XML 29 R16.htm IDEA: XBRL DOCUMENT
v3.22.2

Derivative Instruments | 3 Months Ended
--- | ---
Jun. 30, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | Derivative Instruments In the normal course of business, the Company is exposed to interest rate and foreign exchange rate fluctuations. As part of its risk management strategy, the Company uses derivative instruments, primarily foreign currency forward contracts and interest rate swaps, to hedge certain foreign currency and interest rate exposures. The Company’s objective is to reduce earnings volatility by offsetting gains and losses resulting from these exposures with losses and gains on the derivative contracts used to hedge them. The Company does not use derivative instruments for trading or any speculative purposes. Derivatives Designated for Hedge Accounting Cash flow hedges The Company has designated certain foreign currency forward contracts as cash flow hedges to reduce foreign currency risk related to certain Indian Rupee-denominated intercompany obligations and forecasted transactions. The notional amounts of foreign currency forward contracts designated as cash flow hedges as of June 30, 2022 and March 31, 2022 were $787 million and $727 million, respectively. As of June 30, 2022, the related forecasted transactions extend through June 2024. For the three months ended June 30, 2022 and June 30, 2021, respectively, the Company performed an assessment at the inception of the cash flow hedge transactions and determined that all critical terms of the hedging instruments and hedged items matched. The Company performs an assessment of critical terms on an on-going basis throughout the hedging period. During the three months ended June 30, 2022 and June 30, 2021, respectively, the Company had no cash flow hedges for which it was probable that the hedged transaction would not occur. As of June 30, 2022, $14 million of the existing amount of gain related to the cash flow hedge reported in accumulated other comprehensive loss is expected to be reclassified into earnings within the next 12 months. Amounts recognized in other comprehensive loss and income before income taxes During the three months ended June 30, 2022, the pre-tax gain on derivatives designated for hedge accounting recognized in other comprehensive loss was $2 million and income before income taxes was $4 million. During the three months ended June 30, 2021, the pre-tax gain (loss) on derivatives designated for hedge accounting was not material. Derivatives Not Designated for Hedge Accounting The derivative instruments not designated as hedges for purposes of hedge accounting include certain short-term foreign currency forward contracts. Derivatives that are not designated as hedging instruments are adjusted to fair value through earnings in the financial statement line item to which the derivative relates. Foreign currency forward contracts The Company manages the exposure to fluctuations in foreign currencies by using short-term foreign currency forward contracts to hedge certain foreign currency denominated assets and liabilities, including intercompany accounts and forecasted transactions. The net notional amounts of the foreign currency forward contracts outstanding as of June 30, 2022 and March 31, 2022 were $1.7 billion and $2.1 billion, respectively. The following table presents the pretax amounts impacting income related to designated and non-designated foreign currency forward contracts:
|  |  |  |  |  | For the Three Months Ended
(in millions) |  | Statement of Operations Line Item |  |  |  |  |  | June 30, 2022 |  | June 30, 2021
Foreign currency forward contracts |  | Other income (expense), net |  |  |  |  |  | $ | 38 |  |  | $ | (35) |
Fair Value of Derivative Instruments All derivative instruments are recorded at fair value. The Company’s accounting treatment for these derivative instruments is based on its hedge designation. The following tables present the fair values of derivative instruments included in the balance sheets:
|  | Derivative Assets |  |
|  |  |  | As of |  |  |  |
(in millions) |  | Balance Sheet Line Item |  | June 30, 2022 |  | March 31, 2022 |  |  |  |  |  |
Derivatives designated for hedge accounting: |  |  |  |  |  |  |  |
Foreign currency forward contracts |  | Other current assets |  | $ | 20 |  |  | $ | 18 |  |  |  |  |  |  |
Derivatives not designated for hedge accounting: |  |  |  |  |  |  |  |
Foreign currency forward contracts |  | Other current assets |  | $ | 25 |  |  | $ | 9 |  |  |  |  |  |  |
|  |  |  | Derivative Liabilities
|  |  |  |  |  |  |  | As of
(in millions) |  |  |  |  |  |  |  | Balance Sheet Line Item |  | June 30, 2022 |  | March 31, 2022
Derivatives designated for hedge accounting: |  |  |  |
Foreign currency forward contracts |  |  |  |  |  |  |  | Accrued expenses and other current liabilities |  | $ | 5 |  |  | $ | — |
Derivatives not designated for hedge accounting: |  |  |  |
Foreign currency forward contracts |  |  |  |  |  |  |  | Accrued expenses and other current liabilities |  | $ | 16 |  |  | $ | 15 |
The fair value of foreign currency forward contracts represents the estimated amount required to settle the contracts using current market exchange rates and is based on the period-end foreign currency exchange rates and forward points which are classified as Level 2 inputs. Other Risks for Derivative Instruments The Company is exposed to the risk of losses in the event of non-performance by the counterparties to its derivative contracts. The amount subject to credit risk related to derivative instruments is generally limited to the amount, if any, by which a counterparty’s obligations exceed the obligations of the Company with that counterparty. To mitigate counterparty credit risk, the Company regularly reviews its credit exposure and the creditworthiness of the counterparties. With respect to its foreign currency derivatives, as of June 30, 2022, there were eleven counterparties with concentration of credit risk, and based on gross fair value, the maximum amount of loss that the Company could incur is $27 million. The Company also enters into enforceable master netting arrangements with some of its counterparties. However, for financial reporting purposes, it is the Company’s policy not to offset derivative assets and liabilities despite the existence of enforceable master netting arrangements. The potential effect of such netting arrangements on the Company’s balance sheets is not material for the periods presented. Non-Derivative Financial Instruments Designated for Hedge Accounting The Company applies hedge accounting for foreign currency-denominated debt used to manage foreign currency exposures on its net investments in certain non-U.S. operations. To qualify for hedge accounting, the hedging instrument must be highly effective at reducing the risk from the exposure being hedged. Net Investment Hedges DXC seeks to reduce the impact of fluctuations in foreign exchange rates on its net investments in certain non-U.S. operations with foreign currency-denominated debt. For foreign currency-denominated debt designated as a hedge, the effectiveness of the hedge is assessed based on changes in spot rates. For qualifying net investment hedges, all gains or losses on the hedging instruments are included in currency translation. Gains or losses on individual net investments in non-U.S. operations are reclassified to earnings from accumulated other comprehensive loss when such net investments are sold or substantially liquidated. As of June 30, 2022, DXC had $0.3 billion of foreign currency-denominated debt designated as hedges of net investments in non-U.S. subsidiaries. For the three months ended June 30, 2022, the pre-tax impact of gain on foreign currency-denominated debt designated for hedge accounting recognized in other comprehensive loss was $17 million. As of March 31, 2022, DXC had $0.3 billion of foreign currency-denominated debt designated as hedges of net investments in non-U.S. subsidiaries.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI https://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI https://asc.fasb.org/extlink&oid=126731327&loc=d3e90205-114008 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration