What changed in this filing

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Item 1. Financial Statements

2021-05-05 compared with 2020-11-06 · 149 added, 249 removed, 426 unchanged (48% of the section changed)

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions, except per share data) 2021 2020

7 unchanged sentences

Interest expense 13 17

Goodwill impairment — — — 1,351

(Gain) loss on divestitures and transaction costs 8 3 14 19

Litigation costs (recoveries), net — 2 20 15

Loss on divestitures and transaction costs 2 4

Litigation costs 1 6

Other (income) expenses, net — 2

Total Operating Costs and Expenses 1,037 1,102

Income (Loss) Before Income Taxes ( 13 ) ( 14 ) ( 128 ) ( 1,471 )

Loss Before Income Taxes ( 9 ) ( 51 )

Income tax expense (benefit) 2 ( 2 )

Net Income (Loss) $ ( 7 ) $ ( 16 ) $ ( 107 ) $ ( 1,353 )

Net Income (Loss) per Share:

Net Loss $ ( 11 ) $ ( 49 )

Net Loss per Share:

Basic $ ( 0.06 ) $ ( 0.24 )

5 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2021 2020

Net Income (Loss) $ ( 7 ) $ ( 16 ) $ ( 107 ) $ ( 1,353 )

Net Loss $ ( 11 ) $ ( 49 )

Other Comprehensive Income (Loss), Net (1)

Currency translation adjustments, net ( 11 ) ( 28 )

Reclassification of currency translation adjustments on divestitures — — — 15

Reclassification of divested benefit plans and other — — — ( 1 )

Unrecognized gains (losses), net ( 1 ) ( 3 )

1 unchanged sentence

Other Comprehensive Income (Loss), Net ( 12 ) ( 30 )

Comprehensive Income (Loss), Net $ 5 $ ( 31 ) $ ( 121 ) $ ( 1,347 )

Comprehensive Loss, Net $ ( 23 ) $ ( 79 )

(1) All amounts are net of tax.

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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions, except share data in thousands) September 30, 2020 December 31, 2019

(in millions, except share data in thousands) March 31, 2021 December 31, 2020

Cash and cash equivalents $ 389 $ 450

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Nine Months Ended

September 30,

Three Months Ended

(in millions) 2021 2020

5 unchanged sentences

Deferred income taxes ( 1 ) ( 9 )

Goodwill impairment — 1,351

(Gain) loss from investments — ( 1 )

Amortization of debt financing costs 2 2

(Gain) loss on divestitures and transaction costs 14 19

Loss on divestitures and sales of fixed assets, net 1 —

Stock-based compensation 3 4

Allowance for doubtful accounts 1 —

Changes in operating assets and liabilities:

(Increase) decrease in accounts receivable ( 36 ) ( 84 )

(Increase) decrease in other current and long-term assets ( 51 ) ( 34 )

Increase (decrease) in accounts payable and accrued compensation ( 14 ) ( 128 )

Increase (decrease) in restructuring liabilities 3 4

Increase (decrease) in other current and long-term liabilities ( 152 ) ( 199 )

Accounts receivable 2 ( 42 )

Other current and long-term assets ( 58 ) ( 42 )

Accounts payable and accrued compensation and benefits costs ( 39 ) ( 51 )

Restructuring liabilities 1 ( 7 )

Other current and long-term liabilities ( 1 ) ( 131 )

Net change in income tax assets and liabilities 4 16

2 unchanged sentences

Cost of additions to land, buildings and equipment ( 14 ) ( 11 )

Proceeds from sale of land, buildings and equipment — 2

Cost of additions to internal use software ( 16 ) ( 13 )

Payments for acquisitions, net of cash acquired — ( 90 )

Proceeds (payments) from divestitures, including cash sold 3 ( 7 )

Proceeds from divestitures 1 1

Net cash provided by (used in) investing activities ( 29 ) ( 23 )

2 unchanged sentences

Payments on debt ( 23 ) ( 15 )

Payment of contingent consideration related to acquisition ( 4 ) —

Taxes paid for settlement of stock-based compensation — ( 3 )

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Cash, Cash Equivalents and Restricted Cash at End of period (1)

(1) Includes $ 8 million of restricted cash as of both September 30, 2020 and 2019, respectively, that were included in Other current assets on their respective Condensed Consolidated Balance Sheets.

(1) Includes $ 10 million and $ 18 million of restricted cash as of March 31, 2021 and 2020, respectively, that were included in Other current assets on their respective Condensed Consolidated Balance Sheets.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

Three Months Ended September 30, 2020

(in millions) Common Stock Additional Paid-in Capital Retained Earnings (Deficit) AOCL (1)

Shareholders'

Balance at June 30, 2020 $ 2 $ 3,896 $ ( 2,290 ) $ ( 433 ) $ 1,175

Dividends - preferred stock, $ 20 /share (2)

— — ( 2 ) — ( 2 )

Stock option and incentive plans, net — 5 — — 5

Comprehensive Income (Loss):

Net Income (Loss) — — ( 7 ) — ( 7 )

Other comprehensive income (loss), net — — — 12 12

Total Comprehensive Income (Loss), Net — — ( 7 ) 12 5

Balance at September 30, 2020 $ 2 $ 3,901 $ ( 2,299 ) $ ( 421 ) $ 1,183

Three Months Ended September 30, 2019

(in millions) Common Stock Additional Paid-in Capital Retained Earnings (Deficit) AOCL (1)

Shareholders'

Balance at June 30, 2019 $ 2 $ 3,886 $ ( 1,583 ) $ ( 404 ) $ 1,901

Dividends - preferred stock, $ 20 /share

— — ( 2 ) — ( 2 )

Comprehensive Income (Loss):

Net Income (Loss) — — ( 16 ) — ( 16 )

Other comprehensive income (loss), net — — — ( 15 ) ( 15 )

Total Comprehensive Income (Loss), Net — — ( 16 ) ( 15 ) ( 31 )

Balance at September 30, 2019 $ 2 $ 3,886 $ ( 1,601 ) $ ( 419 ) $ 1,868

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

(in millions) Common Stock Additional Paid-in Capital Retained Earnings (Deficit) AOCL (1)

3 unchanged sentences

— — ( 2 ) — ( 2 )

Stock option and incentive plans, net — 11 — — 11

Stock incentive plans, net — 3 — — 3

Comprehensive Income (Loss):

Net Income (Loss) — — ( 107 ) — ( 107 )

Net Loss — — ( 11 ) — ( 11 )

Other comprehensive income (loss), net — — — ( 12 ) ( 12 )

Total Comprehensive Income (Loss), Net — — ( 11 ) ( 12 ) ( 23 )

Balance at September 30, 2020 $ 2 $ 3,901 $ ( 2,299 ) $ ( 421 ) $ 1,183

Nine Months Ended September 30, 2019

Balance at March 31, 2021 $ 2 $ 3,902 $ ( 2,326 ) $ ( 410 ) $ 1,168

Three Months Ended March 31, 2020

(in millions) Common Stock Additional Paid-in Capital Retained Earnings (Deficit) AOCL (1)

3 unchanged sentences

— — ( 2 ) — ( 2 )

Cumulative effect of accounting change — — ( 8 ) — ( 8 )

Stock option and incentive plans, net — 8 — — 8

Stock incentive plans, net — 1 — — 1

Comprehensive Income (Loss):

Net Income (Loss) — — ( 1,353 ) — ( 1,353 )

Net Loss — — ( 49 ) — ( 49 )

Other comprehensive income (loss), net — — — ( 30 ) ( 30 )

Total Comprehensive Income (Loss), Net — — ( 49 ) ( 30 ) ( 79 )

Balance at September 30, 2019 $ 2 $ 3,886 $ ( 1,601 ) $ ( 419 ) $ 1,868

Balance at March 31, 2020 $ 2 $ 3,891 $ ( 2,236 ) $ ( 437 ) $ 1,220

(1) AOCL - Accumulated other comprehensive loss.

Refer to Note 10 – Accumulated Other Comprehensive Loss for the components of AOCL.

(2) The preferred dividend for the third quarter of 2020 was accrued but unpaid as of September 30, 2020.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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Description of Business

Conduent is a global enterprise and leading provider of mission-critical services and solutions on behalf of businesses and governments – creating exceptional outcomes for its clients and the millions of people who count on them.

Through people, process expertise in transaction-intensive processing and technology such as analytics and automation, Conduent's solutions and services create value by improving efficiencies, reducing costs and enabling revenue growth.

As one of the largest business process services companies in the world, Conduent delivers mission-critical services and solutions on behalf of businesses and governments – creating exceptional outcomes for its clients and the millions of people who count on them.

Through people, process, expertise in transaction-intensive processing and technology such as analytics and automation, Conduent's services and solutions create value by improving efficiencies, reducing costs and enabling revenue growth.

A majority of Fortune 100 companies and over 500 government entities depend on Conduent every day to manage their business processes and essential interactions with their end-users.

The Company's portfolio includes industry-focused solutions in attractive growth markets such as healthcare and transportation, as well as solutions that serve multiple industries such as transaction processing, customer care, human resource services and payment services.

Basis of Presentation

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GAAP) on a basis consistent with reporting interim financial information in accordance with instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC.

Accordingly, they do not include all of the information and notes required by U.S.

GAAP for complete financial statements.

The year-end Condensed Consolidated Balance Sheet was derived from the audited Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020.

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Preparation of financial statements in conformity with U.S.

GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes.

GAAP requires the Company to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes.

Actual results could differ materially from these estimates.

On an ongoing basis, we evaluate our estimates, including those related to fair values of financial instruments, goodwill and intangible assets, income taxes and contingent liabilities, among others.

We base our estimates on assumptions, both historical and forward looking, that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

As of September 30, 2020, the impact of the outbreak of COVID-19 pandemic continues to unfold.

As a result, many of our estimates and assumptions required increased judgment and carry a higher degree of variability and volatility.

As events continue to evolve and additional information becomes available, our estimates may change materially in the future.

On an ongoing basis, the Company evaluates its estimates, including those related to fair values of financial instruments, goodwill and intangible assets, income taxes and contingent liabilities, among others.

The Company bases its estimates on assumptions, both historical and forward looking, that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

As of March 31, 2021, the impact of the COVID-19 pandemic and the mitigating impact of the rollout of a vaccine for it continue to unfold.

As a result, many of the Company's estimates and assumptions required increased judgment and carry a higher degree of variability and volatility.

As events continue to evolve and additional information becomes available, the Company's estimates may change materially in the future.

CNDT Q1 2021 Form 10-Q

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New Accounting Standards Adopted

Credit Losses:

In June 2016, the Financial Accounting Standards Board (FASB) updated the accounting guidance related to measurement of credit losses on financial instruments, which requires financial assets measured at amortized cost to be presented at the net amount expected to be collected.

The guidance replaces the incurred loss model with an expected loss model referred to as current expected credit loss (CECL).

The CECL model requires us to measure lifetime expected credit losses for financial instruments held at the reporting date using historical experience, current conditions and reasonable supportable forecasts.

The guidance expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating credit losses and requires new disclosures of the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination.

This updated guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

The Company adopted the new credit loss guidance as of January 1, 2020.

The adoption did not have any material impact on the Company's consolidated financial statements.

I ncome Taxes:

In December 2019, the Financial Accounting Standards Board (FASB) issued final guidance that simplified the accounting for income taxes by eliminating some exceptions to the general approach in Accounting Standards Codification (ASC) 740, Income Taxes.

This final guidance was effective for fiscal years beginning January 1, 2021.

The Company adopted the final income taxes guidance as of January 1, 2021.

The adoption did not have any material impact on the Company's Condensed Consolidated Financial Statements.

New Accounting Standards To Be Adopted

Income Taxes:

In December 2019, the FASB issued updated accounting guidance to simplify the accounting for income taxes.

The guidance eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The guidance also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

This updated guidance is effective for fiscal years beginning January 1, 2021.

Early adoption is permitted.

The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

Reference Rate Reform:

In March 2020, the FASB issued updated guidance relating to the accounting for the discontinuation of the London Inter-bank Offered Rate (LIBOR), referred to as the reference rate reform.

This guidance provides practical expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships and other transactions affected by the reference rate reform if certain criteria are met.

In March 2020, the FASB issued updated guidance relating to the accounting for the discontinuation of the London Inter-bank Offered Rate (LIBOR), referred to as reference rate reform.

This guidance provides optional practical expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

T his guidance is applicable to contract modifications that replace a reference LIBOR rate affected by reference rate reform.

The amendments may be applied through December 31, 2022.

The Company is currently evaluating the impact of the new guidance on its consolidated financial statements.

The Company is currently evaluating the impact of this guidance on its Condensed Consolidated Financial Statements.

CNDT Q1 2021 Form 10-Q

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Disaggregation of Revenue

During the first quarter of 2020, the Company changed how it presents disaggregated revenue by major service offering.

This change has no impact on disaggregated revenue by reportable segments or the timing of revenue recognition.

All prior periods presented have been revised to reflect this change.

The following table provides information about disaggregated revenue by major service offering, the timing of revenue recognition and a reconciliation of the disaggregated revenue by reportable segment.

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Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2021 2020

3 unchanged sentences

Commercial healthcare solutions 111 113

Human resource services 123 143 388 450

Human resource and learning services 112 138

Total Commercial Industries 526 572

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Total Transportation 184 189

Divestitures — — — 36

Education — — — 1

Total Other — — — 37

Total Consolidated Revenue $ 1,028 $ 1,051

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The following table provides information about the balances of the Company's contract assets, unearned income and receivables from contracts with customers:

(in millions) September 30, 2020 December 31, 2019

(in millions) March 31, 2021 December 31, 2020

Contract Assets (Unearned Income)

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(2) Presented in Other long-term liabilities in the Condensed Consolidated Balance Sheets.

Revenues of $ 20 million and $ 84 million were recognized during the three and nine months ended September 30, 2020, respectively, related to the Company's unearned income at December 31, 2019.

Revenues of $ 16 million and $ 97 million were recognized during the three and nine months ended September 30, 2019, respectively, related to the Company's unearned income at December 31, 2018.

Revenues of $ 58 million and $ 42 million were recognized during the three months ended March 31, 2021 and 2020, respectively, related to the Company's unearned income at December 31, 2020 and 2019, respectively.

The Company had no material asset impairment charges related to contract assets for the three months ended March 31, 2021 or 2020.

Transaction Price Allocated to the Remaining Performance Obligations

Estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially satisfied at September 30, 2020 was approximately $ 1.5 billion.

Estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially satisfied at March 31, 2021 was approximately $ 1.2 billion.

The Company expects to recognize approximately 83 % of this revenue over the next two years and the remainder thereafter.

Note 4 – Segment Reporting

Our reportable segments correspond to how we organize and manage the business, as defined by our Chief Executive Officer, who is also our Chief Operating Decision Maker (CODM), and are aligned to the industries in which our clients operate.

Our segments involve the delivery of business process services and include service arrangements where we manage a customer's business activity or process.

In the first quarter of 2020, we realigned our sales organization and certain shared IT and other allocated functions to reflect how we currently manage our business.

In the third quarter of 2020, in order to provide greater visibility into the profitability of our segments, certain costs that were previously included in the Shared IT/Infrastructure and Corporate Costs (now referred to as Unallocated Costs) are being allocated to each of the reportable segments.

All prior periods presented have been recast to reflect these changes.

Our financial performance is based on Segment Profit/(Loss) and Segment Adjusted EBITDA for our three reportable segments (Commercial Industries, Government Services and Transportation), Other and Unallocated Costs.

Our CODM does not evaluate operating segments using discrete asset information.

The Company's reportable segments correspond to how we organize and manage the business, as defined by the Company's Chief Executive Officer, who is also the Company's Chief Operating Decision Maker (CODM), and are aligned to the industries in which the Company's clients operate.

The Company's segments involve the delivery of business process services and include service arrangements where it manages a customer's business activity or process.

The Company's financial performance is based on Segment Profit/(Loss) and Segment Adjusted Earnings Before Income Taxes, Depreciation and Amortization (EBITDA) for its three reportable segments (Commercial Industries, Government Services and Transportation), Other and Unallocated Costs.

The Company's CODM does not evaluate operating segments using discrete asset information.

Commercial Industries:

Our Commercial Industries segment provides business process services and customized solutions to clients in a variety of industries.

