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What changed in DXC Technology Co's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of DXC Technology Co's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+346 added−367 removedSource: 10-K (2023-05-19) vs 10-K (2022-05-26)

Top changes in DXC Technology Co's 2023 10-K

346 paragraphs added · 367 removed · 250 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

34 edited+16 added−17 removed29 unchanged
Biggest changeSee Note 2 - "Acquisitions" and Note 3 - "Divestitures" for further information on acquisitions and divestitures. Segments and Services Our reportable segments are Global Business Services ("GBS") and Global Infrastructure Services ("GIS"). Global Business Services GBS provides innovative technology solutions that help our customers address key business challenges and accelerate transformations tailored to each customer’s industry and specific objectives.
Biggest changeGlobal Business Services GBS provides innovative technology solutions that help our customers address key business challenges and accelerate transformations tailored to each customer’s industry and specific objectives. 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.
The information on our website is not incorporated by reference into, and is not a part of, this report. 8 Information About Our Executive Officers Name Age Year First Elected as Officer Term as an Officer Position Held with the Registrant as of the filing date Family Relationship Michael J.
The information on our website is not incorporated by reference into, and is not a part of, this report. Information About Our Executive Officers Name Age Year First Elected as Officer Term as an Officer Position Held with the Registrant as of the filing date Family Relationship Michael J.
Our conservation efforts are supported in part by our shift to a virtual-first operating model, which enables our workforce to be largely remote and helps us reduce our greenhouse gas emissions and our overall energy consumption.
Our conservation efforts are supported in part by our shift to a virtual-first operating model, which enables our workforce to be largely remote and helps us reduce our overall energy consumption, which in turn helps to reduce our greenhouse gas emissions.
Through our global learning management ecosystem, we offer hundreds of learning programs as well as a career development system to help employees reach their potential. Providing ways to learn, grow, and explore new and challenging opportunities contribute to our ability to retain a motivated, knowledgeable workforce. Assessing employee abilities and contributions is a cornerstone of development at DXC.
Through our global learning management ecosystem, we offer hundreds of learning programs as well as a career development system to help employees reach their potential. Providing ways to learn, grow, and explore new and challenging opportunities contributes to our ability to retain a motivated, knowledgeable workforce. Assessing employee abilities and contributions is a cornerstone of development at DXC.
Human Capital Management As a leading global information technology services company, we attract highly skilled and educated people. As of March 31, 2022, we employed more than 130,000 people worldwide. At DXC we value our people and the opportunity to engage with them - we are at our best when our people feel valued and respected.
Human Capital Management As a leading global information technology services company, we attract highly skilled and educated people. As of March 31, 2023, we employed more than 130,000 people worldwide. At DXC we value our people and the opportunity to engage with them - we are at our best when our people feel valued and respected.
Our customers include commercial businesses of many sizes and across many industries, as well as public sector enterprises. No individual customer exceeded 10% of our consolidated revenues for fiscal 2022, fiscal 2021, or fiscal 2020. Seasonality General economic conditions have an impact on our business and financial results.
Our customers include commercial businesses of many sizes and across many industries, as well as public sector enterprises. No individual customer exceeded 10% of our consolidated revenues for fiscal 2023, fiscal 2022, or fiscal 2021. Seasonality General economic conditions have an impact on our business and financial results.
Finch previously served as Executive Vice President and Chief Human Resources Officer of AECOM from September 2015 to October 2019.
Finch served as Executive Vice President and Chief Human Resources Officer of AECOM from September 2015 to October 2019.
Available Information We use our corporate website, www.dxc.technology , as a routine channel for distribution of important information, including detailed company information, financial news, SEC filings, Annual Reports, historical stock information and links to a recent earnings call webcast.
Available Information We use our corporate website, www.dxc.technology , as a routine channel for distributing important information, including detailed company information, financial news, SEC filings, Annual Reports, historical stock information and links to a recent earnings call webcast.
Prior to joining DXC, Mr. Sharp served as Vice President and Chief Financial Officer, Defense Systems Sector for Northrop Grumman (“NOC”) from June 2018 to November 2020. From January 2016 to June 2018, Mr. Sharp served as Senior Vice President, Finance of Orbital ATK (subsequently purchased by NOC).
Sharp served as Vice President and Chief Financial Officer, Defense Systems Sector for Northrop Grumman (“NOC”) from June 2018 to November 2020. From January 2016 to June 2018, Mr. Sharp served as Senior Vice President, Finance of Orbital ATK (subsequently purchased by NOC).
We strive to minimize our impact on the environment and improve resource efficiency in the areas of energy consumption, data center management and travel and transportation.
We strive to reduce our impact on the environment and improve resource efficiency in the areas of energy consumption, data center management and travel and transportation.
Prior to that, he served as Senior Vice President, Chief Accounting Officer and Corporate Controller of Leidos, Inc. (formerly SAIC, Inc.). Before joining Leidos, Mr. Sharp spent a decade at CSC, the predecessor company to DXC and eight years at Ernst & Young. Mr. Sharp also served in the United States Marine Corps. William L.
Prior to that, he served as Senior Vice President, Chief Accounting Officer and Corporate Controller of Leidos, Inc. (formerly SAIC, Inc.). Before joining Leidos, Mr. Sharp spent a decade at CSC, the predecessor company to DXC and eight years at Ernst & Young. Mr. Sharp also served in the United States Marine Corps. Mary E.
Key transformation journey priorities include: • Inspire and Take Care of our Colleagues – Ensuring the health and safety of our people is a top priority, especially in the current environment Continuing to bring in new technology, account and delivery talent across the world, and making investments that recognize and reward our people • Focus on Customers – Strengthening our customer relationships and ensuring we are proactively delivering for customers • Optimize Costs – Optimizing value to better serve our customers by eliminating confusion and complexity • Seize the Market – Seizing the market opportunity by cross-selling and expanding what we do with our customers across the Enterprise Technology Stack • Financial Foundation – Unlocking value by pursuing strategic alternatives, rationalizing our portfolio, and strengthening our balance sheet through creating a firm foundation that reflects our commitment to running a long-term sustainable business The Company will continue to focus on execution of its transformation journey in the next fiscal year, with a continued focus on our people, revenue stabilization, cost optimization and winning in the market.
Key transformation journey priorities include: • Inspire and Take Care of our Colleagues – Continuing to bring in new technology, account and delivery talent across the world, and making investments that recognize and reward our people • Focus on Customers – Strengthening our customer relationships and ensuring we are proactively delivering for customers • Optimize Costs – Optimizing value to better serve our customers by eliminating confusion and complexity • Seize the Market – Seizing the market opportunity by cross-selling and expanding what we do with our customers across the six offerings • Financial Foundation – Unlocking value by pursuing strategic alternatives, rationalizing our portfolio, and strengthening our balance sheet through creating a firm foundation that reflects our commitment to running a long-term sustainable business The Company will continue to focus on execution of its transformation journey in the next fiscal year, with a continued focus on our people, revenue stabilization, cost optimization and winning in the market.
Mr. Salvino graduated from Marietta College with a Bachelor of Science degree in industrial engineering. He serves on the Marietta College Board of Trustees and is also a member of the Board of Visitors of the Duke University Pratt School of Engineering. Kenneth P. Sharp became the Executive Vice President and Chief Financial Officer of DXC in November 2020.
Mr. Salvino graduated from Marietta College with a Bachelor of Science degree in industrial engineering. He is a member of the Board of Visitors of the Duke University Pratt School of Engineering. Kenneth P. Sharp became the Executive Vice President and Chief Financial Officer of DXC in November 2020. Prior to joining DXC, Mr.
Our ESG leadership team regularly updates the committee on ESG status and provides an update to the full board annually. 6 Our ESG strategy reflects our ongoing commitment to being a responsible corporate citizen.
The Nominating/Corporate Governance Committee of our Board has specific oversight of ESG. Our ESG leadership team regularly updates the committee on ESG status and provides an update to the full board annually. 6 Our ESG strategy reflects our ongoing commitment to being a responsible corporate citizen.
We are proud to be part of the global movement to minimize the impact of climate change on the world, and we are dedicated to driving sustainable growth by setting ambitious, science-based emissions reduction targets in the next two years.
We are proud to be part of the global movement to reduce the impact of climate change on the world, and we are dedicated to driving sustainable growth by setting ambitious, science-based emissions reduction targets.
Based on feedback received through periodic engagement surveys, management has implemented several initiatives to improve the employee experience through rewards and recognition, open communications and process improvement.
Value of Employee Engagement We value our people and take various actions for employee engagement. Based on feedback received through periodic engagement surveys, management has implemented several initiatives to improve the employee experience through rewards and recognition, open communications and process improvement.
DXC is firmly committed to preventing the exploitation of vulnerable groups. Our main human rights–related focus areas are promoting good practice through our large and diverse global supply chain and supporting a diverse and inclusive corporate culture.
DXC is firmly committed to seeking to prevent modern slavery and the exploitation of vulnerable groups. Our main human rights–related focus areas are adopting policies and practices aimed at preventing human rights abuses through our large and diverse global supply chain and supporting a diverse and inclusive corporate culture.
Transformation Journey DXC's transformation journey focuses on building stronger relationships with customers, its people, and unlocking value across the Enterprise Technology Stack.
Transformation Journey DXC's transformation journey focuses on building stronger relationships with customers, its people, and unlocking value across our six offerings.
Offerings such as DXC Modern Workplace, cloud migration services and data-driven sustainability services directly reduce carbon emissions for our customers. (1) Additional information about our ESG initiatives is available on our website at http://dxc.com/us/en/about-us/corporate-responsibility . The information on our website is not incorporated by reference into, and is not a part of, this report.
Offerings such as DXC Modern Workplace, cloud migration services and data-driven sustainability services can directly reduce carbon emissions for our customers, based on reports from our customers. Additional information about our ESG initiatives is available on our website at http://dxc.com/us/en/about-us/corporate-responsibility .
Before joining DXC, Mr. Voci served as Senior Vice President, Controller and Chief Accounting Officer for CACI International Inc. from November 2018 to May 2021. From 2016 to November 2018, Mr. Voci served as Vice President, Controller and Chief Accounting Officer of Orbital ATK (subsequently purchased by Northrop Grumman).
Before joining DXC, Mr. Voci served as Senior Vice President, Corporate Controller and principal accounting officer for CACI International Inc. from November 2018 to May 2021. From June 2018 to November 2018, Mr. Voci served as Vice President and Controller for the Innovation Systems Sector of Northrop Grumman Corporation. From 2016 to June 2018, Mr.
Deckelman, Jr. serves as Executive Vice President and General Counsel of DXC since September 2020. He previously served as Executive Vice President, General Counsel and Secretary of DXC since the completion of the HPES Merger. Prior to that, Mr. Deckelman served as Executive Vice President, General Counsel and Secretary of CSC. Mr.
Ms. Finch also served as VP Human Resources of Abilizer Solutions Inc. from 2000 to 2001. William L. Deckelman, Jr. serves as Executive Vice President and General Counsel of DXC since September 2020. He previously served as Executive Vice President, General Counsel and Secretary of DXC since the completion of the HPES Merger. Prior to that, Mr.
The Company is continuing with its portfolio shaping efforts, making the right investments and divesting assets that the Company does not believe are well integrated with its enterprise technology stack and its strategic direction in order to better focus on its strategy. 3 Important Acquisitions and Divestitures During the third quarter of fiscal 2022, a subsidiary of DXC entered into a purchase agreement to sell (the "FDB Sale") its German financial services subsidiary ("FDB" or the "FDB Business") to the FNZ Group ("FNZ") for €300 million (approximately $335 million as of March 31, 2022), subject to certain adjustments.
The Company is continuing with its portfolio-shaping efforts, making the right investments and divesting assets that the Company does not believe are well integrated with the six offerings and its strategic direction in order to better focus on its strategy. 3 Important Divestitures During the fourth quarter of fiscal 2023, DXC completed the sale of its German financial services subsidiary ("FDB" or the "FDB Business") to the FNZ Group ("FNZ") for €308 million (approximately $329 million), resulting in a pre-tax gain of approximately $215 million.
Deckelman served as Executive Vice President and General Counsel of Affiliated Computer Services Inc. from 2000 to 2008, served as a director from 2000 to 2003, and previously held various executive positions there from 1989 to 1995. Mary E. Finch was appointed as Executive Vice President and Chief Human Resources Officer of DXC in October 2019. Ms.
Deckelman served as Executive Vice President and General Counsel of Affiliated Computer Services Inc. from 2000 to 2008, served as a director from 2000 to 2003, and previously held various executive positions there from 1989 to 1995. James M. Brady serves as Executive Vice President and Chief Operating Officer of DXC since April 2023.
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 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.
ITEM 1. BUSINESS Overview DXC, a Nevada corporation, is a global IT services market leader. We provide mission-critical IT services that transform global businesses. We deliver excellence for our customers and colleagues around the world.
ITEM 1. BUSINESS Overview DXC, a Nevada corporation, is a global IT services market leader. We provide mission-critical IT services that transform global businesses. We deliver excellence for our customers and colleagues around the world. Our more than 130,000 people in approximately 70 countries are entrusted by our customers, who represent approximately half of today’s Fortune 500 companies.
Salvino 56 2019 Indefinite President and Chief Executive Officer None Kenneth P. Sharp 51 2020 Indefinite Executive Vice President and Chief Financial Officer None William L. Deckelman, Jr. 64 2017 Indefinite Executive Vice President and General Counsel None Mary E.
Salvino 57 2019 Indefinite Chairman, President and Chief Executive Officer None Kenneth P. Sharp 52 2020 Indefinite Executive Vice President and Chief Financial Officer None Mary E. Finch 54 2019 Indefinite Executive Vice President, Chief Human Resources Officer and Global Lead, Marketing None William L. Deckelman, Jr. 65 2017 Indefinite Executive Vice President and General Counsel None James M.
Prior to that, he spent eleven years at Air Products and Chemicals, Inc. (“APD”). While at APD from 2004 to 2015, Mr. Voci was Global Controller Industrial Gases from 2014 to 2015, Global Controller Merchant Gases from 2011 to 2014, Director, Financial Planning & Analysis from 2007 to 2011 and Global Healthcare Controller from 2004 to 2007. Mr.
Voci was Global Controller Industrial Gases from 2014 to 2015, Global Controller Merchant Gases from 2011 to 2014, Director, Financial Planning & Analysis from 2007 to 2011 and Global Healthcare Controller from 2004 to 2007. Mr.
From 1994 to 2014, Mr. Bagal held a series of leadership roles at Accenture. Christopher R. Drumgoole was appointed as Executive Vice President and Chief Operating Officer of DXC in August 2021. He previously served as Executive Vice President and Chief Information Officer since April 2020. Before joining DXC, Mr.
Drumgoole was appointed Global Lead, Cloud Infrastructure and ITO in April 2023. He previously served as Executive Vice President and Chief Operating Officer of DXC from August 2021 to April 2023 and as Executive Vice President and Chief Information Officer of DXC from April 2020 to August 2021. Before joining DXC, Mr.
Our Board of Directors provides oversight of our ESG program, enabling us to have the governance, long-term strategy and processes to manage ESG outcomes and meet the needs of our stakeholders. The Nominating and Corporate Governance Committee of our Board of Directors has specific oversight of ESG.
Environmental, Social and Governance (ESG) The governance of DXC's ESG program is a multitiered process involving our Board of Directors (the "Board"), members of our executive staff and internal leadership. Our Board provides oversight of our ESG program, enabling us to have the governance, long-term strategy and processes to manage ESG outcomes and meet the needs of our stakeholders.
During the first quarter of fiscal 2022, DXC completed the sale of its healthcare provider software business (“HPS” or the “HPS Business”) to Dedalus Holding S.p.A. (“Dedalus”). The sale was accomplished by the cash purchase of all equity interests and assets attributable to the HPS Business for €468 million (approximately $551 million), subject to certain adjustments.
During the first quarter of fiscal 2022, DXC completed the sale of its healthcare provider software business (“HPS” or the “HPS Business”) to Dedalus Holding S.p.A. (“Dedalus”) for €468 million (approximately $551 million), resulting in a pre-tax gain on sale of $331 million. During fiscal 2021, DXC completed the sale of its U.S.
This helps companies to reduce cost and minimize business disruption, human error, and operational risk while improving customer experiences. 4 Global Infrastructure Services GIS provides a portfolio of technology offerings that deliver predictable outcomes and measurable results while reducing business risk and operational costs for customers. GIS offerings include: • Cloud and Security.
Global Infrastructure Services GIS provides a portfolio of technology offerings that deliver predictable outcomes and measurable results while reducing business risk and operational costs for customers. 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.
Voci 50 2021 Indefinite Senior Vice President, Corporate Controller and Principal Accounting Officer None Business Experience of Executive Officers Michael J. Salvino became the President and Chief Executive Officer of DXC in September 2019 and has been a member of the Board of Directors of DXC since May 2019. Prior to joining DXC, Mr.
He was appointed President and Chief Executive Officer of DXC in September 2019, has been a member of the Board since May 2019 and was appointed Chairman of the Board in July 2022. Prior to joining DXC, Mr.
Ms. Finch also served as VP Human Resources of Abilizer Solutions Inc. from 2000 to 2001. 9 Vinod Bagal serves as President, Cloud and Infrastructure Services since March 2022. He previously served as Executive Vice President, Global Delivery and Transformation of DXC from October 2019 to March 2022. Prior to joining DXC, Mr.
Finch serves as Executive Vice President, Chief Human Resources Officer and Global Lead, Marketing of DXC since April 2023. She previously served as Executive Vice President and Chief Human Resources Officer of DXC from October 2019 to April 2023. Before joining DXC, Ms.
