99 million tax indemnification payable related to other tax receivables.

21
DXC TECHNOLOGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

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 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.

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, foreign exchange losses, and a third-party financing transaction 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 of approximately $527 million (including estimated interest and penalties) for the unreserved portion of these items and cash tax payments of approximately $602 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. Tax Court. 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 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. Reg. Sec. 1.367(a)-8(p) to correct the issue.

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 2021 to December 31, 2025. The Company expects to reach resolution for fiscal and tax return years 2009 through 2011 no earlier than fiscal year 2026. The Company expects to reach resolution for 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 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. 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 $62 million.

22
DXC TECHNOLOGY COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)


Note 13 – Stockholders’ Equity

Share Repurchase Program

During the first six months of fiscal 2025, there were no share repurchases under our Share Repurchase Program. The details of shares repurchased during the six months ended September 30, 2023 are shown below:

Fiscal 2024
Fiscal PeriodNumber of Shares RepurchasedAverage Price Per ShareAmount
(in millions)
1st Quarter10,975,643 $25.53 $280 
2nd Quarter9,958,585 $21.50 214 
Total20,934,228 $23.61 $494