Across the Commercial Industries segment, we operate on our clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enable revenue growth for our clients and their consumers and employees.

The Commercial Industries segment provides business process services and customized solutions to clients in a variety of industries.

Across the Commercial Industries segment, the Company operates on its clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enable revenue growth for the Company's clients and their consumers and employees.

Government Services:

Our Government Services segment provides government-centric business process services to U.S.

The Government Services segment provides government-centric business process services to U.S.

federal, state and local and foreign governments for public assistance program administration, transaction processing and payment services.

Our solutions in this segment help governments respond to changing rules for eligibility and increasing citizen expectations.

The solutions in this segment help governments respond to changing rules for eligibility and increasing citizen expectations.

CNDT Q1 2021 Form 10-Q

Transportation:

Our Transportation segment provides systems and support, as well as revenue-generating services, to government clients.

On behalf of government agencies and authorities in the transportation industry, we deliver mission-critical mobility and payment solutions that improve automation, interoperability and decision-making to streamline operations, increase revenue and reduce congestion while creating safer communities and seamless travel experiences for consumers.

Other includes our divestitures and our Student Loan business, which the Company exited in the third quarter of 2018.

Unallocated Costs includes IT infrastructure costs that are shared by multiple reportable segments, enterprise application costs and certain corporate overhead expenses not directly attributable or allocated to our reportable segments.

Selected financial information for our reportable segments was as follows:

The Transportation segment provides systems and support, as well as revenue-generating services, to government clients.

On behalf of government agencies and authorities in the transportation industry, the Company delivers mission-critical mobility and payment solutions that improve automation, interoperability and decision-making to streamline operations, increase revenue and reduce congestion while creating safer communities and seamless travel experiences for consumers.

Other includes the Company's Student Loan business, which the Company exited in the third quarter of 2018.

Selected financial information for the Company's reportable segments was as follows:

Three Months Ended

September 30,

(in millions) Commercial Industries Government Services Transportation Other Unallocated Costs Total

2020 Divestitures Other

Revenue $ 526 $ 318 $ 184 $ — $ — $ 1,028

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Adjusted EBITDA $ 70 $ 77 $ 19 $ ( 3 ) $ ( 67 ) $ 96

Nine Months Ended

September 30,

(in millions) Commercial Industries Government Services Transportation Other Unallocated Costs Total

2020 Divestitures Other

Revenue $ 1,610 $ 969 $ 529 $ — $ — $ — $ 3,108

Segment profit (loss) $ 99 $ 282 $ 56 $ — $ 9 $ ( 258 ) $ 188

Segment depreciation and amortization $ 79 $ 19 $ 27 $ — $ — $ 41 $ 166

Adjusted EBITDA $ 178 $ 301 $ 83 $ — $ 2 $ ( 217 ) $ 347

Revenue $ 1,782 $ 970 $ 579 $ 36 $ 1 $ — $ 3,368

Segment profit (loss) $ 198 $ 202 $ 50 $ 1 $ — $ ( 251 ) $ 200

Segment depreciation and amortization $ 76 $ 24 $ 27 $ — $ — $ 33 $ 160

Adjusted EBITDA $ 274 $ 226 $ 81 $ 1 $ — $ ( 218 ) $ 364

CNDT Q3 2020 Form 10-Q

(in millions) Three Months Ended

September 30, Nine Months Ended

September 30,

Segment Profit (Loss) Reconciliation to Pre-tax Income (Loss) 2021 2020

Income (Loss) Before Income Taxes $ ( 13 ) $ ( 14 ) $ ( 128 ) $ ( 1,471 )

Loss Before Income Taxes $ ( 9 ) $ ( 51 )

Reconciling items:

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Interest expense 13 17

Goodwill impairment — — — 1,351

(Gain) loss on divestitures and transaction costs 8 3 14 19

Litigation costs (recoveries), net — 2 20 15

Loss on divestitures and transaction costs 2 4

Litigation costs 1 6

Other (income) expenses, net — 2

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CA MMIS charge (credit) — ( 7 )

Other adjustments — — — 4

Adjusted EBITDA $ 115 $ 96

Refer to Note 3 – Revenue for additional information on disaggregated revenues of the reportable segments.

CNDT Q1 2021 Form 10-Q

Note 5 – Restructuring Programs and Related Costs

The Company engages in a series of restructuring programs related to downsizing its employee base, exiting certain activities, outsourcing certain internal functions and engaging in other actions designed to reduce its cost structure and improve productivity.

The implementation of the Company's strategic transformation program and various productivity initiatives have reduced the Company's real estate footprint across all geographies and segments resulting in lease terminations, asset impairments and other related costs.

Also included in Restructuring and related costs in the table below are incremental, non-recurring costs related to the consolidation of the Company's data centers, which totaled $ 8 million and $ 0 million for the three months ended September 30, 2020 and 2019, respectively, and $ 16 million and $ 18 million for the nine months ended September 30, 2020 and 2019, respectively.

Management continues to evaluate the Company's business, and in the future, there may be additional provisions for new plan initiatives and/or changes in previously recorded estimates as payments are made, or actions are completed.

The implementation of the Company's operational efficiency improvement initiatives have reduced the Company's real estate footprint across all geographies and segments resulting in lease right-of-use asset impairments and other related costs.

Also included in Restructuring and related costs are incremental, non-recurring costs related to the consolidation of the Company's data centers, which totaled $ 7 million and $ 2 million for the three months ended March 31, 2021 and 2020, respectively.