Various platforms like Global Talent Management, Coaching & Mentoring, Career Development programs, and global recognition are also used to improve employee experiences and engagement. _______________________ (1) The information in this section is based in part on data provided to us by our customers, and we do not,and do not intend to, independently verify such information or claims. 7 Management During COVID-19 We are committed to keeping our people safe and well.
Various platforms like Global Talent Management, Coaching & Mentoring, Career Development programs, and global recognition are also used to improve employee experiences and engagement. 7 Training and Education We view professional development as a corporate responsibility - a strategic investment in our employees’ and the company’s future.
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Our more than 130,000 people in approximately 70 countries are entrusted by our customers, nearly half of today’s Fortune 500 companies, to provide solutions across the Enterprise Technology Stack for new levels of performance, scale and competitiveness. DXC was formed on April 1, 2017 by the merger of CSC and HPES (the "HPES Merger").
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We operate through two segments: Global Business Services ("GBS") and Global Infrastructure Services ("GIS"), to provide solutions across our six differentiated offerings that modernize operations and drive innovation across our customers' entire IT estate. DXC was formed on April 1, 2017 by the merger of CSC and HPES (the "HPES Merger").
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The closing of the transaction is subject to certain conditions, including receipt of certain regulatory consents. At March 31, 2022, FDB held approximately $572 million in cash which primarily related to customer deposit liabilities. The Company expects to complete the FDB Sale in fiscal 2023.
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State and Local Health and Human Services business ("HHS" or the "HHS Business") to Veritas Capital Fund Management, L.L.C. ("Veritas Capital") for approximately $5.0 billion, resulting in a pre-tax gain on sale of $2,014 million. See Note 2 - "Divestitures" for further information on divestitures. Segments and Services Our reportable segments are GBS and GIS.
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During fiscal 2021, DXC completed the sale of its U.S. State and Local Health and Human Services business ("HHS" or the "HHS Business") to Veritas Capital Fund Management, L.L.C. ("Veritas Capital") to form Gainwell Technologies.
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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 ("BPS").
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The sale was accomplished by the cash purchase of all equity interests and assets attributable to the HHS Business together with future services to be provided by the Company for a total enterprise value of $5.0 billion, subject to net working capital adjustments and assumed liabilities.
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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.
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During fiscal 2020, DXC completed the acquisition of Luxoft Holding, Inc., a global scale digital service provider whose offerings encompass strategic consulting, custom software development, and digital solution engineering services. We also completed other acquisitions during fiscal 2020 to complement our offerings and to provide opportunities for future growth.
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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.
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We use advanced technologies and methods to accelerate the creation, modernization, delivery and maintenance of high-quality, secure applications allowing customers to innovate faster while reducing risk, time to market, and total cost of ownership. We support customers across all industries, including public sector, insurance, banking and capital markets, and automotive. • Business process services.
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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.
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We perform the integration and optimization of front and back office processes, as well as agile process automation.
Added
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.
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We help customers rapidly modernize by adapting legacy apps to cloud, migrate the right workloads, and effectively manage their multi-cloud environments. Our security solutions help predict attacks, proactively respond to threats, ensure compliance and protect data, applications and infrastructure. • IT Outsour cing ("ITO"). Our ITO services help customers securely and cost-effectively run mission-critical systems and IT infrastructure.
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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. 4 • Modern Workplace.
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We manage and simplify our customers’ existing IT investments, reduce the costs to run them and provide a path for customers to move portions of their IT estates to the cloud to drive innovation and additional savings. • Modern Workplace.
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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.
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We provide services to fit our customer’s employee, business and IT needs from intelligent collaboration, modern device management, digital support services, and mobility services. Our focus on the employee experience provides a consumer-like, digital experience that fits the needs of today's professional.
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DXC has been a signatory of the UN Global Compact ("UNGC") since the inception of our Company, and we are committed in our alignment with the UNGC's Ten Principles for responsible business practices.
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Environmental, Social and Governance ("ESG") In 2021, we enhanced the governance of our ESG program to include a multitiered process involving the Board of Directors, members of our executive staff and internal leadership.
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The information on our website, including our voluntary ESG-related reporting, is not incorporated by reference into, and is expressly not a part of, this report.
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Value of Employee Engagement We value our people and take various actions for employee engagement. We assess employee engagement at least annually through a global engagement survey.
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Brady 56 2023 Indefinite Executive Vice President and Chief Operating Officer None Christopher R. Drumgoole 48 2021 Indefinite Global Lead, Cloud Infrastructure and ITO None Christopher A. Voci 51 2021 Indefinite Senior Vice President, Corporate Controller and Principal Accounting Officer None 8 Business Experience of Executive Officers Michael J. Salvino serves as Chairman, President and Chief Executive Officer of DXC.
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During the past surveys, we have approximately 80% of our people participating in the survey with an employee engagement score measuring above 70%, and employees rated DXC highly on career path, communication, and culture.
Added
Deckelman served as Executive Vice President, General Counsel and Secretary of CSC. Mr.
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DXC employees are equipped and enabled to work virtually and flexibly from home and continue to deliver results for our customers. Science and data will remain the drivers of our approach as we continue to navigate through COVID-19, and promote the safety and well-being of our people.
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He previously served as Executive Vice President of Global Delivery from April 2022 to April 2023 and as President of the Americas Region from June 2020 to April 2022. Before joining DXC, he served as Chief Operating Officer of Accumen Inc., a tech-enabled healthcare performance company, from July 2012 until June 2020. Before joining Accumen Inc., Mr.
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We will remain flexible and ready to react quickly if required to deliver for our customers. We recognize that this is an opportunity for DXC to change employee experience in an impactful way. Training and Education We view professional development as a corporate responsibility — a strategic investment in our employees’ and the company’s future.
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Brady served in a variety of leadership positions at Accenture from June 2006 until July 2012. Prior to that, Mr. Brady served 20 years at Honeywell in a variety of leadership roles, most recently as vice president of Integrated Supply Chain for the aerospace engines business. 9 Christopher R.
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Finch 52 2019 Indefinite Executive Vice President and Chief Human Resources Officer None Vinod Bagal 56 2019 Indefinite President, Cloud and Infrastructure Services None Christopher R. Drumgoole 47 2021 Indefinite Executive Vice President and Chief Operating Officer None Christopher A.
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Voci served first as Vice President, Finance and then as Controller and Chief Accounting Officer of Orbital ATK (subsequently purchased by Northrop Grumman). Prior to that, he spent eleven years at Air Products and Chemicals, Inc. (“APD”). While at APD from 2004 to 2015, Mr.
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Bagal served at Cognizant Technology Solutions as Senior Vice President - Global Multi-Service Integration and North America Delivery and as Senior Vice President - Global Technology Consulting and Multi-Service Integration from September 2014 to October 2019, where he led the transformation of Cognizant's client delivery organization to position it for the next wave of professional services demands.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

122 edited+43 added−41 removed172 unchanged
Biggest changeOur existing indebtedness, together with the incurrence of additional indebtedness and the restrictive covenants contained in, or expected to be contained in the documents evidencing such indebtedness, could have significant consequences on our future operations, including: • events of default if we fail to comply with the financial and other covenants contained in the agreements governing our debt instruments, which could, if material and not cured, result in all of our debt becoming immediately due and payable or require us to negotiate an amendment to financial or other covenants that could cause us to incur additional fees and expenses; • subjecting us to the risk of increased sensitivity to interest rate increases in our outstanding variable-rate indebtedness that could cause our debt service obligations to increase significantly; • increasing the risk of a future credit ratings downgrade of our debt, which could increase future debt costs and limit the future availability for debt financing; • debt service may reduce the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes; • placing us at a competitive disadvantage compared to less leveraged competitors; 20 • increasing our vulnerability to the impact of adverse economic and industry conditions; and • causing us to reduce or eliminate our return of cash to our stockholders, including via dividends and share repurchases.
Biggest changeOur existing indebtedness, together with the incurrence of additional indebtedness and the restrictive covenants contained in, or expected to be contained in the documents evidencing such indebtedness, could have significant consequences on our future operations, including: • events of default if we fail to comply with the financial and other covenants contained in the agreements governing our debt instruments, which could, if material and not cured, result in all of our debt becoming immediately due and payable or require us to negotiate an amendment to financial or other covenants that could cause us to incur additional fees and expenses; • subjecting us to the risk of increased sensitivity to interest rate increases in our outstanding variable-rate indebtedness that could cause our debt service obligations to increase significantly; for instance, the U.S.
In addition, sophisticated hardware and operating system software and applications produced or procured from third parties may contain defects in design or manufacture, including “bugs” and other vulnerabilities that could unexpectedly interfere with the security and operation of our systems, or harm those of third parties with whom we may interact.
In addition, sophisticated hardware and operating system software and applications produced or procured from third parties may contain defects in design or manufacture, including “bugs” or other vulnerabilities that could unexpectedly interfere with the security and operation of our systems, or harm those of third parties with whom we may interact.
A party, whether an insider or third party operating outside the Company, who is able to circumvent our security measures or those of our contractors, partners or vendors could access our IT Systems, or those of a critical third party, and misappropriate proprietary information, the confidential data of our customers, employees or business partners or cause interruption in our or their operations.
A party, whether an insider or a third party operating outside the Company, who is able to circumvent our security measures or those of our contractors, partners or vendors could access our IT Systems, or those of a critical third party, and misappropriate proprietary information, the confidential data of our customers, employees or business partners or cause interruption in our or their operations.
The cost, potential monetary damages, and operational consequences of responding to security incidents and implementing remediation measures could be significant and may be in excess of insurance policy limits or be not covered by our insurance at all.
The cost, potential monetary damages, and operational consequences of responding to security incidents and implementing remediation measures could be significant and may be in excess of insurance policy limits or not be covered by our insurance at all.
The regulatory landscape in these areas continues to evolve rapidly, and there is a risk that the Company could fail to address or comply with the fast changing regulatory environment, which could lead to regulatory or other actions which result in material liability for the Company.
The regulatory landscape in these areas continues to evolve rapidly, and there is a risk that the Company could fail to address or comply with the fast changing regulatory environment, which could lead to regulatory or other actions that could result in material liability for the Company.
The markets we serve are highly competitive and characterized by rapid technological change which has resulted in deflationary pressure in the price of services which in turn can adversely impact our margins. Our competitors may develop solutions or services that make our offerings obsolete or may force us to decrease prices on our services which can result in lower margins.
The markets we serve are highly competitive and characterized by rapid technological change, which has resulted in deflationary pressure in the price of services that in turn can adversely impact our margins. Our competitors may develop solutions or services that make our offerings obsolete or may force us to decrease prices on our services which can result in lower margins.
Divestiture transactions also involve significant challenges and risks, including: • the potential loss of key customers, suppliers, vendors and other key business partners; • declining employee morale and retention issues affecting employees, which may result from changes in compensation, or changes in management, reporting relationships, future prospects or perceived expectations; • difficulty making new and strategic hires of new employees; • diversion of management time and a shift of focus from operating the businesses to transaction execution considerations; • customers delaying or deferring decisions or ending their relationships; • the need to provide transition services, which may result in stranded costs and the diversion of resources and focus; • the need to separate operations, systems (including accounting, management, information, human resource and other administrative systems), technologies, products and personnel, which is an inherently risky and potentially lengthy and costly process; • the inefficiencies and lack of control that may result if such separation is delayed or not implemented effectively, and unforeseen difficulties and expenditures that may arise as a result including potentially significant stranded costs; • our desire to maintain an investment grade credit rating may cause us to use cash proceeds, if any, from any divestitures or other strategic transactions that we might otherwise have used for other purposes in order to reduce our financial leverage; • the inability to obtain necessary regulatory approvals or otherwise satisfy conditions required in order consummate any such transactions; • our dependence on accounting, financial reporting, operating metrics and similar systems, controls and processes of divested businesses could lead to challenges in preparing our consolidated financial statements or maintaining effective financial control over financial reporting; and • contractual terms limiting our ability to compete for or perform certain contracts or services.
Divestiture transactions also involve significant challenges and risks, including: • the potential loss of key customers, suppliers, vendors and other key business partners; • declining employee morale and retention issues affecting employees, which may result from changes in compensation, or changes in management, reporting relationships, future prospects or perceived expectations; • difficulty in making new and strategic hires of new employees; • diversion of management time and a shift of focus from operating the businesses to transaction execution considerations; • customers delaying or deferring decisions or ending their relationships with us; • the need to provide transition services, which may result in stranded costs and the diversion of resources and focus; • the need to separate operations, systems (including accounting, management, information, human resources and other administrative systems), technologies, products and personnel, which is an inherently risky and potentially lengthy and costly process; • the inefficiencies and lack of control that may result if such separation is delayed or not implemented effectively, and unforeseen difficulties and expenditures that may arise as a result including potentially significant stranded costs; • our desire to maintain an investment grade credit rating may cause us to use cash proceeds, if any, from any divestitures or other strategic transactions that we might otherwise have used for other purposes in order to reduce our financial leverage; • the inability to obtain necessary regulatory approvals or otherwise satisfy conditions required in order consummate any such transactions; • our dependence on accounting, financial reporting, operating metrics and similar systems, controls and processes of divested businesses could lead to challenges in preparing our consolidated financial statements or maintaining effective financial control over financial reporting; and • contractual terms limiting our ability to compete for or perform certain contracts or services.
If we are unable to adequately address these concerns, our business and results of operations could suffer. 15 Compliance with new privacy and security laws, requirements and regulations may result in cost increases due to expanded compliance obligations, potential systems changes, the development of additional administrative processes and increased enforcement actions, litigation, fines and penalties.
If we are unable to adequately address these concerns, our business and results of operations could suffer. Compliance with new privacy and security laws, requirements and regulations may result in cost increases due to expanded compliance obligations, potential systems changes, the development of additional administrative processes and increased enforcement actions, litigation, fines and penalties.
Additionally, the inability to adequately develop and train personnel and assimilate key new hires or promoted employees could have a material adverse effect on relationships with third parties, our financial condition and results of operations and cash flows. 23 We also must manage leadership development and succession planning throughout our business.
Additionally, the inability to adequately develop and train personnel and assimilate key new hires or promoted employees could have a material adverse effect on relationships with third parties, our financial condition and results of operations and cash flows. We also must manage leadership development and succession planning throughout our business.
If we are unable to effectively manage these complicated relationships with alliance partners, our business and results of operations could be adversely affected. 21 We face aggressive price competition and may have to lower prices to stay competitive, while simultaneously seeking to maintain or improve revenue and gross margin.
If we are unable to effectively manage these complicated relationships with alliance partners, our business and results of operations could be adversely affected. We face aggressive price competition and may have to lower prices to stay competitive, while simultaneously seeking to maintain or improve revenue and gross margin.
Further, any negative publicity with respect to customer contracts or any related proceedings, regardless of accuracy, may damage our business by harming our ability to compete for new contracts. Contracts with the U.S. federal government and related agencies are also subject to issues with respect to federal budgetary and spending limits or matters.
Further, any negative publicity with respect to customer contracts or any related proceedings, regardless of accuracy, may damage our business by harming our ability to compete for new contracts. Our customers' contracts with the U.S. federal government and related agencies are also subject to issues with respect to federal budgetary and spending limits or matters.
In addition, the regulatory environment related to information security and data privacy is evolving rapidly and the Company will need to expend time and resources to ensure compliance with these evolving regulations, and failure to understand and comply with these regulations can negatively impact the Company, its results of operations, and financial condition.
In addition, the regulatory environment related to information security and data privacy is evolving rapidly and the Company will need to expend time and resources to ensure compliance with these evolving regulations, and failure to understand or comply with these regulations can negatively impact the Company, its results of operations, and financial condition.
The parties did not seek a ruling from the IRS regarding such qualification. The HPES Merger Tax Opinions were based on current law and relied upon various factual representations and assumptions, as well as certain undertakings made by HPE, HPES and CSC.
The parties did not seek a ruling from the IRS regarding such qualification. The HPES Merger Tax Opinions were based on then current law and relied upon various factual representations and assumptions, as well as certain undertakings made by HPE, HPES and CSC.
However, we are not obligated to make any purchases of our shares, and our decision to repurchase our shares, as well as the timing of such repurchases, will depend on a variety of factors as determined by our management and Board of Directors.
However, we are not obligated to make any purchases of our shares, and our decision to repurchase our shares, as well as the timing of such repurchases, will depend on a variety of factors as determined by our management and Board.
In addition, detecting, investigating and resolving actual or alleged violations of the FCPA or other anti-bribery violations is expensive and could consume significant time and attention of our senior management. 19 Failure to maintain our credit rating and ability to manage working capital, refinance and raise additional capital for future needs, could adversely affect our liquidity, capital position, borrowing cost, and access to capital markets.
In addition, detecting, investigating and resolving actual or alleged violations of the FCPA or other anti-bribery violations is expensive and could consume significant time and attention of our senior management. 17 Failure to maintain our credit rating and ability to manage working capital, refinance and raise additional capital for future needs could adversely affect our liquidity, capital position, borrowing cost, and access to capital markets.
Failure to perform satisfactorily under these agreements may expose us to legal liability, result in the loss of customers or harm our reputation, which could harm the financial performance of our IT services business. 22 Performance under contracts, including those on which we have partnered with third parties, may be adversely affected if we or the third parties fail to deliver on commitments or otherwise breach obligations to our customers.
Failure to perform satisfactorily under these agreements may expose us to legal liability, result in the loss of customers or harm our reputation, which could harm the financial performance of our IT services business. 21 Performance under contracts, including those on which we have partnered with third parties, may be adversely affected if we or the third parties fail to deliver on commitments or otherwise breach obligations to our customers.
If, due to any of our representations being untrue or our covenants being breached, the Distribution was determined not to qualify for tax-free treatment under Section 355 of the Internal Revenue Code (the "Code"), HPE would generally be subject to tax as if it sold the DXC common stock in a taxable transaction, which could result in a material tax liability.