Management continues to evaluate the Company's businesses, and in the future, there may be additional provisions for new plan initiatives and/or changes in previously recorded estimates as payments are made, or actions are completed.

Costs associated with restructuring, including employee severance and lease termination costs, are generally recognized when it has been determined that a liability has been incurred, which is generally upon communication to the affected employees or exit from the leased facility.

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Asset impairment costs related to the reduction of our real estate footprint include impairment of operating lease right-of-use (ROU) assets and associated leasehold improvements.

A summary of the Company's restructuring program activity during the nine months ended September 30, 2020 and 2019 was as follows:

A summary of the Company's restructuring program activity during the three months ended March 31, 2021 and 2020 is as follows:

(in millions) Severance and Related Costs Termination and Other Costs Asset Impairments Total

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Charges against reserve and currency ( 2 ) ( 10 ) ( 3 ) ( 15 )

Accrued Balance at September 30, 2020 $ 7 $ 3 $ — $ 10

CNDT Q3 2020 Form 10-Q

Accrued Balance at March 31, 2021 $ 1 $ 2 $ — $ 3

(in millions) Severance and Related Costs Termination and Other Costs Asset Impairments Total

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Charges against reserve and currency ( 8 ) ( 5 ) ( 1 ) ( 14 )

Reclassification to operating lease ROU assets (2)

— ( 22 ) — ( 22 )

Accrued Balance at September 30, 2019 $ 13 $ 7 $ — $ 20

Accrued Balance at March 31, 2020 $ 7 $ 5 $ — $ 12

(1) Represents amounts recognized within the Consolidated Statements of Income (Loss) for the years shown.

(2) Relates to the adoption of the new lease guidance.

In addition, the Company recorded professional support costs associated with the strategic transformation program in Restructuring and related costs of $ 2 million and $ 0 million for the three months ended September 30, 2020 and 2019, respectively, and $ 6 million and $ 2 million for the nine months ended September 30, 2020 and 2019, respectively.

The following table summarizes the total amount of costs incurred in connection with these restructuring programs by segment:

In addition, the Company recorded professional support costs associated with the implementation of certain strategic transformation programs of $ 1 million and $ 2 million for the three months ended March 31, 2021 and 2020, respectively.

CNDT Q1 2021 Form 10-Q

The following table summarizes the total amount of costs incurred in connection with these restructuring programs by reportable and non-reportable segment:

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2021 2020

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Transportation — —

Other — ( 1 ) — —

Unallocated Costs (1)

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Long-term debt was as follows:

(in millions) September 30, 2020 December 31, 2019

(in millions) March 31, 2021 December 31, 2020

Term loan A due 2022 $ 624 $ 654

Term loan B due 2023 814 816

Revolving credit facility due 2022 150 —

Senior notes due 2024 34 34

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Total Long-term Debt $ 1,388 $ 1,420

As of September 30, 2020, the Company has borrowed $ 150 million of its $ 750 million Senior Revolving Credit Facility (Revolver).

In addition, the Company has utilized $ 8 million of the Revolver to issue letters of credit.

The net Revolver available to be drawn upon as of September 30, 2020 was $ 592 million.

CNDT Q3 2020 Form 10-Q

At September 30, 2020 and December 31, 2019, the Company was in compliance with all debt covenants related to the borrowings in the table above.

As of March 31, 2021, the Company had no outstanding borrowings under its $ 750 million Senior Revolving Credit Facility (Revolver).

However, the Company has utilized $ 7 million of the Revolver to issue letters of credit.

The net Revolver available to be drawn upon as of March 31, 2021 was $ 743 million.

At March 31, 2021 and December 31, 2020, the Company was in compliance with all debt covenants related to the borrowings in the table above.

Note 7 – Financial Instruments

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As a part of the Company's foreign exchange risk management strategy, the Company uses derivative instruments, primarily forward contracts, to hedge the funding of foreign entities which have a non-dollar functional currency, thereby reducing volatility of earnings or protecting fair values of assets and liabilities.

At September 30, 2020 and December 31, 2019, the Company had outstanding forward exchange contracts with gross notional values of $ 160 million and $ 207 million, respectively.

At September 30, 2020, approximately 76 % of these contracts mature within three months, 9 % in three to six months, 12 % in six to twelve months and 3 % in greater than twelve months.

At March 31, 2021 and December 31, 2020, the Company had outstanding forward exchange contracts with gross notional values of $ 234 million and $ 180 million, respectively.

At March 31, 2021, approximately 82 % of these contracts mature within three months, 7 % in three to six months, 8 % in six to twelve months and 3 % in greater than twelve months.

Most of these foreign currency derivative contracts are designated as cash flow hedges and did not have a material impact on the Company's balance sheet, income statement or cash flows for the periods presented.

Refer to Note 8 – Fair Value of Financial Assets and Liabilities for additional information regarding the fair value of the Company's foreign exchange forward contracts.

CNDT Q1 2021 Form 10-Q

Note 8 – Fair Value of Financial Assets and Liabilities

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The basis for the measurement at fair value in all cases was Level 2.

(in millions) September 30, 2020 December 31, 2019

(in millions) March 31, 2021 December 31, 2020

Foreign exchange contract - forward $ 2 $ 2

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Total Liabilities $ 1 $ —

CNDT Q3 2020 Form 10-Q

Summary of Other Financial Assets and Liabilities

The estimated fair values of our other financial assets and liabilities were as follows:

September 30, 2020 December 31, 2019

The estimated fair values of other financial assets and liabilities were as follows:

March 31, 2021 December 31, 2020

(in millions) Carrying

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Long-term debt $ 1,388 $ 1,361 $ 1,420 $ 1,378

Contingent consideration payable $ — $ — $ 4 $ 4

The fair value amounts for Cash and cash equivalents, Restricted cash, Accounts receivable, net and Short-term debt approximate carrying amounts due to the short-term maturities of these instruments.