If, due to any of our representations being untrue or our covenants being breached, the Distribution was determined not to qualify for tax-free treatment under Section 355 of the Internal Revenue Code of 1986, as amended (the "Code"), HPE would generally be subject to tax as if it sold the DXC common stock in a taxable transaction, which could result in a material tax liability.
These incidents can result in significant disruption to our business (for example, due to ransomware or denial-of-service) through an impact on our operations or those of our clients, employees, vendors or other partners; loss of data (including proprietary, confidential or otherwise sensitive or valuable information) belonging to us, our clients, employees, vendors or partners; reputational damage, and injury to customer relationships.
These incidents can result in significant disruption to our business (for example, due to ransomware or denial-of-service) through an impact on our operations or those of our clients, employees, vendors or other partners; compromise, corruption or loss of data (including proprietary, confidential or otherwise sensitive or valuable information) belonging to us, our clients, employees, vendors or partners; reputational damage, and injury to customer relationships.
Such laws, regulations, treaties or initiatives in response to climate change, including, but not limited to, the introduction of a carbon tax, could result in increased operational costs associated with air pollution requirements and increased compliance and energy costs, which could harm our business and results of operations by increasing our expenses or requiring us to alter our business operations.
Other laws, regulations, treaties or initiatives in response to climate change, including, but not limited to, the introduction of a carbon tax, could result in increased operational costs associated with air pollution requirements and increased compliance and energy costs, which could harm our business and results of operations by increasing our expenses or requiring us to alter our business operations.
The repatriation tax resulted in a material amount of additional U.S. tax liability, the majority of which was reflected as an income tax expense in fiscal 2018, when the tax legislation was enacted, despite the fact that the resulting tax may be paid over eight years. In January 2022, the U.S.
The repatriation tax resulted in a material amount of additional U.S. tax liability, the majority of which was reflected as an income tax expense in fiscal 2018, when the tax legislation was enacted, despite the fact that the resulting tax may be paid over eight years.
As noted in Note 23 - "Commitments and Contingencies," we are currently party to a number of disputes that involve or may involve litigation or arbitration, including securities litigation in which we and certain of our current or former officers and directors have been named as defendants.
As noted in Note 21 - "Commitments and Contingencies," we are currently party to a number of disputes that involve or may involve litigation or arbitration, including securities litigation in which we and certain of our current or former officers and directors have been named as defendants.
Among the closing conditions to completing the USPS Separation and Mergers, we received a legal opinion of tax counsel substantially to the effect that, for U.S. federal income tax purposes: (i) the USPS Separation qualifies as a “reorganization” within the meaning of Section 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the “Code”); (ii) each of DXC and Perspecta is a “party to a reorganization” within the meaning of Section 368(b) of the Code with respect to the USPS Separation; (iii) the USPS distribution qualifies as (1) a tax-free spin-off, resulting in nonrecognition under Sections 355(a), 361 and 368(a) of the Code, and (2) a transaction in which the stock distributed thereby should constitute “qualified property” for purposes of Sections 355(d), 355(e) and 361(c) of the Code; and (iv) none of the related mergers causes Section 355(e) of the Code to apply to the USPS distribution.
Among the closing conditions to completing the USPS Separation and Mergers, we received a legal opinion of tax counsel substantially to the effect that, for U.S. federal income tax purposes: (i) the USPS Separation qualifies as a “reorganization” within the meaning of Section 368(a)(1)(D) of the Code; (ii) each of DXC and Perspecta is a “party to a reorganization” within the meaning of Section 368(b) of the Code with respect to the USPS Separation; (iii) the USPS distribution qualifies as (1) a tax-free spin-off, resulting in nonrecognition under Sections 355(a), 361 and 368(a) of the Code, and (2) a transaction in which the stock distributed thereby should constitute “qualified property” for purposes of Sections 355(d), 355(e) and 361(c) of the Code; and (iv) none of the related mergers causes Section 355(e) of the Code to apply to the USPS distribution.
Such delays can negatively impact our results of operations if the pace and level of spending on new technologies by some of our customers is not sufficient to make up any shortfall by other customers.
Such delays can negatively impact our results of operations if the pace and level of spending on new technologies by some of our customers are not sufficient to make up any shortfall by other customers.
For more details, including on current tax examinations of our income tax returns by tax authorities, see Note 13 – “Income Taxes.” 29 We may be adversely affected by disruptions in the credit markets, including disruptions that reduce our customers' access to credit and increase the costs to our customers of obtaining credit.
For more details, including on current tax examinations of our income tax returns by tax authorities, see Note 15 – “Income Taxes.” We may be adversely affected by disruptions in the credit markets, including disruptions that reduce our customers' access to credit and increase the costs to our customers of obtaining credit.
In addition, businesses in the countries in which we operate are subject to local, legal and political environments and regulations including with respect to employment, tax, statutory supervision and reporting and trade restriction, along with industry regulations such as regulation by bank regulators in the U.S. and Europe. These regulations and environments are also subject to change.
In addition, businesses in the countries in which we operate are subject to local, legal and political environments and regulations including with respect to employment, tax, statutory supervision and reporting and trade restriction, along with industry regulations such as regulation by bank regulators in the U.S. and Europe.
Our ability to grow and provide our customers with competitive services is partially dependent on our ability to attract and retain highly motivated people with the skills necessary to serve our customers.
Our ability to provide customers with competitive services is dependent on our ability to attract and retain qualified personnel. Our ability to grow and provide our customers with competitive services is partially dependent on our ability to attract and retain highly motivated people with the skills necessary to serve our customers.
This legislation may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment in compliance programs, and could impact strategies and availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies.
New and developing legislation may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment in compliance programs, and could impact strategies and availability of previously useful data and could result in increased compliance costs and/or changes in business practices and policies.
Any future economic downturn, depending upon its severity and duration, could also lead to a deterioration of worldwide credit and financial markets that could negatively affect the financial health of customers, lower their demand for our services, limit their ability or willingness to pay us in a timely manner and our ability to obtain external financing to fund our operations and capital expenditures, result in losses on our holdings of cash and investments due to failures of financial institutions and other parties, and result in a higher rate of losses on our accounts receivables due to credit defaults.
Any future economic downturn induced by COVID-19 or any other public health crisis, depending upon its severity and duration, could also lead to a deterioration of worldwide credit and financial markets that could negatively affect the financial health of customers, lower their demand for our services, limit their ability or willingness to pay us in a timely manner and our ability to obtain external financing to fund our operations and capital expenditures, result in losses on our holdings of cash and investments due to failures of financial institutions and other parties, and result in a higher rate of losses on our accounts receivables due to credit defaults.
For more information about our restructuring plans, see Note 22 - "Restructuring Costs." In the course of providing services to customers, we may inadvertently infringe on the intellectual property rights of others and be exposed to claims for damages.
For more information about our restructuring plans, see Note 13 - "Restructuring Costs." 26 In the course of providing services to customers, we may inadvertently infringe on the intellectual property rights of others and be exposed to claims for damages.
We may not succeed in our strategic objectives, which could adversely affect our business, financial condition, results of operations and cash flows. Our transformation journey focuses on our customers, optimizing costs and seizing the market.
Risks Related to Our Business We may not succeed in our strategic objectives, which could adversely affect our business, financial condition, results of operations and cash flows. Our transformation journey focuses on our customers, optimizing costs and seizing the market.
While incidents experienced thus far have not resulted in significant disruption to our business, it is possible that we could suffer a severe attack or incident, with potentially material and adverse effects on our business, reputation, customer relations, results of operations or financial condition.
While incidents experienced thus far have not resulted in significant disruption to our business, it is possible that we or a critical service provider could suffer a severe attack or incident, with potentially material adverse effects on our business, reputation, customer relations, results of operations or financial condition.
Future performance and historical trends may be adversely affected by the aforementioned risks, and other variables and risks and uncertainties not currently known or that are currently expected to be immaterial may also materially and adversely affect our business, financial condition, and results of operations or the price of shares of our common stock in the future.
Future performance and historical trends may be adversely affected by the risks discussed in this section. Other variables and risks and uncertainties not currently known or that are currently expected to be immaterial may also materially and adversely affect our business, financial condition, and results of operations or the price of shares of our common stock in the future.
The Sarbanes-Oxley Act of 2002 and the related regulations require our management to report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal control over financial reporting. Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud.
The Sarbanes-Oxley Act of 2002 and the related regulations require we maintain effective disclosure controls and procedures and require our management to report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal control over financial reporting. Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud.
We are experiencing, and may continue to experience, delays and shortages of certain necessary components to the services and solutions we offer our clients resulting from issues with the global supply chain, the COVID-19 pandemic, the conflict between Russia and Ukraine, and any disruptions at our suppliers.
We are experiencing, and may continue to experience, delays and shortages of certain necessary components to the services and solutions we offer our clients resulting from issues with the global supply chain, the economic downturns, the rising inflation, the COVID-19 pandemic, the conflict between Russia and Ukraine, and any disruptions at our suppliers.
Item 1A. RISK FACTORS Our operations and financial results are subject to various risks and uncertainties, which may materially and adversely affect our business, financial condition, and results of operations, and the actual outcome of matters as to which forward-looking statements are made in this Annual Report.
Item 1A. RISK FACTORS Our operations and financial results are subject to various risks and uncertainties, which may materially and adversely affect our business, financial condition, and results of operations, and the actual outcome of matters as to which forward-looking statements are made in this Annual Report on Form 10-K.
Our future business and financial performance could suffer due to a variety of international factors, including: • ongoing instability or changes in a country’s or region’s economic or geopolitical and security conditions, including inflation, recession, interest rate fluctuations, and actual or anticipated military or political conflict, civil unrest, crime, political instability, human rights concerns, and terrorist activity; • natural or man-made disasters, industrial accidents, public health issues, cybersecurity incidents, interruptions of service from utilities, transportation or telecommunications providers, or other catastrophic events; • longer collection cycles and financial instability among customers; • trade regulations and procedures and actions affecting production, pricing and marketing of products, including policies adopted by countries that may champion or otherwise favor domestic companies and technologies over foreign competitors; • local labor conditions and regulations; • managing our geographically dispersed workforce; • changes in the international, national or local regulatory and legal environments; • differing technology standards or customer requirements; • difficulties associated with repatriating earnings generated or held abroad in a tax-efficient manner and • changes in tax laws. 25 Our business operations are subject to various and changing federal, state, local and foreign laws and regulations that could result in costs or sanctions that adversely affect our business and results of operations.
Our future business and financial performance could suffer due to a variety of international factors, including: • ongoing instability or changes in a country’s or region’s economic or geopolitical and security conditions, including inflation, recession, interest rate fluctuations, and actual or anticipated military or political conflict, civil unrest, crime, political instability, human rights concerns, and terrorist activity; • natural or man-made disasters, industrial accidents, public health issues, cybersecurity incidents, interruptions of service from utilities, transportation or telecommunications providers, or other catastrophic events; • longer collection cycles and financial instability among customers; • trade regulations and procedures and actions affecting production, pricing and marketing of products, including policies adopted by countries that may champion or otherwise favor domestic companies and technologies over foreign competitors; • local labor conditions and regulations; • managing our geographically dispersed workforce; • changes in the international, national or local regulatory and legal environments; • differing technology standards or customer requirements; • difficulties associated with repatriating earnings generated or held abroad in a tax-efficient manner and • changes in tax laws.
We continue to evaluate the extent to which the COVID-19 crisis has impacted us and our employees, customers and suppliers and the extent to which it and other emerging developments will impact us and our employees, customers and suppliers in the future.
We continue to evaluate the extent to which the COVID-19 crisis and other emerging developments will impact us and our employees, customers and suppliers in the future.
For example, if we are unable to comply with fast-moving regulatory requirements, we could be disqualified from RFP processes, leading to a loss of sales.
For example, if we are unable to comply with fast-moving regulatory requirements, we could be disqualified from requests for proposal processes, leading to a loss of sales.
Recently enacted U.S. tax legislation has significantly changed the U.S. federal income taxation of U.S. corporations, including by reducing the U.S. corporate income tax rate, limiting interest deductions, permitting immediate expensing of certain capital expenditures, adopting elements of a territorial tax system, imposing a one-time transition tax (or “repatriation tax”) on all undistributed earnings and profits of certain U.S.-owned foreign corporations, revising the rules governing net operating losses and the rules governing foreign tax credits, introducing new anti-base erosion provisions and the ability to expense research and experimentation costs.
The 2017 Tax Cuts & Jobs Act ("TCJA") significantly changed the federal income taxation of U.S. corporations, including by reducing the U.S. corporate income tax rate, limiting interest deductions, permitting immediate expensing of certain capital expenditures, adopting elements of a territorial tax system, imposing a one-time transition tax (or “repatriation tax”) on all undistributed earnings and profits of certain U.S.-owned foreign corporations, revising the rules governing net operating losses and the rules governing foreign tax credits, introducing new anti-base erosion provisions and the ability to expense research and experimentation costs.
The CPRA, which takes effect on January 1, 2023 and significantly modifies the CCPA, potentially results in further uncertainty and could require us to incur additional costs and expenses in an effort to comply.
The CPRA, which took effect on January 1, 2023 and significantly modified the CCPA, potentially results in further uncertainty and could require us to incur additional costs and expenses in an effort to comply.
Social and environmental responsibility regulations, policies and provisions, as well as customer and investor demands, may adversely affect our relationships with customers and investors. 11 • We may not achieve some or all of the expected benefits of our restructuring plans and our restructuring may adversely affect our business. • We may inadvertently infringe on the intellectual property rights of others and our inability to procure third-party licenses may result in decreased revenue or increased costs. • Disruption of our supply chain could adversely impact our business. • We may be exposed to negative publicity and other potential risks if we are unable to achieve and maintain effective internal controls over financial reporting. • We could suffer additional losses due to asset impairment charges. • We may not be able to pay dividends or repurchase shares of our common stock. • Pending litigations may have a material and adverse impact on our profitability and liquidity. • Disruptions in the credit markets may reduce our customers' access to credit and increase the costs to our customers of obtaining credit, and our hedging program is subject to counterparty default risk. • We derive significant revenues and profit from contracts awarded through costly competitive bidding processes, and we may not achieve revenue and profit objectives if we fail to bid on these projects effectively. • If our customers experience financial difficulties, we may not be able to collect our receivables. • If we are unable to maintain and grow our customer relationships over time or to comply with customer contracts or government contracting regulations or requirements, our operating results and cash flows will suffer. • Our strategic transactions may prove unsuccessful. • Changes in tax legislation and our tax rates may materially affect our financial condition and results of operations.
Social and environmental responsibility regulations, policies and provisions, as well as customer and investor demands, may adversely affect our relationships with customers and investors. • We may not achieve some or all of the expected benefits of our restructuring plans and our restructuring may adversely affect our business. 11 • We may inadvertently infringe on the intellectual property rights of others and our inability to procure third-party licenses may result in decreased revenue or increased costs. • Disruption of our supply chain could adversely impact our business. • We may be exposed to negative publicity and other potential risks if we are unable to maintain effective disclosure controls and internal controls over financial reporting. • We could suffer additional losses due to asset impairment charges. • We may not be able to pay dividends or repurchase shares of our common stock that we announced previously. • Pending litigations may have a material and adverse impact on our profitability and liquidity. • Disruptions in the credit markets may reduce our customers' access to credit and increase the costs to our customers of obtaining credit, and our hedging program is subject to counterparty default risk. • We may not achieve revenue and profit objectives if we fail to competitively bid on our projects effectively. • If our customers experience financial difficulties, we may not be able to collect our receivables. • If we are unable to maintain and grow our customer relationships over time or to comply with customer contracts or government contracting regulations or requirements, our operating results and cash flows will suffer. • Our strategic transactions may prove unsuccessful. • Changes in tax rates, tax laws, and the timing and outcome of tax examinations could affect our results of operations.
GDPR) and 4% of total annual revenue for the preceding financial year. 16 While we strive to comply with all applicable data protection laws and regulations, as well as internal privacy policies, any failure or perceived failure to comply or any misappropriation, loss or other unauthorized disclosure of sensitive or confidential information may result in proceedings or actions against us by government or other entities, private lawsuits against us (including class actions) or the loss of customers, which could potentially have an adverse effect on our business, reputation and results of operations.
While we strive to comply with all applicable data protection laws and regulations, as well as internal privacy policies, any failure or perceived failure to comply or any misappropriation, loss or other unauthorized disclosure of sensitive or confidential information may result in proceedings or actions against us by government or other entities, private lawsuits against us (including class actions) or the loss of customers, which could potentially have an adverse effect on our business, reputation and results of operations.
If we are unable to compete in these highly competitive markets, our results of operations may be materially and adversely affected. • If we are unable to accurately estimate the cost of services and the timeline for completion of contracts, the profitability of our contracts may be materially and adversely affected. • Performance under contracts, including those on which we have partnered with third parties, may be adversely affected if we or the third parties fail to deliver on commitments or otherwise breach obligations to our customers. • Natural disasters may affect our worldwide business operations and financial results. • We may not be able to attract and retain qualified personnel. • Prolonged periods of inflation where we do not have adequate inflation protections in our customer contracts could increase costs, have an adverse effect on general economic conditions and impact consumer budgeting, which could impact our profitability and have a material adverse effect on our business and results of operations. • Our international operations are exposed to risks, including fluctuations in exchange rates and Brexit. • Failure to comply with federal, state, local and foreign laws and regulations that could result in costs or sanctions that adversely affect our business.
If we are unable to compete in these highly competitive markets, our results of operations may be materially and adversely affected. • If we are unable to accurately estimate the cost of services and the timeline for completion of contracts, the profitability of our contracts may be materially and adversely affected. • Performance under contracts, including those on which we have partnered with third parties, may be adversely affected if we or the third parties fail to deliver on commitments or otherwise breach obligations to our customers. • We are subject to a series of risks relating to climate change and natural disasters; and increased scrutiny of, and evolving expectations for, sustainability and ESG initiatives could also adversely impact our business. • We may not be able to attract and retain qualified personnel. • Prolonged periods of inflation where we do not have adequate inflation protections in our customer contracts could increase costs, have an adverse effect on general economic conditions and impact consumer budgeting. • Our international operations are exposed to risks, including fluctuations in exchange rates. • Failure to comply with federal, state, local and foreign laws and regulations could result in costs or sanctions that adversely affect our business.
We have indebtedness totaling approximately $5.0 billion as of March 31, 2022 (including capital lease obligations). We may incur substantial additional indebtedness in the future for many reasons, including to fund acquisitions.
We have indebtedness totaling approximately $4.4 billion as of March 31, 2023 (including capital lease obligations). We may incur substantial additional indebtedness in the future for many reasons, including to fund acquisitions.
Adjusting business operations to changing environments and regulations may be costly and could potentially render the particular business operations uneconomical, which may adversely affect our profitability or lead to a change in the business operations.
These regulations and environments are also subject to change. 25 Adjusting business operations to changing environments and regulations may be costly and could potentially render the particular business operations uneconomical, which may adversely affect our profitability or lead to a change in the business operations.
Our inability to keep pace with any ESG regulations, trends and developments or failure to meet the expectations, including, but not limited to, any expectations resulting from goals we have established, or interests of our clients and investors could adversely affect our business and reputation and could result in undesirable investor actions or customer or talent retention and attraction issues. 26 We may not achieve some or all of the expected benefits of our restructuring plans and our restructuring may adversely affect our business.
Our inability to keep pace with any ESG regulations, trends and developments or failure to meet the expectations, including, but not limited to, any expectations resulting from goals we have established, or interests of our clients and investors, could adversely affect our business and reputation and could result in undesirable investor actions or customer or talent retention and attraction issues.
If we do not sufficiently invest in new technology and adapt to industry developments, or evolve and expand our business at sufficient speed and scale, or if we do not make the right strategic investments to respond to these developments and successfully drive innovation, our services and solutions, our results of operations, and our ability to develop and maintain a competitive advantage and to execute on our growth strategy could be negatively affected. 17 Our ability to compete in certain markets we serve is dependent on our ability to continue to expand our capacity in certain offshore locations.
If we do not sufficiently invest in new technology and adapt to industry developments, or evolve and expand our business at sufficient speed and scale, or if we do not make the right strategic investments to respond to these developments and successfully drive innovation, our services and solutions, our results of operations, and our ability to develop and maintain a competitive advantage and to execute on our growth strategy could be negatively affected.
An increase in our borrowing costs, limitations on our ability to access the global capital and credit markets or a reduction in our liquidity can adversely affect our financial condition and results of operations.
An increase in our borrowing costs, limitations on our ability to access the global capital and credit markets or a reduction in our liquidity can adversely affect our financial condition and results of operations. For example, in response to increasing inflation, the U.S.
The U.K. is no longer in the European Union customs union and is outside of the European Union single market. The TCA addresses trade, economic arrangements, law enforcement, judicial cooperation and a governance framework including procedures for dispute resolution, among other things.
The U.K. is no longer in the European Union customs union and is outside of the European Union single market. The TCA addresses trade, economic arrangements, law enforcement, judicial cooperation and governance, among other things.
Risk Factor Summary Risks Related to Our Business • Our business and financial results have been adversely affected and could continue to be materially adversely affected by the COVID-19 crisis. • We may not succeed in our strategic objectives. • We could be vulnerable to security breaches, cyber-attacks or disclosure of confidential or personal information. • Our ability to continue to develop and expand our service offerings to address emerging business demands and technological trends, including our ability to sell differentiated services up the Enterprise Technology Stack, may impact our future growth. • Our operations in certain offshore locations may expose us to risks inherent to these locations such as Russia's recent invasion of Ukraine, which may adversely affect our revenue and profitability. • Failure to maintain our credit rating and ability to manage working capital, refinance and raise additional capital for future needs could adversely affect our liquidity, capital position, borrowing, cost and access to capital markets. • Our indebtedness could have a material adverse effect on our financial condition and results of operations. • Our primary markets are highly competitive.
Risk Factor Summary Risks Related to Our Business • We may not succeed in our strategic objectives. • We could be vulnerable to security breaches, cyber-attacks or disclosure of confidential or personal data. • Our ability to continue to develop and expand our service offerings to address emerging business demands and technological trends, including our ability to sell differentiated services, may impact our future growth. • Our operations in certain offshore locations may expose us to risks inherent to these locations. • Failure to maintain our credit rating and ability to manage working capital, refinance and raise additional capital for future needs could adversely affect our liquidity, capital position, borrowing cost, and access to capital markets. • Our business and financial results could be materially adversely affected by public health crises. • Our indebtedness could have a material adverse effect on our financial condition and results of operations. • Our primary markets are highly competitive.
Among other things, we provide complex industry specific insurance processing in the U.K., which is regulated by authorities in the U.K. and elsewhere, such as the U.K.’s Financial Conduct Authority and Her Majesty’s Treasury and the U.S. Department of Treasury, which increases our exposure to compliance risk.
We operate in approximately 70 countries in an increasingly complex regulatory environment. Among other things, we provide complex industry-specific insurance processing in the U.K., which is regulated by authorities in the U.K. and elsewhere, such as the U.K.’s Financial Conduct Authority and His Majesty’s Treasury and the U.S. Department of Treasury, which increases our exposure to compliance risk.
In order to achieve successful acquisitions, we will need to: • integrate the operations and business cultures, as well as the accounting, financial controls, management information, technology, human resources and other administrative systems, of acquired businesses with existing operations and systems; • maintain third-party relationships previously established by acquired companies; • attract and retain senior management and key personnel at acquired businesses; and • manage new business lines, as well as acquisition-related workload.
In order to achieve successful acquisitions, we will need to: • integrate the operations and business cultures, as well as the accounting, financial controls, management information, technology, human resources and other administrative systems, of acquired businesses with existing operations and systems; • maintain third-party relationships previously established by acquired companies; • attract and retain senior management and key personnel at acquired businesses; and • manage new business lines, as well as acquisition-related workload. 31 Existing contractual restrictions may limit our ability to engage in certain integration activities for varying periods.
If we or our partners fail to meet our contractual obligations or otherwise breach obligations to our customers, we could be subject to legal liability, which may have a material and adverse impact on our revenues and profitability. Natural disasters may affect our worldwide business operations and financial results.
If we or our partners fail to meet our contractual obligations or otherwise breach obligations to our customers, we could be subject to legal liability, which may have a material and adverse impact on our revenues and profitability.
If we are unable to continue to execute our strategy and build our business across the Enterprise Technology Stack in a highly competitive and rapidly evolving environment or if we are unable to commercialize such services and solutions, expand and scale them with sufficient speed and versatility, our growth, productivity objectives and profit margins could be negatively affected.
If we are unable to continue to execute our strategy and grow our GBS business and expand margins while stabilizing our GIS business in a highly competitive and rapidly evolving environment or if we are unable to commercialize such services and solutions, expand and scale them with sufficient speed and versatility, our growth, productivity objectives and profit margins could be negatively affected.
The ongoing conflict could cause harm to our team members and otherwise impair their ability to work for extended periods of time, as well as disrupt telecommunications systems, banks and other critical infrastructure necessary to conduct business in Ukraine.
We are closely monitoring the developing situation and are committed to caring for our colleagues in the region. The ongoing conflict could cause harm to our team members and otherwise impair their ability to work for extended periods of time, as well as disrupt telecommunications systems, banks and other critical infrastructure necessary to conduct business in Ukraine.
We are also subject to risks associated with environmental, social and governance (“ESG”) regulations. Governmental bodies, investors, clients and businesses are increasingly focused on prioritizing ESG practices, which has resulted in and may in the future continue to result in the adoption of new laws and regulations.
We are also subject to risks associated with ESG regulations. Governmental bodies, investors, clients and businesses are increasingly focused on prioritizing ESG practices, which has resulted in and may in the future continue to result in the adoption of new laws and regulations that could impact our results of operations.
In the event that one or more customers or suppliers' defaults on its payment or delivery obligations, we could incur significant losses, which may harm our business, reputation, results of operations, cash flows and financial condition. In addition, customers may decide to downsize, defer or cancel contracts which could negatively affect our revenues.
In the event that one or more customers or suppliers' defaults on its payment or delivery obligations, we could incur significant losses, which may harm our business, reputation, results of operations, cash flows and financial condition.
This could cause our cash collections to decrease and bad debt expense to increase. While we may resort to alternative methods to pursue claims or collect receivables, these methods are expensive and time consuming and successful collection is not guaranteed.
This could cause our cash collections to decrease and bad debt expense to increase. While we may resort to alternative methods to pursue claims or collect receivables, these methods are expensive and time consuming and successful collection is not guaranteed. Failure to collect our receivables or prevail on claims would have an adverse effect on our profitability and cash flows.
Our ability to develop and implement up to date solutions utilizing new technologies that meet evolving customer needs in digital cloud, information technology outsourcing, consulting, industry software and solutions, and application services markets, and in areas such as artificial intelligence, automation, Internet of Things and as-a-service solutions, in a timely or cost-effective manner, will impact our ability to retain and attract customers and our future revenue growth and earnings.
Our ability to develop and implement innovative technology solutions that meet evolving customer needs in analytics, software engineering, applications, business process services, digital cloud, information technology outsourcing and consulting, and in areas such as artificial intelligence, automation, Internet of Things and software as-a-service solutions, in a timely or cost-effective manner, will impact our ability to retain and attract customers and our future revenue growth and earnings.
For instance, on July 16, 2020, the Court of Justice of the European Union (the “CJEU”) invalidated the EU-U.S. Privacy Shield Framework (the “Privacy Shield”) under which personal data could be transferred from the EEA to U.S. entities who had self-certified under the Privacy Shield scheme.
Legal developments in Europe have created complexity and uncertainty regarding such transfers. For instance, on July 16, 2020, the Court of Justice of the European Union (the “CJEU”) invalidated the EU-U.S. Privacy Shield Framework (the “Privacy Shield”) under which personal data could be transferred from the EEA to U.S. entities who had self-certified under the Privacy Shield scheme.
While historically we have partially mitigated currency risk, including exposure to fluctuations in currency exchange rates by matching costs with revenues in a given currency, our exposure to fluctuations in other currencies against the U.S. dollar increases, as revenue in currencies other than the U.S. dollar increases and as more of the services we provide are shifted to lower cost regions of the world.
While historically we have partially mitigated currency risk, including exposure to fluctuations in currency exchange rates by matching costs with revenues in a given currency, our exposure to fluctuations in other currencies against the U.S. dollar increases, as revenue in currencies other than the U.S. dollar increases.
However, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. There can be no assurance that all control issues or fraud will be detected.
However, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
If the projected cash flows of a particular contract are not adequate to recover the unamortized cost balance of the asset group, the balance is adjusted in the tested period based on the contract's fair value.
If the projected cash flows of a particular contract are not adequate to recover the unamortized cost balance of the asset group, the balance is adjusted in the tested period based on the contract's fair value. Either of these impairments could materially affect our reported net earnings.
Governmental authorities in the U.S., the EU and the UK, among others, launched an expansion of coordinated sanctions and export control measures, including, among others, blocking and other sanctions against some of the largest state-owned and private Russian financial institutions (and their subsequent removal from the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) payment system) and certain Russian businesses, which may have a material impact on our ability to make and receive payments to/from our Russian business partners and customers.
Governmental authorities in the U.S., the EU and the UK, among others, launched an expansion of coordinated sanctions and export control measures, including, among others, blocking and other sanctions against some of the largest state-owned and private Russian financial institutions (and their subsequent removal from the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) payment system) and certain Russian businesses.
Any alleged or actual failure to comply with these measures as we extricate our business operations from Russia may subject us to government scrutiny, civil and/or criminal proceedings, sanctions and other liabilities, which may have a material adverse effect on our international operations, financial condition and results of operations.
Any alleged or actual failure to comply with these measures may subject us to government scrutiny, civil and/or criminal proceedings, sanctions and other liabilities, which may have a material adverse effect on our international operations, financial condition, and results of operations. Actions taken by Russia in response to such sanctions could also have a material adverse effect on our operations.
We acquired substantial goodwill and other intangibles as a result of the HPES Merger and the Luxoft Acquisition, increasing our exposure to this risk.
We could suffer additional losses due to asset impairment charges. We acquired substantial goodwill and other intangibles as a result of the HPES Merger and the Luxoft Acquisition, increasing our exposure to this risk.
Actions taken by Russia in response to such sanctions could also have a material adverse effect on our operations. For example, in response to increased sanctions, Russia or another government could attempt to take control of assets in Russia or Ukraine of Western companies that are suspending or withdrawing their operations from Russia, such as DXC.
For example, in response to increased sanctions, Russia or another government could attempt to take control of assets in Russia or Ukraine of Western companies that are suspending or withdrawing their operations from Russia, such as DXC.
There are also significant costs associated with restructuring which can have a significant impact on our earnings and cash flow. If we fail to achieve some or all of the expected benefits of restructuring, it could have a material adverse effect on our competitive position, business, financial condition, results of operations and cash flows.
If we fail to achieve some or all of the expected benefits of restructuring, it could have a material adverse effect on our competitive position, business, financial condition, results of operations and cash flows.
Negative or uncertain political climates in countries or locations where we operate, such as Ukraine and Russia, including but not limited to, military activities or civil hostilities, criminal activities and other acts of violence, infrastructure disruption, natural disasters or other conditions could adversely affect our operations or cause us to exit certain markets. On February 24, 2022, Russia invaded Ukraine.
Negative or uncertain political climates in countries or locations where we operate, such as Ukraine, including but not limited to, military activities or civil hostilities, criminal activities and other acts of violence, infrastructure disruption, natural disasters or other conditions could adversely affect our operations or cause us to exit certain markets. 16 The ongoing conflict between Russia and Ukraine has impacted our business and financial performance in that region.
Our exposure to currencies other than the U.S. dollar may impact our results, as they are expressed in U.S. dollars. Currency variations also contribute to variations in sales of products and services in affected jurisdictions.
Our international operations are exposed to risks, including fluctuations in exchange rates, which may be beyond our control. Our exposure to currencies other than the U.S. dollar may impact our results, as they are expressed in U.S. dollars. Currency variations also contribute to variations in sales of products and services in affected jurisdictions.
Because the agreement merely sets forth a framework in many respects and will require complex additional bilateral negotiations between the U.K. and the European Union as both parties continue to work on the rules for implementation, significant political and economic uncertainty remains about whether the terms of the relationship will differ materially from the terms before withdrawal.
Because the agreement merely sets forth a framework in many respects and requires complex additional bilateral negotiations between the U.K. and the European Union, significant uncertainty remains about whether the terms of the relationship will differ materially from the terms before withdrawal.
Our strategic priorities include an initiative to assist DXC customers across a broader range of their information technology needs, which we refer to as “the enterprise technology stack.” We may not be able to implement our strategic priorities and progress on our transformation journey in accordance with our expectations for a variety of reasons, including failure to execute on our plans in a timely fashion, lack of adequate skills, ineffective management, inadequate incentives, customer resistance to new initiatives, inability to control costs or maintain competitive offerings.
We may not be able to implement our strategic priorities and progress on our transformation journey in accordance with our expectations for a variety of reasons, including failure to execute on our plans in a timely fashion, lack of adequate skills, ineffective management, inadequate incentives, customer resistance to new initiatives, inability to control costs or maintain competitive offerings.
We require our employees, partners, subcontractors, agents, and others to comply with the FCPA and other anti-bribery laws. There is no assurance that our policies or procedures will protect us against liability under the FCPA or other laws for actions taken by our employees and intermediaries.
There is no assurance that our policies or procedures will protect us against liability under the FCPA or other laws for actions taken by our employees and intermediaries.
If large parts of Ukraine become the target of further U.S. or other applicable sanctions, we may be legally unable to do business or otherwise continue to operate in Ukraine.
If large parts of Ukraine become the target of further U.S. or other applicable sanctions, we may be legally unable to do business or otherwise continue to operate in Ukraine. If these contingencies come to pass, our results of operations and cash flows may be adversely affected.
GDPR, with each regime having the ability to fine up to the greater of €20 million (in the case of the GDPR) or £17 million (in the case of the U.K.
GDPR, with each regime having the ability to fine up to the greater of €20 million (in the case of the GDPR) or £17 million (in the case of the U.K. GDPR) and 4% of total annual revenue for the preceding financial year.
Our future effective tax rates, which are largely driven by the mix of our global earnings and the differing statutory tax rates in the jurisdictions where we operate, are subject to change as a result of changes in statutory tax rates enacted in those jurisdictions, or by changes in the valuation of deferred tax assets and liabilities, or by changes in tax laws or their interpretation.
Our future effective tax rates, which are largely driven by the mix of our global earnings and the differing statutory tax rates in the jurisdictions where we operate, are subject to change as a result of changes in statutory tax rates enacted in those jurisdictions, or by changes in the valuation of deferred tax assets and liabilities, or by changes in tax laws or their interpretation or tax policy initiatives and reforms under consideration, such as those reflected in the OECD/G20 Inclusive Framework on Base Erosion and Profit Sharing or other projects.
In connection with Brexit, the U.K. and the European Union agreed on the Trade and Cooperation Agreement (“TCA”) that governs the future trading relationship between the U.K. and the European Union in specified areas. The TCA took effect on January 1, 2021.