The fair value of Long-term debt was estimated based on the current rates offered to the Company for debt of similar maturities (Level 2).

The fair value of the contingent consideration payable related to the HSP acquisition was measured using a Monte Carlo simulation model and calibrated to management’s financial projections of the acquired business.

The value of the contingent consideration payable is then estimated to be the arithmetic average of all simulation paths, discounted to the valuation date (Level 3).

The changes in the fair value are recorded in Other income (expense), net on the Condensed Consolidated Statements of Income (Loss).

During the third quarter of 2020, the contingent consideration payable was settled.

CNDT Q1 2021 Form 10-Q

Note 9 – Employee Benefit Plans

The Company has post-retirement savings and investment plans in several countries, including the U.S., U.K.

In many instances, employees from those defined benefit pension plans that have been amended to freeze future service accruals were transitioned to an enhanced defined contribution plan.

In these plans, employees are allowed to contribute a portion of their salaries and bonuses to the plans.

In many instances, employees participating in defined benefit pension plans that have been amended to freeze future service accruals were transitioned to an enhanced defined contribution plan.

In these plans, employees are permitted to contribute a portion of their salaries and bonuses to the plans.

Historically, the Company matched a portion of employee contributions.

However, beginning in 2019, the Company suspended its match to the 401(k) plan for all U.S.

salaried employees.

Additionally, during the second quarter of 2020, the Company extended the suspension of its match to the 401(k) plan to also include all U.S.

hourly employees.

The Company recognized an expense related to its defined contribution plans of $ 1 million and $ 2 million for the three months ended September 30, 2020 and 2019, respectively, and $ 2 million and $ 7 million for the nine months ended September 30, 2020 and 2019, respectively.

Beginning in 2019, the Company suspended its match to the 401(k) plan for all U.S.

salaried employees and extended the suspension to all U.S.

hourly employees in the second quarter of 2020.

However, the Company match was reinstated for all U.S.

employees in November of 2020.

The Company recognized an expense related to its defined contribution plans of $ 5 million and $ 1 million for the three months ended March 31, 2021 and 2020, respectively.

Note 10 – Accumulated Other Comprehensive Loss (AOCL)

2 unchanged sentences

Balance at December 31, 2020 $ ( 400 ) $ 3 $ ( 1 ) $ ( 398 )

Other comprehensive income (loss) before reclassifications ( 15 ) — 1 ( 14 )

Amounts reclassified from accumulated other comprehensive loss — — — —

Net current period other comprehensive income (loss) ( 15 ) — 1 ( 14 )

Balance at September 30, 2020 $ ( 423 ) $ 3 $ ( 1 ) $ ( 421 )

CNDT Q3 2020 Form 10-Q

Other comprehensive income (loss) ( 11 ) ( 1 ) — ( 12 )

Balance at March 31, 2021 $ ( 411 ) $ 2 $ ( 1 ) $ ( 410 )

(in millions) Currency Translation Adjustments Gains (Losses) on Cash Flow Hedges Defined Benefit Pension Items Total

Balance at December 31, 2019 $ ( 408 ) $ 3 $ ( 2 ) $ ( 407 )

Other comprehensive income (loss) before reclassifications ( 9 ) 1 — ( 8 )

Amounts reclassified from accumulated other comprehensive loss 15 — ( 1 ) 14

Net current period other comprehensive income (loss) 6 1 ( 1 ) 6

Balance at September 30, 2019 $ ( 420 ) $ 3 $ ( 2 ) $ ( 419 )

Other comprehensive income (loss) ( 28 ) ( 3 ) 1 ( 30 )

Balance at March 31, 2020 $ ( 436 ) $ — $ ( 1 ) $ ( 437 )

(1) All amounts are net of tax.

9 unchanged sentences

The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated.

The Company assesses its potential liability by analyzing its litigation, regulatory and other matters using available information.

The Company assesses its potential liability by analyzing its litigation and regulatory matters using available information.

The Company develops its view on estimated losses in consultation with outside counsel handling its defense in these matters, which involves an analysis of potential results, assuming a combination of litigation and settlement strategies.

Should developments in any of these matters cause a change in the Company's determination as to an unfavorable outcome and result in the need to recognize a material accrual, or should any of these matters result in a final adverse judgment or be settled for significant amounts in excess of any accrual for such matter or matters, this could have a material adverse effect on the Company's results of operations, cash flows and financial position in the period or periods in which such change in determination, judgment or settlement occurs.

The Company believes it has recorded adequate provisions for any such matters as of September 30, 2020.

The Company believes it has recorded adequate provisions for any such matters as of March 31, 2021.

Litigation is inherently unpredictable, and it is not possible to predict the ultimate outcome of these matters and such outcome in any such matters could be in excess of any amounts accrued and could be material to the Company's results of operations, cash flows or financial position in any reporting period.

CNDT Q1 2021 Form 10-Q

Additionally, guarantees, indemnifications and claims arise during the ordinary course of business from relationships with suppliers, customers and non-consolidated affiliates when the Company undertakes an obligation to guarantee the performance of others if specified triggering events occur.

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The ultimate effect on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to the outcome of these claims.

However, while the ultimate liabilities resulting from such claims may be significant to results of operations in the period recognized, management does not anticipate they will have a material adverse effect on the condensed consolidated financial position or liquidity.