The U.K. withdrew from the European Union on January 31, 2020 (“Brexit”). In connection with Brexit, the U.K. and the European Union agreed on the Trade and Cooperation Agreement (“TCA”) that governs the future trading relationship between the U.K. and the European Union in specified areas, which became effective in 2021.
Like other companies, we face an evolving array of information security and data security threats that pose risks to us and our customers. 14 Threat actors are increasingly sophisticated and using tools and techniques designed to circumvent security controls, to evade detection and to remove or obfuscate forensic evidence, which may make it more difficult for us to detect, identify, investigate contain or recover from, future cyberattacks and security incidents.
Threat actors are increasingly sophisticated and using tools and techniques designed to circumvent security controls, to evade detection and to remove or obfuscate forensic evidence, which may make it more difficult for us to detect, identify, investigate, contain or recover from, future cyberattacks and security incidents.
Any failure on our part to comply with the specific provisions in customer contracts or any violation of government contracting regulations or other requirements could result in the imposition of various civil and criminal penalties, which may include termination of contracts, forfeiture of profits, suspension of payments, and, in the case of government contracts, fines and suspension from future government contracting.
Our customers' contracts with U.S. government agencies are also subject to audits and investigations, which may include a review of performance on contracts, pricing practices, cost structure, and compliance with applicable laws and regulations. 30 Any failure on our part to comply with the specific provisions in customer contracts or any violation of government contracting regulations or other requirements could result in the imposition of various civil and criminal penalties, which may include termination of contracts, forfeiture of profits, suspension of payments, and, in the case of government contracts, fines and suspension from future government contracting.
Even if we successfully integrate, we cannot predict with certainty if or when these cost and revenue synergies, growth opportunities and benefits will occur, or the extent to which they actually will be achieved.
We may not be successful in meeting these or any other challenges encountered in connection with historical and future acquisitions. Even if we successfully integrate, we cannot predict with certainty if or when these cost and revenue synergies, growth opportunities and benefits will occur, nor the extent to which they actually will be achieved.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table provides a summary of properties we owned and leased as of March 31, 2022: Approximate Square Feet (in millions) Geographic Area Owned Leased Total United States 2.7 1.4 4.1 EMEA 1.1 4.6 5.7 APAC 1.0 3.8 4.8 All other 0.7 0.3 1.0 Real estate in restructuring — 1.6 1.6 Inactive space 0.6 0.1 0.7 Sublet space 0.6 — 0.6 Assets held for sale 0.5 — 0.5 Total 7.2 11.8 19.0 Type Owned Leased Total Offices 2.2 8.2 10.4 Data centers 3.3 1.9 5.2 Real estate in restructuring — 1.6 1.6 Inactive space 0.6 0.1 0.7 Sublet space 0.6 — 0.6 Assets held for sale 0.5 — 0.5 Total 7.2 11.8 19.0 We believe that the facilities described above are suitable and adequate to meet our current and anticipated requirements.
Biggest changeThe following table provides a summary of properties we owned and leased as of March 31, 2023: Approximate Square Feet (in millions) Geographic Area Owned Leased Total United States 2.3 1.3 3.6 EMEA 0.9 3.4 4.3 APAC 0.9 3.3 4.2 All other 0.6 0.2 0.8 Real estate in restructuring — 1.6 1.6 Inactive space 0.7 0.2 0.9 Sublet space 0.4 — 0.4 Assets held for sale 0.4 — 0.4 Total 6.2 10.0 16.2 Approximate Square Feet (in millions) Type Owned Leased Total Offices 1.9 6.2 8.1 Data centers 2.8 2.0 4.8 Real estate in restructuring — 1.6 1.6 Inactive space 0.7 0.2 0.9 Sublet space 0.4 — 0.4 Assets held for sale 0.4 — 0.4 Total 6.2 10.0 16.2 We believe that the facilities described above are suitable and adequate to meet our current and anticipated requirements.
ITEM 2. PROPERTIES Our corporate headquarters is located at a leased facility in Ashburn, VA. We own or lease numerous offices and data centers with approximately 400 locations around the world. We do not identify properties by segment, as they are interchangeable in nature and used by both segments.
ITEM 2. PROPERTIES Our corporate headquarters is located at a leased facility in Ashburn, VA. We own or lease numerous offices and data centers in approximately 370 locations around the world. We do not identify properties by segment, as they are interchangeable in nature and used by both segments.
As we transition to a more permanent virtual model we believe we will have excess facilities space. See Note 10 - "Property and Equipment," which provides additional information related to our land, buildings and leasehold improvements, and Note 7 - "Leases," which provides additional information related to our real estate lease commitments.
As we transition to a more permanent virtual model, we believe we will have excess facilities space. See Note 8 - "Property and Equipment," which provides additional information related to our land, buildings and leasehold improvements, and Note 5 - "Leases," which provides additional information related to our real estate lease commitments.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIndexed Return Return 2018* Return 2019 Return 2020 Return 2021 Return 2022 DXC Technology Company 48.9 % (25.0) % (76.9) % 121.5 % 4.1 % S&P 500 Index 14.2 % 9.5 % (7.0) % 56.4 % 15.6 % S&P North American Technology Index 31.4 % 15.7 % 3.8 % 72.0 % 8.7 % * Since April 3, 2017 Equity Compensation Plans See Part III, Item 12 of this Annual Report for information regarding our equity compensation plans.
Biggest changeComparison of Five Year Cumulative Total Return The following table provides total shareholder returns assuming $100 was invested on April 2, 2018, with annual returns using our fiscal year-end date: Company/Market/Peer Group 2019 2020 2021 2022 2023 DXC Technology Company (24.6) % (77.7) % 127.6 % 4.2 % (20.7) % S&P 500 Index 12.0 % (7.0) % 56.4 % 15.6 % (7.7) % S&P North American Technology Index 19.0 % 3.8 % 72.0 % 8.7 % (11.7) % Equity Compensation Plans See Part III, Item 12 of this Annual Report on Form 10-K for information regarding our equity compensation plans.
Share repurchases may be made from time to time through various means, including in open market purchases, 10b5-1 plans, privately-negotiated transactions, accelerated stock repurchases, block trades and other transactions, in compliance with Rule 10b-18 under the Exchange Act as well as, to the extent applicable, other federal and state securities laws and other legal requirements.
Share repurchases may be made from time to time through various means, including in open market purchases, 10b5-1 plans, privately-negotiated transactions, accelerated stock repurchases, block trades and other transactions, in compliance with Rule 10b-18 under the Exchange Act of 1934, as amended, as well as, to the extent applicable, other federal and state securities laws and other legal requirements.
Dividends The Board of Directors (the “Board”) indefinitely suspended the Company’s cash dividend payment beginning in the first quarter of fiscal 2021.
Dividends The Board indefinitely suspended the Company’s cash dividend payment beginning in the first quarter of fiscal 2021.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on the New York Stock Exchange under the symbol "DXC." Number of Holders As of May 23, 2022, there were 40,767 holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock trades on the New York Stock Exchange under the symbol "DXC." Number of Holders As of May 8, 2023, there were 38,901 holders of record of our common stock.
The graph assumes that $100 was invested at the market close on April 3, 2017 in our common stock, the S&P 500 Index, and the S&P North American Technology Index and that dividends have been reinvested. The stock price performance of the following graph is not necessarily indicative of future stock price performance.
The graph assumes that $100 was invested at the market close on April 2, 2018 (the first trading day of fiscal 2019) in our common stock, the S&P 500 Index, and the S&P North American Technology Index and that dividends have been reinvested. The stock price performance of the following graph is not necessarily indicative of future stock price performance.
Issuer Purchases of Equity Securities Share repurchase activity during the three months ended March 31, 2022 was as follows: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs January 1, 2022 to January 31, 2022 1,119,994 $ 33.36 1,119,994 $ 1,387,691,431 February 1, 2022 to February 28, 2022 2,619,956 $ 36.16 2,619,956 $ 1,292,960,125 March 1, 2022 to March 31, 2022 4,461,217 $ 31.14 4,461,217 $ 1,154,057,908 On April 3, 2017, we announced the establishment of a share repurchase plan approved by the Board of Directors with an initial authorization of $2.0 billion for future repurchases of outstanding shares of our common stock.
Issuer Purchases of Equity Securities Share repurchase activity during the three months ended March 31, 2023 was as follows: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs January 1, 2023 to January 31, 2023 710,633 $ 28.38 710,633 $ 810,962,128 February 1, 2023 to February 28, 2023 4,351,381 $ 28.61 4,351,381 $ 686,464,022 March 1, 2023 to March 31, 2023 8,460,167 $ 24.96 8,460,167 $ 475,271,849 Total 13,522,181 $ 26.32 13,522,181 On April 3, 2017, we announced the establishment of a share repurchase plan approved by the Board with an initial authorization of $2.0 billion for future repurchases of outstanding shares of our common stock.
On November 8, 2018, our Board of Directors approved an incremental $2.0 billion share repurchase authorization. On February 2, 2022, we announced our intention to repurchase incrementally up to $1.0 billion of our outstanding shares of common stock in the open market. An expiration date has not been established for this repurchase plan.
On November 8, 2018, our Board approved an incremental $2.0 billion share repurchase authorization. Under these approved share repurchase plans, on February 2, 2022, we announced our intention and subsequently completed the repurchase of $1.0 billion of our outstanding shares of common stock in the open market prior to the issuance of this Annual Report on Form 10-K.
See Note 16 - "Stockholders' Equity" for more information. 37 Performance Graph The following graph shows a comparison from April 3, 2017 (the date our common stock commenced trading on the NYSE) through March 31, 2022 of the cumulative total return for our common stock, the Standard & Poor’s 500 Stock Index ("S&P 500 Index") and the Standard & Poor’s North American Technology Index ("S&P North American Technology Index").
See Note 16 - "Stockholders' Equity" for more information. 37 Performance Graph The following graph compares the cumulative return on our common stock for the most recent five years, with the cumulative return on the Standard & Poor’s 500 Stock Index ("S&P 500 Index") and the Standard & Poor’s North American Technology Index ("S&P North American Technology Index").
The timing, volume, and nature of share repurchases pursuant to the share repurchase plan are at the discretion of management and may be suspended or discontinued at any time.
The timing, volume, and nature of share repurchases pursuant to the share repurchase plan are at the discretion of management and may be suspended or discontinued at any time. 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.
Removed
Comparison of Cumulative Total Return The following table provides indexed returns assuming $100 was invested on April 3, 2017, with annual returns using our fiscal year-end date.
Added
On May 18, 2023, DXC announced that its Board approved an incremental $1.0 billion share repurchase authorization.
Added
We reflect the excise tax within equity as part of the repurchase of the common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeA reconciliation of reported results to non-GAAP results is as follows: Fiscal Year Ended March 31, 2022 (in millions, except per-share amounts) As Reported Restructuring Costs Transaction, Separation and Integration-Related Costs Amortization of Acquired Intangible Assets Impairment Losses Gains and Losses on Dispositions Pension and OPEB Actuarial and Settlement Gains and Losses Debt Extinguishment Costs Tax Adjustment Non-GAAP Results Income before income taxes 1,141 318 26 434 31 (341) (684) 311 — 1,236 Income tax expense 405 65 7 90 7 (104) (171) 73 (43) 329 Net income 736 253 19 344 24 (237) (513) 238 43 907 Less: net loss attributable to non-controlling interest, net of tax 18 — — — — — (5) — — 13 Net income attributable to DXC common stockholders $ 718 $ 253 $ 19 $ 344 $ 24 $ (237) $ (508) $ 238 $ 43 $ 894 Effective Tax Rate 35.5 % 26.6 % Basic EPS $ 2.87 $ 1.01 $ 0.08 $ 1.38 $ 0.10 $ (0.95) $ (2.03) $ 0.95 $ 0.17 $ 3.58 Diluted EPS $ 2.81 $ 0.99 $ 0.07 $ 1.35 $ 0.09 $ (0.93) $ (1.99) $ 0.93 $ 0.17 $ 3.50 Weighted average common shares outstanding for: Basic EPS 250.02 250.02 250.02 250.02 250.02 250.02 250.02 250.02 250.02 250.02 Diluted EPS 255.21 255.21 255.21 255.21 255.21 255.21 255.21 255.21 255.21 255.21 * The net periodic pension cost within net income includes $441 million of actual return on plan assets, whereas the net periodic pension cost within non-GAAP net income includes $581 million of expected long-term return on pension assets of defined benefit plans subject to interim remeasurement. 48 Fiscal Year Ended March 31, 2021 (in millions, except per-share amounts) As Reported Restructuring Costs Transaction, Separation and Integration- Related Costs Amortization of Acquired Intangible Assets Impairment Losses Gains and Losses on Dispositions Pension and OPEB Actuarial and Settlement Gains and Losses Debt Extinguishment Costs Tax Adjustment Non-GAAP Results Income before income taxes 654 551 358 530 190 (2,004) 519 41 — 839 Income tax expense 800 92 87 121 49 (920) 115 10 (142) 212 Net (loss) income (146) 459 271 409 141 (1,084) 404 31 142 627 Less: net income attributable to non-controlling interest, net of tax 3 — — — — — — — — 3 Net (loss) income attributable to DXC common stockholders $ (149) $ 459 $ 271 $ 409 $ 141 $ (1,084) $ 404 $ 31 $ 142 $ 624 Effective Tax Rate 122.3 % 25.3 % Basic EPS $ (0.59) $ 1.81 $ 1.07 $ 1.61 $ 0.55 $ (4.27) $ 1.59 $ 0.12 $ 0.56 $ 2.46 Diluted EPS $ (0.59) $ 1.79 $ 1.06 $ 1.59 $ 0.55 $ (4.22) $ 1.57 $ 0.12 $ 0.55 $ 2.43 Weighted average common shares outstanding for: Basic EPS 254.14 254.14 254.14 254.14 254.14 254.14 254.14 254.14 254.14 254.14 Diluted EPS 254.14 256.86 256.86 256.86 256.86 256.86 256.86 256.86 256.86 256.86 * The net periodic pension cost within net loss includes $1,401 million of actual return on plan assets, whereas the net periodic pension cost within non-GAAP net income includes $659 million of expected long-term return on pension assets of defined benefit plans subject to interim remeasurement.
Biggest changeA reconciliation of reported results to non-GAAP results is as follows: Fiscal Year Ended March 31, 2023 (in millions, except per-share amounts) As Reported Restructuring Costs Transaction, Separation and Integration-Related Costs Amortization of Acquired Intangible Assets Merger Related Indemnification, Arbitration Loss, and SEC Matter Gains and Losses on Dispositions Impairment Losses Pension and OPEB Actuarial and Settlement Gains and Losses Tax Adjustment Non-GAAP Results (Loss) income before income taxes (885) 216 16 402 83 (190) 19 1,431 — 1,092 Income tax (benefit) expense (319) 44 3 81 31 25 4 291 120 280 Net (loss) income (566) 172 13 321 52 (215) 15 1,140 (120) 812 Less: net income attributable to non-controlling interest, net of tax 2 — — — — — — 2 — 4 Net (loss) income attributable to DXC common stockholders $ (568) $ 172 $ 13 $ 321 $ 52 $ (215) $ 15 $ 1,138 (120) $ 808 Effective Tax Rate 36.0 % 25.6 % Basic EPS $ (2.48) $ 0.75 $ 0.06 $ 1.40 $ 0.23 $ (0.94) $ 0.07 $ 4.97 $ (0.52) $ 3.53 Diluted EPS $ (2.48) $ 0.74 $ 0.06 $ 1.38 $ 0.22 $ (0.92) $ 0.06 $ 4.89 $ (0.52) $ 3.47 Weighted average common shares outstanding for: Basic EPS 228.99 228.99 228.99 228.99 228.99 228.99 228.99 228.99 228.99 228.99 Diluted EPS 228.99 232.62 232.62 232.62 232.62 232.62 232.62 232.62 232.62 232.62 47 Fiscal Year Ended March 31, 2022 (in millions, except per-share amounts) As Reported Restructuring Costs Transaction, Separation and Integration- Related Costs Amortization of Acquired Intangible Assets Impairment Losses Gains and Losses on Dispositions Pension and OPEB Actuarial and Settlement Gains and Losses Debt Extinguishment Costs Tax Adjustment Non-GAAP Results Income before income taxes 1,141 318 26 434 31 (341) (684) 311 — 1,236 Income tax expense 405 65 7 90 7 (104) (171) 73 (43) 329 Net income 736 253 19 344 24 (237) (513) 238 43 907 Less: net income attributable to non-controlling interest, net of tax 18 — — — — — (5) — — 13 Net income attributable to DXC common stockholders $ 718 $ 253 $ 19 $ 344 $ 24 $ (237) $ (508) $ 238 $ 43 $ 894 Effective Tax Rate 35.5 % 26.6 % Basic EPS $ 2.87 $ 1.01 $ 0.08 $ 1.38 $ 0.10 $ (0.95) $ (2.03) $ 0.95 $ 0.17 $ 3.58 Diluted EPS $ 2.81 $ 0.99 $ 0.07 $ 1.35 $ 0.09 $ (0.93) $ (1.99) $ 0.93 $ 0.17 $ 3.50 Weighted average common shares outstanding for: Basic EPS 250.02 250.02 250.02 250.02 250.02 250.02 250.02 250.02 250.02 250.02 Diluted EPS 255.21 255.21 255.21 255.21 255.21 255.21 255.21 255.21 255.21 255.21 Reconciliations of revenue growth to organic revenue growth are as follows: Fiscal Years Ended March 31, 2023 March 31, 2022 Total revenue growth (11.3) % (8.3) % Foreign currency 6.0 % (0.8) % Acquisitions and divestitures 2.6 % 6.5 % Organic revenue growth (2.7) % (2.6) % GBS revenue growth (8.4) % (8.9) % Foreign currency 5.9 % (0.4) % Acquisitions and divestitures 4.9 % 13.2 % GBS organic revenue growth 2.4 % 3.9 % GIS revenue growth (13.8) % (7.7) % Foreign currency 6.0 % (1.2) % Acquisitions and divestitures 0.6 % 0.5 % GIS organic revenue growth (7.2) % (8.4) % 48 Reconciliations of net (loss) income to adjusted EBIT are as follows: Fiscal Years Ended (in millions) March 31, 2023 March 31, 2022 Net (loss) income $ (566) $ 736 Income tax (benefit) expense (319) 405 Interest income (135) (65) Interest expense 200 204 EBIT (820) 1,280 Restructuring costs 216 318 Transaction, separation and integration-related costs 16 26 Amortization of acquired intangible assets 402 434 Merger-related indemnification 46 — SEC Matter 8 — Gains on dispositions (190) (341) Arbitration loss 29 — Impairment losses 19 31 Pension and OPEB actuarial and settlement losses (gains) 1,431 (684) Debt extinguishment costs — 311 Adjusted EBIT $ 1,157 $ 1,375 49 Liquidity and Capital Resources Cash and Cash Equivalents and Cash Flows As of March 31, 2023, our cash and cash equivalents ("cash") were $1.9 billion, of which $0.7 billion was held outside of the U.S.