As of September 30, 2020, the Company had accrued its estimate of liability incurred under its indemnification arrangements and guarantees.

However, while the ultimate liabilities resulting from such claims may be significant to results of operations in the period recognized, management does not anticipate they will have a material adverse effect on the Company's condensed consolidated financial position or liquidity.

As of March 31, 2021, the Company had accrued its estimate of liability incurred under its indemnification arrangements and guarantees.

Litigation Against the Company

State of Texas v.

Xerox Corporation, Conduent Business Services, LLC (f/k/a Xerox Business Services, LLC), Conduent State Healthcare, LLC (f/k/a Xerox State Healthcare, LLC, f/k/a ACS State Healthcare, LLC) and Conduent Incorporated:

On May 9, 2014, the State of Texas, via the Texas Office of Attorney General (the “State”), filed a lawsuit in the 53rd Judicial District Court of Travis County, Texas.

The lawsuit alleged that Conduent State Healthcare LLC (f/k/a Xerox State Healthcare, LLC and ACS State Healthcare) (“CSH”), Conduent Business Services LLC (“CBS”) and Conduent Incorporated (“CI”) (collectively, CSH, CBS and CI are referred to herein as the "Conduent Defendants") and Xerox Corporation (together with the Conduent Defendants, the “Defendants”) violated the Texas Medicaid Fraud Prevention Act in the administration of its contract with the Texas Department of Health and Human Services (“HHSC”).

In February 2019 a settlement agreement and release was reached among the Defendants, the State and HHSC which was amended in May 2019 ("Texas Agreement").

Pursuant to the terms of the Texas Agreement, the Conduent Defendants were required to pay the State of Texas $ 236 million, of which $ 118 million was paid in 2019 and $ 118 million paid in January 2020.

The case has been dismissed with prejudice with a full release and discharge of the Defendants.

CNDT Q3 2020 Form 10-Q

Employees’ Retirement System of the Puerto Rico Electric Power Authority et al v.

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On February 3, 2020, plaintiffs filed a lawsuit in the Superior Court of New York County, New York.

The lawsuit relates to the sale of a portion of CBS's select standalone customer care call center business (the “Business”) to plaintiffs, which sale closed in February 2019.

Under the terms of the sale agreement, CBS received approximately $ 23 million of notes from plaintiffs (the “Notes”).

The lawsuit relates to the sale of a portion of Conduent Business Service, LLC's (CBS) select standalone customer care call center business (Business) to plaintiffs, which sale closed in February 2019.

Under the terms of the sale agreement, CBS received approximately $ 23 million of notes from plaintiffs (Notes).

The lawsuit alleges various causes of action in connection with the acquisition, including:

indemnification for breach of representation and warranty, indemnification for breach of contract and fraud.

indemnification for breach of representation and warranty;

indemnification for breach of contract;

Plaintiffs allege that their obligation to mitigate damages and their contractual right of set-off permits them to withhold and deduct from any amounts that are owed to CBS under the Notes, and plaintiffs seek a judgement that they have no obligation to pay the Notes.

CBS denies all of these allegations, believes that it has strong defenses to all of plaintiffs’ claims and will vigorously defend itself against these claims.

In the third quarter of 2020, CBS filed a counterclaim against Skyview Capital LLC seeking the outstanding balance on the Notes, the amounts owed for the Jamaica deferred closing portion of the sale, and other transition services agreement and late rent payment obligations.

On August 20, 2020, Conduent filed a counterclaim against Skyview seeking the outstanding balance on the notes, the amounts owed for the Jamaica deferred closing, and other transition services agreement and late rent payment obligations.

Conduent denies all of the plaintiffs' allegations, believes that it has strong defenses to all of plaintiffs’ claims and will vigorously defend itself against these claims.

The Company is not able to determine or predict the ultimate outcome of this proceeding or reasonably provide an estimate or range of estimate of the possible outcome or loss, if any, in excess of currently recorded reserves.

CNDT Q1 2021 Form 10-Q

Dennis Nasrawi v.

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On September 13, 2012, the Court sustained both demurrers with prejudice, completely dismissing the matter and barring plaintiffs from refiling their claims.

Plaintiffs appealed, and ultimately the California Court of Appeals (Sixth District) reversed the trial court’s ruling and remanded the case back to the trial court as to Buck only, and only with respect to Plaintiffs' claim of aiding and abetting StanCERA in breaching its fiduciary duty.

Plaintiffs appealed, and ultimately the California Court of Appeals (Sixth District) reversed the trial court’s ruling and remanded the case back to the trial court as to Buck only, and only with respect to plaintiff's claim of aiding and abetting StanCERA in breaching its fiduciary duty.

This case has been stayed pending the outcome of parallel litigation the plaintiffs are pursuing against StanCERA.

1 unchanged sentence

On April 26, 2019, plaintiffs in the parallel litigation filed an appeal.

This case remains stayed until the parallel litigation is finally concluded.

Nasrawi remains stayed until the parallel litigation is finally concluded.

Absent the court finding that StanCERA breached its fiduciary duty, plaintiffs’ claim against Buck for aiding and abetting said breach would not appear viable.

Buck will continue to aggressively defend these lawsuits.

In August 2018, Conduent sold Buck Consultants, LLC;

In August 2018, Conduent sold Buck;

however, the Company retained this liability after the sale.

CNDT Q3 2020 Form 10-Q

Conduent Business Services, LLC v.