Other (Income) Expense, Net Other (income) expense, net comprises non-service cost components of net periodic pension (income) expense, movement in foreign currency exchange rates on our foreign currency denominated assets and liabilities and the related economic hedges, equity earnings of unconsolidated affiliates and other miscellaneous gains and losses.
Other Expense (Income), Net Other expense (income), net comprises non-service cost components of net periodic pension income, movement in foreign currency exchange rates on our foreign currency denominated assets and liabilities and the related economic hedges, equity earnings of unconsolidated affiliates and other miscellaneous gains and losses.
We maintain various multi-currency, multi-entity, cross-border, physical and notional cash and pool arrangements with various counterparties to manage liquidity efficiently that enable participating subsidiaries to draw on the Company’s pooled resources to meet liquidity needs. A significant portion of the cash held by our foreign subsidiaries is not expected to be impacted by U.S. federal income tax upon repatriation.
We maintain various multi-currency, multi-entity, cross-border, physical and notional cash pool arrangements with various counterparties to manage liquidity efficiently that enable participating subsidiaries to draw on the Company’s pooled resources to meet liquidity needs. A significant portion of the cash held by our foreign subsidiaries is not expected to be impacted by U.S. federal income tax upon repatriation.
Any such changes could significantly affect the amounts reported in the consolidated financial statements in the year these changes occur. The majority of our global unremitted foreign earnings have been taxed in the U.S. or would be exempt from U.S. tax upon repatriation. Such earnings and all current foreign earnings are not indefinitely reinvested.
Any such changes could significantly affect the amounts reported in the consolidated financial statements in the year these changes occur. 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.
These methods involve significant judgments and estimates that we assess periodically by considering market and entity-specific factors, such as type of customer, features of the products or services and market conditions. Once the total revenues have been allocated to the various performance obligations and lease components, revenues for each are recognized based on the relevant revenue recognition method for each.
These methods involve significant judgments and estimates that we assess periodically by considering market and entity-specific factors, such as type of customer, features of the products or services and market conditions. 53 Once the total revenues have been allocated to the various performance obligations and lease components, revenues for each are recognized based on the relevant revenue recognition method for each.
The discount rate used in an income approach is based on our weighted-average cost of capital and may be adjusted for the relevant risks associated with business-specific characteristics and any uncertainty related to a reporting unit's ability to execute on the projected future cash flows. 57
The discount rate used in an income approach is based on our weighted-average cost of capital and may be adjusted for the relevant risks associated with business-specific characteristics and any uncertainty related to a reporting unit's ability to execute on the projected future cash flows.
Significant changes in these estimates or impairment may result if material contracts terminate earlier than the expected benefit period, or if there are material changes in the average contract period. 54 Income Taxes We are subject to income taxes in the United States (federal and state) and numerous foreign jurisdictions.
Significant changes in these estimates or impairment may result if material contracts terminate earlier than the expected benefit period, or if there are material changes in the average contract period. Income Taxes We are subject to income taxes in the United States (federal and state) and numerous foreign jurisdictions.
(5) (1) TSI-Related Costs for both periods presented include fees and other internal and external expenses associated with legal, accounting, consulting, due diligence, investment banking advisory, and other services, as well as financing fees, retention incentives, and resolution of transaction related claims in connection with, or resulting from, exploring or executing potential acquisitions, dispositions and strategic investments, whether or not announced or consummated.
(7) (1) TSI-Related Costs for both periods presented include fees and other internal and external expenses associated with legal, accounting, consulting, due diligence, investment banking advisory, and other services, as well as financing fees, retention incentives, and resolution of transaction related claims in connection with, or resulting from, exploring or executing potential acquisitions, dispositions and strategic investments, whether or not announced or consummated.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS ("MD&A") OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction The purpose of the MD&A is to present information that management believes is relevant to an assessment and understanding of our results of operations and cash flows for the fiscal year ended March 31, 2022 and our financial condition as of March 31, 2022.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS ("MD&A") OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction The purpose of the MD&A is to present information that management believes is relevant to an assessment and understanding of our results of operations and cash flows for the fiscal year ended March 31, 2023 and our financial condition as of March 31, 2023.
The Internal Revenue Service (the “IRS”) has examined, or is examining, the Company’s federal income tax returns for fiscal 2008 through the tax year ended October 31, 2018. With respect to CSC’s fiscal 2008 through 2017 federal tax returns, the Company participated in settlement negotiations with the IRS Office of Appeals.
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 TSI-Related costs for fiscal 2022 include $14 million of costs to execute dispositions (including $2 million for the sale of HHS which closed in October 2020 and $12 million for the sale of HPS which closed on April 1, 2021); $2 million legal costs and a $(12) million credit towards Perspecta Arbitration settlement; $5 million in expenses related to integration projects resulting from the CSC – HPE ES merger (including costs associated with continuing efforts to separate certain IT systems) and $17 million of costs incurred in connection with activities related to other acquisitions and divestitures.
The TSI-Related costs for fiscal 2022 include $14 million of costs to execute dispositions (including $2 million for the sale of HHS which closed in October 2020 and $12 million for the sale of HPS which closed on April 1, 2021); $2 million legal costs and a $(12) million credit towards Perspecta Arbitration settlement; $5 million in expenses related to integration projects resulting from the HPES merger (including costs associated with continuing efforts to separate certain IT systems) and $17 million of costs incurred in connection with activities related to other acquisitions and divestitures.
The MD&A is organized in the following sections: • Background • Results of Operations • Liquidity and Capital Resources • Critical Accounting Estimates The following discussion includes a comparison of our results of operations and liquidity and capital resources for fiscal 2022 and fiscal 2021.
The MD&A is organized in the following sections: • Background • Results of Operations • Liquidity and Capital Resources • Critical Accounting Estimates The following discussion includes a comparison of our results of operations and liquidity and capital resources for fiscal 2023 and fiscal 2022.
We recorded a valuation allowance against deferred tax assets of approximately $2.1 billion as of March 31, 2022 due to uncertainties related to the ability to utilize these assets.
We recorded a valuation allowance against deferred tax assets of approximately $2.1 billion as of March 31, 2023, due to uncertainties related to the ability to utilize these assets.
Insignificant businesses were also sold during fiscal 2022 that resulted in a gain of $53 million. This was partially offset by $13 million in sales price adjustments related to prior year dispositions, which resulted from changes in projected closing net working capital.
During fiscal 2022, DXC also sold certain insignificant businesses that resulted in a gain of $53 million. This was partially offset by $13 million in sales price adjustments related to prior year dispositions, which resulted from changes in projected closing net working capital.
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. We do not expect the U.S. Tax Court matters to be resolved in the next 12 months.
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. 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, 2011 and 2013 are in the U.S.
Background DXC 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 across the Enterprise Technology Stack to drive new levels of performance, competitiveness, and customer experience.
Background DXC 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.
A comparison of our results of operations and liquidity and capital resources for fiscal 2021 and fiscal 2020 may be found in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” on Form 10-K filed with the Securities and Exchange Commission on May 28, 2021.
A comparison of our results of operations and liquidity and capital resources for fiscal 2022 and fiscal 2021 may be found in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” on Form 10-K filed with the Securities and Exchange Commission on May 26, 2022.
These non-GAAP financial measures include earnings before interest and taxes (“EBIT”), adjusted EBIT, non-GAAP income before income taxes, non-GAAP net income, non-GAAP net income attributable to DXC common stockholders, and non-GAAP EPS, and constant currency revenues.
These non-GAAP financial measures include earnings before interest and taxes (“EBIT”), adjusted EBIT, non-GAAP income before income taxes, non-GAAP net income, non-GAAP net income attributable to DXC common stockholders, non-GAAP EPS, organic revenue growth, and constant currency revenues.
(5) Tax adjustment for fiscal 2022 includes a $50 million net revaluation of deferred taxes resulting from changes in non-US jurisdiction tax rates, and $(7) million of adjustment to the transition tax.
Tax adjustment for fiscal 2022 includes $50 million net revaluation of deferred taxes resulting from changes in non-US jurisdiction tax rates and $(7) million of adjustment to transition tax.
Our weighted average rates used were: March 31, 2022 March 31, 2021 Discount rates 2.0 % 2.4 % Expected long-term rates of return on assets 4.4 % 5.6 % The assumption for the expected long-term rate of return on plan assets is impacted by the expected asset mix of the plan; judgments regarding the correlation between historical excess returns and future excess returns and expected investment expenses.
Our weighted average rates used were: March 31, 2023 March 31, 2022 Discount rates 2.7 % 2.0 % Expected long-term rates of return on assets 4.3 % 4.4 % The assumption for the expected long-term rate of return on plan assets is impacted by the expected asset mix of the plan; judgments regarding the correlation between historical excess returns and future excess returns and expected investment expenses.
The IRS examined several issues for these tax years that resulted in various audit adjustments. The Company and the IRS Office of Appeals have an agreement in principle as to 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.
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.
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 carry-forwards, would be approximately $44 million. Earnings (Loss) Per Share Diluted earnings (loss) per share for fiscal 2022 was $2.81, as compared to $(0.59) in fiscal 2021.
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 carry-forwards, would be approximately $16 million. Earnings Per Share (EPS) Diluted (loss) earnings per share for fiscal 2023 was $(2.48), as compared to $2.81 in fiscal 2022.
However, some arrangements may require significant estimates, including contracts which include multiple performance obligations . Contracts with multiple performance obligations Many of our contracts re quire us to provide a range of services or performance obligations to our customers, which may include a combination of services, products or both and may also contain leases embedded in those arrangements.
Contracts with multiple performance obligations Many of our contracts re quire us to provide a range of services or performance obligations to our customers, which may include a combination of services, products or both and may also contain leases embedded in those arrangements.
The following table provides the impact changes in the weighted-average assumptions would have had on our net periodic pension benefits and settlement and contractual termination charges for fiscal 2022: (in millions) Change Approximate Change in Net Periodic Pension Expense Approximate Change in Settlement, Contractual Termination, and Mark-to-Market Charges Expected long-term return on plan assets 0.5% $ (66) $ 63 Expected long-term return on plan assets (0.5)% $ 66 $ (63) Discount rate 0.5% $ 35 $ (838) Discount rate (0.5)% $ (41) $ 1,029 56 Valuation of Assets We review long-lived assets, intangible assets, and goodwill for impairment in accordance with our accounting policy disclosed in Note 1 - "Summary of Significant Accounting Policies." Assessing the fair value of assets involves significant estimates and assumptions including estimation of future cash flows, the timing of such cash flows, and discount rates reflecting the risk inherent in projecting future cash flows.
The following table provides the impact changes in the weighted-average assumptions would have had on our net periodic pension benefits and settlement and contractual termination charges for fiscal 2023: (in millions) Change Approximate Change in Net Periodic Pension Expense Approximate Change in Settlement, Contractual Termination, and Mark-to-Market Charges Expected long-term return on plan assets 0.5% $ (49) $ 49 Expected long-term return on plan assets (0.5)% $ 49 $ (49) Discount rate 0.5% $ 18 $ (416) Discount rate (0.5)% $ (23) $ 462 55 Valuation of Assets We review long-lived assets, intangible assets, and goodwill for impairment in accordance with our accounting policy disclosed in Note 1 - "Summary of Significant Accounting Policies." Assessing the fair value of assets involves significant estimates and assumptions including estimation of future cash flows, the timing of such cash flows, and discount rates reflecting the risk inherent in projecting future cash flows.
As we believe we will ultimately prevail on the technical merits of the disagreed items and are challenging them in the IRS Office of Appeals or the U.S.
As we believe we will ultimately prevail on the technical merits of the disagreed items and are challenging them in the U.S.
Tax Court, these matters are not fully reserved and would result in a federal and state tax expense of approximately $458 million (including estimated interest and penalties) for the unreserved portion of these items and related cash cost if we do not prevail.
Tax Court, these matters are not fully reserved and would result in incremental federal and state tax expense and cash tax payments of approximately $477 million (including estimated interest and penalties) for the unreserved portion of these items if we do not prevail.
(2) Gains and losses on dispositions for fiscal 2022 include a $331 million gain on sale of the HPS business, gains of $23 million on other dispositions and loss of $13 million on adjustments relating to the sale of the HHS business.
Gains and losses on dispositions for fiscal 2022 include a $331 million gain on sale of the HPS business, gains of $23 million on dispositions related to certain insignificant businesses, and a loss of $13 million on adjustments relating to the sale of the HHS business.
(4) Impairment losses for fiscal 2022 includes a $10 million impairment charge of capitalized TSI related property and equipment and a $21 million impairment charge of loan receivable and stock warrants associated with a strategic investment. Impairment losses for fiscal 2021 were $190 million.
Impairment losses for fiscal 2022 include a $10 million impairment charge of capitalized TSI related property and equipment and a $21 million impairment charge of loan receivable and stock warrants associated with a strategic investment.
We exclude impairment losses as these non-cash amounts reflect generally an acceleration of what would be multiple periods of expense and are not expected to occur frequently. Further assets such as goodwill may be significantly impacted by market conditions outside of management’s control. There are limitations to the use of the non-GAAP financial measures presented in this report.
We exclude impairment losses as these non-cash amounts reflect generally an acceleration of what would be multiple periods of expense and are not expected to occur frequently. Further, assets such as goodwill may be significantly impacted by market conditions outside of management’s control.
Taxes Our effective tax rate ("ETR") on income (loss) from continuing operations, before taxes, for fiscal 2022 and 2021 was 35.5% and 122.3%, respectively.
Taxes Our effective tax rate ("ETR") on income (loss) from continuing operations, before taxes, for fiscal 2023 and 2022 was (36.0)% and 35.5%, respectively.
Diluted earnings per share for fiscal 2022 includes $0.99 per share of restructuring costs, $0.07 per share of transaction, separation and integration-related costs, $1.35 per share of amortization of acquired intangible assets, $0.09 per share of impairment losses, $(0.93) per share of net gains on dispositions, $(1.99) per share of pension and OPEB actuarial and settlement gains, $0.93 per share of debt extinguishment costs, and $0.17 per share of tax adjustments primarily relating to tax adjustments to impair or recognize certain deferred tax assets and adjustments for changes in tax legislation.
Diluted earnings per share for fiscal 2022 includes $0.99 per share of restructuring costs, $0.07 per share of transaction, separation and integration-related costs, $1.35 per share of amortization of acquired intangible assets, $0.09 per share of impairment losses, $(0.93) per share of net gains on dispositions, $(1.99) per share of pension and OPEB actuarial and settlement gains, $0.93 per share of debt extinguishment costs, and $0.17 per share of tax adjustments primarily relating to tax adjustments to impair or recognize certain deferred tax assets and adjustments for changes in tax legislation. 44 Non-GAAP Financial Measures We present non-GAAP financial measures of performance which are derived from the statements of operations of DXC.
We have $0.2 billion in cash held by foreign subsidiaries used for local operations that is subject to country-specific limitations which may restrict or result in increased costs in the repatriation of these funds.
We have $0.1 billion in cash held by foreign subsidiaries used for local operations that is subject to country-specific limitations which may restrict or result in increased costs in the repatriation of these funds. In addition, other practical considerations may limit our use of consolidated cash.
Selected references are made on a “constant currency basis” so that certain financial results can be viewed without the impact of fluctuations in foreign currency rates, thereby providing comparisons of operating performance from period to period.
Selected references are made on a “constant currency basis” so that certain financial results can be viewed without the impact of fluctuations in foreign currency rates, thereby providing comparisons of operating performance from period to period. Financial results on a “constant currency basis” are non-GAAP measures calculated by translating current period activity into U.S.
(2) • Pension and OPEB actuarial and settlement gains and losses – pension and OPEB actuarial mark to market adjustments and settlement gains and losses. • Debt extinguishment costs – costs associated with early retirement, redemption, repayment or repurchase of debt and debt-like items including any breakage, make-whole premium, prepayment penalty or similar costs as well as solicitation and other legal and advisory expenses.
(5) • Debt extinguishment costs – costs associated with early retirement, redemption, repayment or repurchase of debt and debt-like items including any breakage, make-whole premium, prepayment penalty or similar costs as well as solicitation and other legal and advisory expenses.
The following foreign earnings are considered indefinitely reinvested: approximately $495 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 our accumulated earnings in India as of March 31, 2021.
The following earnings are considered indefinitely reinvested: approximately $484 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.
A reconciliation of the differences between the U.S. federal statutory rate and the ETR, as well as other information about our income tax provision, is provided in Note 13 - "Income Taxes." In fiscal 2022, the ETR was primarily impacted by: • Income Tax and Foreign Tax Credits, which decreased income tax expense and decreased the ETR by $174 million and 15.2%, respectively. • Changes in Luxembourg losses that increased the ETR by $1,609 million and 141.0%, respectively, with an offsetting decrease in the ETR due to a decrease in the valuation allowance of the same amount. • Adjustments to uncertain tax positions that increased the overall income tax expense and the ETR by $78 million and 6.8%, respectively.
In fiscal 2022, the ETR was primarily impacted by: • Income tax and foreign tax credits, which decreased income tax expense and decreased the ETR by $174 million and 15.2%, respectively. • Changes in Luxembourg losses that increased the ETR by $1,609 million and 141.0%, respectively, with an offsetting decrease in the ETR due to a decrease in the valuation allowance of the same amount. • Adjustments to uncertain tax positions that increased the overall income tax expense and the ETR by $78 million and 6.8%, respectively.
The following table contains certain key working capital metrics: As of March 31, 2022 March 31, 2021 March 31, 2020 Days of sales outstanding in accounts receivable 69 66 65 Days of purchases outstanding in accounts payable (45) (40) (66) Cash conversion cycle 24 26 (1) 50 Investing cash flow Net cash (used in) provided by investing activities was $(60) million during fiscal 2022 as compared to $4,665 million during fiscal 2021.
The following table contains certain key working capital metrics: As of March 31, 2023 March 31, 2022 March 31, 2021 Days of sales outstanding in accounts receivable 67 69 66 Days of purchases outstanding in accounts payable (50) (45) (40) Cash conversion cycle 17 24 26 50 Investing cash flow Net cash used in investing activities was $635 million and $60 million, respectively, in fiscal 2023 and fiscal 2022, a change of $575 million compared to the prior fiscal year.
(3) • Impairment losses – impairment losses on assets classified as long-term on the balance sheet. (4) • Tax adjustments – reflects discrete tax adjustments to impair or recognize certain deferred tax assets and adjustments for changes in tax legislation. Income tax expense of merger and divestitures is separately computed based on the underlying transaction.
(6) • Tax adjustments – discrete tax adjustments to impair or recognize certain deferred tax assets and adjustments for changes in tax legislation. Income tax expense (benefit) of merger and divestitures is separately computed based on the underlying transaction.
Considerations impacting the recoverability of deferred tax assets include the period of expiration of the tax asset, planned use of the tax asset and historical and projected taxable income as well as tax liabilities for the tax jurisdiction to which the tax asset relates.
The Company will continue to evaluate its position based on its future strategy and cash needs. 54 Considerations impacting the recoverability of deferred tax assets include the period of expiration of the tax asset, planned use of the tax asset, historical and projected taxable income as well as deferred tax liabilities for the tax jurisdiction to which the tax asset relates.
We were in compliance with all financial covenants associated with our borrowings as of March 31, 2022 and March 31, 2021. 51 As of March 31, 2022, our credit ratings were as follows: Rating Agency Long Term Ratings Short Term Ratings Outlook Fitch BBB F-2 Stable Moody's Baa2 P-2 Stable S&P BBB- - Stable For information on the risk s of ratings downgrades, see Part I, Item 1A - Risk Factors subsection titled, "Failure to maintain our credit rating and ability to manage working capital, refinance and raise additional capital for future needs, could adversely affect our liquidity, capital position, borrowing cost, and access to capital markets." Liquidity We expect our existing cash and cash equivalents, together with cash generated from operations, will be sufficient to meet our normal operating requirements for the next 12 months.
As of March 31, 2023, our credit ratings were as follows: Rating Agency Long Term Ratings Short Term Ratings Outlook Fitch BBB F-2 Stable Moody's Baa2 P-2 Stable S&P BBB- - Stable 51 For information on the risk s of ratings downgrades, see Part I, Item 1A - "Risk Factors" subsection titled " Failure to maintain our credit rating and ability to manage working capital, refinance and raise additional capital for future needs could adversely affect our liquidity, capital position, borrowing cost, and access to capital markets .
Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Fiscal 2022 Highlights.” 46 Certain non-GAAP financial measures and the respective most directly comparable financial measures calculated and presented in accordance with GAAP include: Fiscal Years Ended (in millions) March 31, 2022 March 31, 2021 Change Percentage Change Income before income taxes $ 1,141 $ 654 $ 487 74.5 % Non-GAAP income before income taxes $ 1,236 $ 839 $ 397 47.3 % Net income (loss) $ 736 $ (146) $ 882 604.1 % Adjusted EBIT $ 1,375 $ 1,102 $ 273 24.8 % Reconciliation of Non-GAAP Financial Measures Our non-GAAP adjustments include: • Restructuring costs – includes costs, net of reversals, related to workforce and real estate optimization and other similar charges. • Transaction, separation and integration-related (“TSI”) costs – includes costs related to integration, planning, financing and advisory fees and other similar charges associated with mergers, acquisitions, strategic investments, joint ventures, and dispositions and other similar transactions.
Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Revenues.” 45 Certain non-GAAP financial measures and the respective most directly comparable financial measures calculated and presented in accordance with GAAP include: Dollar Amount Fiscal Years Ended Change (in millions) March 31, 2023 March 31, 2022 Dollar Percent (Loss) income before income taxes $ (885) $ 1,141 $ (2,026) (177.6) % Non-GAAP income before income taxes $ 1,092 $ 1,236 $ (144) (11.7) % Net (loss) income $ (566) $ 736 $ (1,302) (176.9) % Adjusted EBIT $ 1,157 $ 1,375 $ (218) (15.9) % Reconciliation of Non-GAAP Financial Measures Our non-GAAP adjustments include: • Restructuring costs – includes costs, net of reversals, related to workforce and real estate optimization and other similar charges. • Transaction, separation and integration-related (“TSI”) costs – includes costs related to integration, planning, financing and advisory fees and other similar charges associated with mergers, acquisitions, strategic investments, joint ventures, and dispositions and other similar transactions.
The transition tax is payable over eight years; 8% of net tax liability in each of years 1-5, 15% in year 6, 20% in year 7, and 25% in year 8. We have made our first four payments.
The transition tax is payable over eight years; 8% of net tax liability in each of years 1-5, 15% in year 6, 20% in year 7, and 25% in year 8. We have made our first five payments. See Note 15 - "Income Taxes" for additional information about the transition tax, and the estimated liability related to unrecognized tax benefits.
The following table summarizes our cash flow activity: Fiscal Year Ended (in millions) March 31, 2022 March 31, 2021 Net cash provided by (used in): Operating activities $ 1,501 $ 124 Investing activities (60) 4,665 Financing activities (1,818) (5,476) Effect of exchange rate changes on cash and cash equivalents 29 39 Cash classified within current assets held for sale 52 (63) Net decrease in cash and cash equivalents (296) (711) Cash and cash equivalents at beginning of year 2,968 3,679 Cash and cash equivalents at end of year $ 2,672 $ 2,968 Operating cash flow Net cash provided by operating activities during fiscal 2022 was $1,501 million as compared to $124 million during fiscal 2021.
The following table summarizes our cash flow activity: Fiscal Year Ended (in millions) March 31, 2023 March 31, 2022 Change Net cash provided by (used in): Operating activities $ 1,415 $ 1,501 $ (86) Investing activities (635) (60) (575) Financing activities (1,507) (1,818) 311 Effect of exchange rate changes on cash and cash equivalents (97) 29 (126) Cash classified within current assets held for sale 10 52 (42) Net decrease in cash and cash equivalents $ (814) $ (296) $ (518) Cash and cash equivalents at beginning of year 2,672 2,968 Cash and cash equivalents at end of year $ 1,858 $ 2,672 Operating cash flow Net cash provided by operating activities was $1,415 million and $1,501 million, respectively, in fiscal 2023 and fiscal 2022, a decrease of $86 million compared to the prior fiscal year.
Tax Court proceedings have concluded. The Company expects to reach resolution with regard to disagreed items for fiscal years 2009 through 2013 no earlier than fiscal 2025, and to reach resolution for fiscal years 2014 through 2017, within 12 months. The Company may settle certain other tax examinations for different amounts than the Company has accrued as uncertain tax positions.
The Company expects to reach resolution for fiscal and tax return years 2009 through 2020 no earlier than fiscal 2025. 43 The Company may settle certain other tax examinations for different amounts than the Company has accrued as uncertain tax positions.
Dividends To maintain our financial flexibility we continued to suspend payment of quarterly dividends for fiscal 2022. 52 Off-Balance Sheet Arrangements In the normal course of business, we are a party to arrangements that include guarantees, the receivables sales facility and certain other financial instruments with off-balance sheet risk, such as letters of credit and surety bonds.
Off-Balance Sheet Arrangements In the normal course of business, we are a party to arrangements that include guarantees, the receivables sales facility and certain other financial instruments with off-balance sheet risk, such as letters of credit and surety bonds. We also use performance letters of credit to support various risk management insurance policies.
Critical Accounting Estimates The preparation of financial statements, in accordance with GAAP, requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosure of contingent assets and liabilities. These estimates may change in the future if underlying assumptions or factors change.
(2) Amounts represent scheduled interest payments on long-term debt. Critical Accounting Estimates The preparation of the financial statements, in accordance with GAAP, requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosure of contingent assets and liabilities.
We determine whether it is more likely than not a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit is recorded in our financial statements.
We determine whether it is more likely than not a tax position will be sustained upon examination by the appropriate taxing authorities before any portion of the tax benefit is recorded in our financial statements and only the portion of the tax benefit that is measured as greater than 50% likely to be realized upon settlement with a taxing authority (that has full knowledge of all relevant information) is recognized.
We also use performance letters of credit to support various risk management insurance policies. No liabilities related to these arrangements are reflected in the Company's balance sheets. See Note 6 - "Receivables" and Note 23 - "Commitments and Contingencies" for additional information regarding these off-balance sheet arrangements.
No liabilities related to these arrangements are reflected in the Company's balance sheets. See Note 4 - "Receivables" and Note 21 - "Commitments and Contingencies" for additional information regarding these off-balance sheet arrangements.
Financial results on a “constant currency basis” are non-GAAP measures calculated by translating current period activity into U.S. dollars using the comparable prior period’s currency conversion rates. This approach is used for all results where the functional currency is not the U.S. dollar.
Dollars using the comparable prior period’s currency conversion rates. This approach is used for all results where the functional currency is not the U.S. Dollar.
Accordingly, actual results could differ materially from our estimates under different assumptions, judgments or conditions. We consider the following policies to be critical because of their complexity and the high degree of judgment involved in implementing them: revenue recognition, income taxes, business combinations, defined benefit plans and valuation of assets.
We consider the following policies to be critical because of their complexity and the high degree of judgment involved in implementing them: revenue recognition, income taxes, defined benefit plans, valuation of assets, and loss accruals for litigation. We have discussed the selection of our critical accounting policies and the effect of estimates with the Audit Committee of our Board.
The earnings per share increase was due to an increase of $882 million in net income.
The decrease in earnings per share was due to a decrease of $1,286 million in net income attributable to DXC common stockholders.
The decrease was primarily driven by cost reductions exceeding the associated decline in revenue compared to the same period in the prior fiscal year. 42 Selling, General and Administrative Selling, general and administrative expense, excluding depreciation and amortization and restructuring costs ("SG&A"), was $1.4 billion for fiscal 2022, as compared to $2.1 billion in fiscal 2021.
Gross margin (Revenues less COS as a percentage of revenue) was 22.1% and 22.0% for fiscal 2023 and 2022, respectively. Selling, General and Administrative Selling, general and administrative expense, excluding depreciation and amortization and restructuring costs ("SG&A"), was $1.4 billion for fiscal 2023, a decrease of $33 million compared to the prior fiscal year.
Debt Financing The following table summarizes our total debt: As of (in millions) March 31, 2022 March 31, 2021 Short-term debt and current maturities of long-term debt $ 900 $ 1,167 Long-term debt, net of current maturities 4,065 4,345 Total debt $ 4,965 $ 5,512 The $0.5 billion decrease in total debt during fiscal 2022 was primarily attributed to the retirement of all the remaining $319 million of the 4.45% senior notes due fiscal 2023 using the proceeds from the sale of our HPS Business, and the repurchase of the $33 million of the 4.125% senior notes due fiscal 2026.
Debt Financing The following table summarizes our total debt: As of (in millions) March 31, 2023 March 31, 2022 Short-term debt and current maturities of long-term debt $ 500 $ 900 Long-term debt, net of current maturities 3,900 4,065 Total debt $ 4,400 $ 4,965 The $0.6 billion decrease in total debt during fiscal 2023 was primarily due to net decreases in commercial paper borrowings, finance lease liabilities and borrowings for asset financing.
We have discussed the selection of our critical accounting policies and the effect of estimates with the Audit Committee of our Board of Directors. 53 Revenue Recognition Most of our revenues are recognized based on objective criteria and do not require significant estimates that may change over time.
Revenue Recognition Most of our revenues are recognized based on objective criteria and do not require significant estimates that may change over time. However, some arrangements may require significant estimates, including contracts which include multiple performance obligations .
The decrease in interest expense was primarily due to a reduction in bonds and term loans and the Company's refinancing of its high coupon debt during fiscal 2022, decreased amounts drawn on our revolving credit facility, and decreases to finance leases and asset financing. Interest income for fiscal 2022 was $65 million, as compared to $98 million in fiscal 2021.
The decrease in net interest expense against the comparative period was primarily due to higher income from notional cash pool deposits due to global interest rate hikes, a reduction in notes payable and term loans resulting from the Company's refinancing of its high coupon debt in fiscal 2022, and decreases in interest expense from finance leases and borrowings for asset financing.
Fiscal 2022 revenues included a favorable foreign currency exchange rate impact of 0.8%, primarily driven by the weakening of the U.S. dollar against the British Pound, Canadian Dollar, and Australian Dollar.
For more information, see "Non-GAAP Financial Measures." The unfavorable foreign currency exchange rate impact is primarily driven by the strengthening of the U.S. dollar against the British Pound, Euro, and Australian Dollar.
The components of other (income) expense, net for fiscal 2022 and 2021 are as follows: Fiscal Years Ended (in millions) March 31, 2022 March 31, 2021 Non-service cost components of net periodic pension (income) expense $ (1,066) $ 110 Foreign currency loss 13 14 Other gain (28) (22) Total $ (1,081) $ 102 The $1,183 million increase in other income, net, for fiscal 2022, as compared to the prior fiscal year, was due to a year-over-year increase of $1,176 million in non-service components of net periodic pension income attributable to changes in mark-to-market actuarial assumptions and asset valuations, a $6 million increase in other gains from sales of non-operating assets, and a year-over-year favorable foreign currency impact of $1 million.
The components of other expense (income), net for fiscal 2023 and 2022 were as follows: Fiscal Years Ended (in millions) March 31, 2023 March 31, 2022 Dollar Change Non-service cost components of net periodic pension expense (income) $ 1,180 $ (1,066) $ 2,246 Foreign currency (gain) loss (15) 13 (28) Gain on sale of assets (90) (88) (2) Other loss 9 60 (51) Total $ 1,084 $ (1,081) $ 2,165 42 Other expense (income), net, was $1,084 million and $(1,081) million in fiscal 2023 and fiscal 2022, respectively, a change of $2,165 million compared to the prior fiscal year that was primarily due to: • net periodic pension expense increased by $2,246 million primarily due to a $1,070 million mark-to-market pension loss in fiscal 2023 versus a $664 million gain in fiscal 2022, a $361 million settlement loss in fiscal 2023 related to the buy-out of a defined benefit pension plan in the U.K., and $131 million less pension income in fiscal 2023 due to changes in expected returns on assets and other actuarial assumptions.
During the third quarter of fiscal 2021, DXC sold its HHS business for $5.0 billion which resulted in an estimated pre-tax gain on sale of $2,014 million, net of closing costs. Insignificant businesses were also sold during fiscal 2021 that resulted in a loss of $10 million.
Gain on Disposition of Businesses During fiscal 2023, DXC sold its FDB business, resulting in a pre-tax gain of $215 million. During fiscal 2023, DXC also sold certain insignificant businesses that resulted in a net loss of $25 million. During fiscal 2022, DXC sold its HPS business resulting in a pre-tax gain on sale of $331 million.
Restructuring Costs Restructuring costs represent severance related to workforce optimization programs and expense associated with facilities and data center rationalization. During fiscal 2022, management approved global cost savings initiatives designed to better align our workforce and facility structures. Total restructuring costs recorded, net of reversals, during fiscal 2022 and 2021 were $318 million and $551 million, respectively.
During fiscal 2023, management approved global cost savings initiatives designed to better align our workforce and facility structures. Total restructuring costs recorded, net of reversals, during fiscal 2023 were $216 million, a decrease of $102 million compared to the prior fiscal year. See Note 13 - "Restructuring Costs" for additional information about our restructuring actions.
In addition, other practical considerations may limit our use of consolidated cash, including cash of $0.6 billion held in a German financial services subsidiary subject to regulatory requirements, and $0.2 billion held by majority owned consolidated subsidiaries where third-parties or public shareholders hold minority interests.
This includes cash of $0.1 billion held by majority owned consolidated subsidiaries where third parties or public shareholders hold minority interests.
Diluted loss per share for fiscal 2021 includes $1.79 per share of restructuring costs, $1.06 per share of transaction, separation and integration-related costs, $1.59 per share of amortization of acquired intangible assets, $0.55 per share of impairment losses, $(4.22) per share of net gains on dispositions, $1.57 per share of pension and OPEB actuarial and settlement losses, $0.12 per share of debt extinguishment costs, and $0.55 per share of tax adjustment relating to a valuation allowance on deferred tax assets offset by changes in outside basis related to held for sale classification of the HPS business. 45 Ukraine / Russia Update Subsequent to the end of the quarter, DXC exited its domestic Russian business.
Diluted EPS for fiscal 2023 includes $0.74 per share of restructuring costs, $0.06 per share of transaction, separation and integration-related costs, $1.38 per share of amortization of acquired intangible assets, $0.22 per share of merger-related indemnification, arbitration loss, and SEC Matter costs, $0.06 per share of impairment losses, $4.89 per share of pension and OPEB actuarial and settlement losses, $(0.92) per share of net gains on dispositions, and $(0.52) per share of tax adjustments primarily relating to tax adjustments to impair or recognize certain deferred tax assets and adjustments for changes in tax legislation.
Costs and Expenses Our total costs and expenses were as follows: Fiscal Years Ended Amount Percentage of Revenues (in millions) March 31, 2022 March 31, 2021 March 31, 2022 March 31, 2021 Percentage Point Change Costs of services (excludes depreciation and amortization and restructuring costs) $ 12,683 $ 14,086 77.8 % 79.5 % (1.7) Selling, general and administrative (excludes depreciation and amortization and restructuring costs) 1,408 2,066 8.7 11.7 (3.0) Depreciation and amortization 1,717 1,970 10.6 11.1 (0.5) Restructuring costs 318 551 2.0 3.1 (1.1) Interest expense 204 361 1.3 2.0 (0.7) Interest income (65) (98) (0.4) (0.6) 0.2 Debt extinguishment costs 311 41 1.9 0.2 1.7 Gain on disposition of businesses (371) (2,004) (2.3) (11.3) 9.0 Other (income) expense, net (1,081) 102 (6.6) 0.6 (7.2) Total costs and expenses $ 15,124 $ 17,075 93.0 % 96.3 % (3.3) The 330 basis point decrease in total costs and expenses as a percentage of revenue for fiscal 2022 primarily reflects cost optimization realized in the current period, lower costs after the dispositions of the HPS and HHS businesses, lower transaction, separation and integration-related costs, a reduction in restructuring activities, decreases in depreciation and amortization and an increase in other (income) expense attributed to income from non-service components of net periodic pension (income) expense, partially offset by a decrease in gain on disposition of businesses and an increase in debt extinguishment costs.
The 13.8% decrease against the comparative period includes a 6.0% unfavorable foreign currency exchange rate impact, 0.6% decline in revenue from the disposition of certain businesses, and a 7.2% decline in organic revenue from project completions, early terminations, and lower resale revenue. 40 Costs and Expenses Our total costs and expenses were as follows: Dollar Amount Fiscal Years Ended Change (in millions) March 31, 2023 March 31, 2022 Dollar Percent Costs of services (excludes depreciation and amortization and restructuring costs) $ 11,246 $ 12,683 $ (1,437) (11.3) % Selling, general and administrative (excludes depreciation and amortization and restructuring costs) 1,375 1,408 (33) (2.3) Depreciation and amortization 1,519 1,717 (198) (11.5) Restructuring costs 216 318 (102) (32.1) Interest expense 200 204 (4) (2.0) Interest income (135) (65) (70) 107.7 Debt extinguishment costs — 311 (311) (100.0) Gain on disposition of businesses (190) (371) 181 (48.8) Other expense (income), net 1,084 (1,081) 2,165 (200.3) Total costs and expenses $ 15,315 $ 15,124 $ 191 1.3 % Costs of Services Costs of services, excluding depreciation and amortization and restructuring costs ("COS"), were $11.2 billion for fiscal 2023, a decrease of $1,437 million compared to the prior fiscal year.
The increase of $1,377 million was primarily due to an increase in net income, net of adjustments of $1,578 million, partially offset by a $201 million unfavorable change in working capital due to higher working capital outflows during fiscal 2022 .
The decrease was primarily due to: • a decrease in net income, net of adjustments of $455 million. • a $369 million favorable change in working capital during fiscal 2023 compared to fiscal 2022 primarily from improvements in our cash collections and payables cycles.
This was partially offset by share repurchases of $628 million in fiscal 2022, an increase in payments for debt extinguishment costs of $303 million, an increase in payments on capital leases and borrowings for asset financing of $60 million, and an increase in payments for other financing activities, net, of $58 million, primarily due to an $85 million repayment of liability resulting from a financing transaction entered in fiscal 2017.
The lower net cash used in financing activities was primarily due to: • a $479 million decrease in payments on capital leases and borrowings for asset financings, as the Company continues reducing the volume of these financing arrangements. • a $216 million decrease in cash outflows from net borrowings on long term debt, including the payment of debt extinguishment costs in fiscal 2022. • a $73 million increase in cash inflows from other financing activities, primarily due to a fiscal 2022 $85 million repayment of a liability resulting from a financing transaction entered in fiscal 2017. • a $406 million increase in cash outflows from net repayments on commercial paper borrowings, as the Company reduced its activity in the European commercial paper market due to lower operating cash requirements. • $51 million of higher cash outflows from increased share repurchase activity and related taxes paid on net share settlements.
See Note 23 - "Commitments and Contingencies" for more information. (4) The transition tax resulted in recording a total transition tax obligation of $276 million, of which $284 million was recorded as income tax liability and $8 million recorded as a reduction in our unrecognized tax benefits, which has been omitted from this table.
Tax Reform - Transition Tax (1) 43 66 — — 109 Interest payments (2) 74 118 57 32 281 Total $ 117 $ 184 $ 57 $ 32 $ 390 (1) The transition tax resulted in recording a total transition tax obligation of $198 million, of which $223 million was recorded as income tax liability and $25 million was recorded as an unrecognized tax benefit receivable, which has been omitted from this table.
The statute of limitations on assessments for fiscal years 2011 through 2013 has expired, with the exception of a $6 million refund claim for 2012 for which the statute remains open. However, as previously noted, fiscal years 2011 and 2013 are in the U.S. Tax Court and consequently these years will remain open until 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 following table summarizes our total liquidity: As of (in millions) March 31, 2022 Cash and cash equivalents $ 2,672 Available borrowings under our revolving credit facility 3,000 Total liquidity $ 5,672 During November 2021 we amended our revolving credit facility to, among other things, decrease available borrowings from $4.0 billion to $3.0 billion.
Our liquidity of $5.4 billion as of March 31, 2023, includes $1.9 billion of cash and cash equivalents, $3.0 billion of available borrowings under our revolving credit facility, and $500 million of available borrowings under our term loan credit agreement.
This was partially offset by proceeds from short-term investing of $24 million in fiscal 2022. Financing cash flow Net cash used in financing activities during fiscal 2022 was $(1,818) million as compared to $(5,476) million during fiscal 2021.
Financing cash flow Net cash used in financing activities was $1,507 million and $1,818 million, respectively, in fiscal 2023 and fiscal 2022, a change of $311 million compared to the prior fiscal year.
(1) • Amortization of acquired intangible assets – includes amortization of intangible assets acquired through business combinations. • Gains and losses on dispositions – gains and losses related to dispositions of businesses, strategic assets and interests in less than wholly-owned entities.
(3) • Gains and losses on dispositions – gains and losses related to dispositions of businesses, strategic assets and interests in less than wholly-owned entities. (4) • Arbitration loss - reflects losses arising from arbitration decisions in the third and fourth quarters of fiscal 2023. • Impairment losses – impairment losses on assets classified as long-term on the balance sheet.
Depreciation expense decreased $129 million primarily due to a reduction in assets due to impairment of un-deployed assets in the prior year, and asset retirements. Amortization expense was $1,092 million for fiscal 2022, as compared to $1,216 million in fiscal 2021.
Amortization expense was $1,000 million for fiscal 2023, a decrease of $92 million compared to the prior fiscal year.
Net income included the cumulative impact of certain items totaling $171 million during fiscal 2022, reflecting restructuring costs, transaction, separation and integration-related costs, amortization of acquired intangible assets, gains on dispositions, impairment losses, debt extinguishment costs, pension and other post-retirement benefit ("OPEB") actuarial and settlement gains, and a tax adjustment. • Fiscal 2022 income tax expense decreased significantly compared to fiscal 2021 as a result of the gain on disposition of the HHS business, which included the impact of non-tax deductible goodwill in fiscal 2021. • Our cash and cash equivalents were $2,672 million at March 31, 2022. • We generated $1,501 million of cash from operations during fiscal 2022, as compared to $124 million during fiscal 2021. 40 Revenues During fiscal 2022 and fiscal 2021, the distribution of our revenues across operating segments and geographies were as follows: Fiscal Years Ended Fiscal Year Ended (in millions) March 31, 2022 March 31, 2021 Percentage Change Constant Currency March 31, 2022 (1) Percentage Change in Constant Currency (1) Geographic Market United States $ 4,775 $ 5,983 (20.2) % $ 4,775 (20.2) % U.K. 2,295 2,413 (4.9) % 2,199 (8.9) % Other Europe 5,117 5,129 (0.2) % 5,132 0.1 % Australia 1,549 1,529 1.3 % 1,508 (1.4) % Other International 2,529 2,675 (5.5) % 2,504 (6.4) % Total Revenues $ 16,265 $ 17,729 (8.3) % $ 16,118 (9.1) % Reportable Segments GBS $ 7,598 $ 8,336 (8.9) % $ 7,561 (9.3) % GIS 8,667 9,393 (7.7) % 8,557 (8.9) % Total Revenues $ 16,265 $ 17,729 (8.3) % $ 16,118 (9.1) % (1) Constant currency revenues are a non-GAAP measure calculated by translating current period activity into U.S. dollars using the comparable prior period’s currency conversion rates.
Results of Operations The following table provides financial data for fiscal 2023 and 2022: Fiscal Years Ended (In millions, except per-share amounts) March 31, 2023 March 31, 2022 Revenues $ 14,430 $ 16,265 (Loss) income before income taxes (885) 1,141 Income tax (benefit) expense (319) 405 Net (loss) income $ (566) $ 736 Diluted (loss) income per common share: $ (2.48) $ 2.81 39 Revenues Our revenues by geography and operating segments are provided below: Fiscal Years Ended Fiscal Year Ended (in millions) March 31, 2023 March 31, 2022 Percentage Change Constant Currency March 31, 2023 (1) Percentage Change in Constant Currency (1) Geographic Market United States $ 4,320 $ 4,775 (9.5) % $ 4,320 (9.5) % United Kingdom 1,883 2,295 (18.0) % 2,137 (6.9) % Other Europe 4,429 5,117 (13.4) % 4,849 (5.2) % Australia 1,449 1,549 (6.5) % 1,566 1.1 % Other International 2,349 2,529 (7.1) % 2,524 (0.2) % Total Revenues $ 14,430 $ 16,265 (11.3) % $ 15,396 (5.3) % Reportable Segments GBS $ 6,960 $ 7,598 (8.4) % $ 7,406 (2.5) % GIS 7,470 8,667 (13.8) % 7,990 (7.8) % Total Revenues $ 14,430 $ 16,265 (11.3) % $ 15,396 (5.3) % (1) Constant currency revenues are a non-GAAP measure calculated by translating current period activity into U.S. dollars using the comparable prior period’s currency conversion rates.
We may be required to change our provision for income taxes when the ultimate treatment of certain items is challenged or agreed to by taxing authorities. The Finance Act 2021 in the U.K. took effect after Royal Assent was received in June 2021.
We may be required to change our provision for income taxes when the ultimate outcome of a tax position is agreed to by taxing authorities or otherwise effectively settled. In the U.S., the IRA was signed into law on August 16, 2022. We do not currently expect the IRA to have a material impact on our Consolidated Financial Statements.
See Note 22 - "Restructuring Costs" for additional information about our restructuring actions. Interest Expense and Interest Income Interest expense for fiscal 2022 was $204 million, as compared to $361 million in fiscal 2021, a decrease of 43%.
Interest Expense and Interest Income For fiscal 2023, net interest expense (interest expense less interest income) was $65 million, a decrease of $74 million as compared to the prior fiscal year.
Amortization expense decreased $124 million primarily due to a decrease in customer related intangibles related to the disposition of the HHS business during the third quarter of fiscal 2021 and a reduction in transition and transformation contract cost amortization due to contract completions.
The decrease in amortization expense was primarily due to a decrease in software amortization, a reduction in transition and transformation contract cost amortization due to contract completions, and a favorable foreign currency exchange rate impact of $43 million for fiscal 2023. 41 Restructuring Costs Restructuring costs represent severance related to workforce optimization programs and expense associated with facilities and data center rationalization.
Removed
Our customers include commercial businesses of many sizes and in many industries and public sector clients. 39 Results of Operations The following table sets forth certain financial data for fiscal 2022 and 2021: Fiscal Years Ended (In millions, except per-share amounts) March 31, 2022 March 31, 2021 Revenues $ 16,265 $ 17,729 Income before income taxes 1,141 654 Income tax expense 405 800 Net income (loss) $ 736 $ (146) Diluted income (loss) per common share: $ 2.81 $ (0.59) Fiscal 2022 Highlights Fiscal 2022 financial highlights include the following: • Fiscal 2022 revenues were $16,265 million, a decrease of 8.3% as compared to fiscal 2021.
Added
Our customers include commercial businesses of many sizes and in many industries and public sector clients.
Removed
See "Revenues” below for additional information. • Fiscal 2022 net income and diluted income per share were $736 million and $2.81, respectively, compared to net loss and diluted loss per share of $146 million and $0.59, respectively, for fiscal 2021. Net income increased by $882 million during fiscal 2022 as compared to the prior fiscal year.
Added
This information is consistent with how management views our revenues and evaluates our operating performance and trends. For more information, see "Non-GAAP Financial Measures." Total revenue for fiscal 2023 was $14.4 billion, a decrease of $1,835 million or 11.3%, as compared to the same period a year ago.
Removed
The increase was primarily due to increases in non-service components of net periodic pension income attributable to changes in mark-to-market actuarial assumptions and asset valuations, cost optimization realized in the current period, lower costs after the dispositions of the HPS and HHS businesses, lower transaction, separation and integration-related costs, a reduction in restructuring activities, and decreases in depreciation and amortization, partially offset by a reduction in revenue, an increase in debt extinguishment costs, and the gain on disposition of the HHS business during the third quarter fiscal 2021.
Added
The 11.3% decrease against the comparative period includes a 6.0% unfavorable foreign currency exchange rate impact, a 2.6% decline in revenue from the disposition of certain businesses, and a 2.7% decline in organic revenue. Organic revenue growth is a non-GAAP measure.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+0 added−0 removed11 unchanged
Biggest changeThe majority of this fluctuation would be offset by expenses incurred in local currency; and as a result, there would not be a material change to our income from continuing operations before taxes. As such, in the view of management, the resulting impact would not be material to our results of operations or cash flows.
Biggest changeTo the extent that we were not able to match local currency revenues with local currency expenses, there would be an impact to our results of operations and cash flows.
Therefore, the changes in fair value of these forward contracts are recorded in accumulated other comprehensive income, net of taxes in the statements of comprehensive income and subsequently classified into net income in the period the hedged transactions are recognized in net income.
Therefore, the changes in fair value of these forward contracts are recorded in accumulated other comprehensive (loss) income, net of taxes in the statements of comprehensive income and subsequently classified into net income in the period the hedged transactions are recognized in net income.
A change in interest rates related to our long-term debt would not have a material impact on our balance sheet as we do not record our debt at fair value. 58
A change in interest rates related to our long-term debt would not have a material impact on our balance sheet as we do not record our debt at fair value. 57
However, due to our increased use of offshore labor centers, we have become more exposed to fluctuations in foreign currency exchange rates. We experienced significant foreign currency fluctuations during fiscal 2022 due primarily to the volatility of the Euro, British Pound, Canadian Dollar, and Australian Dollar in relation to the U.S. dollar.
However, due to our increased use of offshore labor centers, we have become more exposed to fluctuations in foreign currency exchange rates. We experienced significant foreign currency fluctuations during fiscal 2023 due primarily to the volatility of the Euro, British Pound, and Australian Dollar in relation to the U.S. dollar.
Interest Rate Risk As of March 31, 2022, we had outstanding debt with varying maturities for an aggregate carrying amount of $5.0 billion, of which $0.4 billion was floating interest rate debt. As of March 31, 2022, an assumed 10% unfavorable change in interest rates would not be material to our consolidated results of operations or cash flows.
Interest Rate Risk As of March 31, 2023, we had outstanding debt with varying maturities for an aggregate carrying amount of $4.4 billion, of which $0.1 billion was floating interest rate debt. As of March 31, 2023, an assumed 10% unfavorable change in interest rates would not be material to our consolidated results of operations or cash flows.
We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than U.S. dollar, see Note 21 - "Revenue." During fiscal 2022, approximately 71% of our revenues were generated outside of the United States.
We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than U.S. dollar; see Note 12 - "Revenue." During fiscal 2023, approximately 70% of our revenues were generated outside of the United States.
Significant foreign currency fluctuations during fiscal 2021 was due primarily to the volatility of the Australian dollar, British Pound and Euro in relation to the U.S. dollar.
Significant foreign currency fluctuations during fiscal 2022 were due primarily to the volatility of the Euro, British Pound, Canadian Dollar, and Australian Dollar in relation to the U.S. dollar.
For the year ended March 31, 2022, a hypothetical 10% increase (decrease) in the value of the U.S. dollar against all currencies would have decreased (increased) revenues by approximately 7.1%, or $1.1 billion.
For the year ended March 31, 2023, a hypothetical 10% increase (decrease) in the value of the U.S. dollar against all currencies would have decreased (increased) revenues by approximately 7%, or $1.0 billion. The majority of this fluctuation would be offset by expenses incurred in local currency.

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