Cognizant Business Services, LLC:

On April 12, 2017, CBS filed a lawsuit against Cognizant Business Services Corporation (“Cognizant”) in the Supreme Court of New York County, New York.

The lawsuit relates to the Amended and Restated Master Outsourcing Services Agreement effective as of October 24, 2012, and the service delivery contracts and work orders thereunder, between CBS and Cognizant, as amended and supplemented (the “Contract”).

Cognizant Business Services Corporation:

On April 12, 2017, Conduent Business Service LLC (CBS) filed a lawsuit against Cognizant Business Services Corporation (Cognizant) in the Supreme Court of New York County, New York.

The Contract contains certain minimum purchase obligations by CBS through the date of expiration.

3 unchanged sentences

CBS also alleges that it terminated the Contract for cause, because, among other things, Cognizant violated the Foreign Corrupt Practices Act.

Cognizant initially asserted two counterclaims for breach of contract seeking recovery of damages in excess of $ 47 million, which includes amounts allegedly not paid to Cognizant under the Contract and an alleged $ 25 million termination fee.

CBS has responded to Cognizant’s counterclaims by denying the allegations.

Cognizant subsequently filed a second amended counterclaim seeking an additional $ 43 million to satisfy the minimum revenue commitment attributable to the years 2017-2020, which increased Cognizant's damages claim to approximately $ 90 million.

In its answer, Cognizant asserted two counterclaims for breach of contract seeking recovery of damages in excess of $ 47 million, which includes amounts alleged not paid to Cognizant under the Contract and an alleged $ 25 million termination fee.

Cognizant's second amended counterclaim increased Cognizant's damages to $ 89 million.

CBS will continue to vigorously defend itself against the counterclaims but the Company is not able to determine or predict the ultimate outcome of this proceeding or reasonably provide an estimate or range of estimate of the possible outcome or loss, if any, in excess of currently recorded reserves.

CNDT Q1 2021 Form 10-Q

Other Matters

1 unchanged sentence

(XES) has cooperated with several federal and state agencies regarding a variety of matters, including XES' self-disclosure to the U.S.

Department of Education (the "Department") and the Consumer Financial Protection Bureau ("CFPB") that some third-party student loans under outsourcing arrangements for various financial institutions required adjustments.

With the exception of an inquiry the Illinois Attorney General's Office commenced in September 2019, the Company has resolved the investigations the CFPB and several state agencies commenced and continues to work with the Department and the U.S.

Department of Education (Department) and the Consumer Financial Protection Bureau (CFPB) that some third-party student loans under outsourcing arrangements for various financial institutions required adjustments.

With the exception of an inquiry the Illinois Attorney General's Office recently commenced, the Company has resolved the investigations the CFPB and several state agencies commenced and continues to work with the Department and the U.S.

Department of Justice to resolve all outstanding issues, including a number of operational projects that XES discovered and disclosed since 2014.

The Company cannot provide assurance that the CFPB, another regulator, a financial institution on behalf of which the Company serviced third-party student loans, or another party will not ultimately commence a legal action against XES in which fines, penalties or other liabilities are sought from XES.

The Company is not able to predict the likely outcome of these matters, should any such matter be commenced, or reasonably provide an estimate or range of estimates of any loss in excess of currently recorded reserves.

Nor is the Company able to predict the likely outcome of these matters, should any such matter be commenced, or reasonably provide an estimate or range of estimates of any loss in excess of currently recorded reserves.

The Company could, in future periods, incur judgments or enter into settlements to resolve these potential matters for amounts in excess of current reserves and there could be a material adverse effect on the Company's results of operations, cash flows and financial position in the period in which such change in judgment or settlement occurs.

1 unchanged sentence

Certain contracts, primarily in the Company's Government Services and Transportation segments, require the Company to provide a surety bond or a letter of credit as a guarantee of performance.

As of September 30, 2020, the Company had $ 601 million of outstanding surety bonds used to secure its performance of contractual obligations with its clients and $ 86 million of outstanding letters of credit issued to secure the Company's performance of contractual obligations to its clients as well as other corporate obligations.

As of March 31, 2021, the Company had $ 610 million of outstanding surety bonds used to secure its performance of contractual obligations with its clients and $ 95 million of outstanding letters of credit issued to secure the Company's performance of contractual obligations to its clients as well as other corporate obligations.

In general, the Company would only be liable for the amount of these guarantees in the event of default in the Company's performance of its obligations under each contract.

The Company believes it has sufficient capacity in the surety markets and liquidity from its cash flow and its various credit arrangements (including its Revolver) to allow it to respond to future requests for proposals that require such credit support.

CNDT Q3 2020 Form 10-Q

Note 12 – Preferred Stock

3 unchanged sentences

Each share of convertible preferred stock is convertible at any time, at the option of the holder, into 44.9438 shares of common stock for a total of 5,393,000 shares (reflecting an initial conversion price of approximately $ 22.25 per share of common stock), subject to customary anti-dilution adjustments.

Note 13 – Earnings per Share

We did not declare any common stock dividends in the periods presented.

The following table sets forth the computation of basic and diluted earnings per share of common stock:

CNDT Q1 2021 Form 10-Q

Note 13 – Earnings (Loss) per Share

The Company did not declare any common stock dividends in the periods presented.

The following table sets forth the computation of basic and diluted earnings (loss) per share of common stock:

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions, except per share data in whole dollars and shares in thousands) 2021 2020

Net income (loss) $ ( 7 ) $ ( 16 ) $ ( 107 ) $ ( 1,353 )

Net loss $ ( 11 ) $ ( 49 )

Dividend - preferred stock ( 2 ) ( 2 )

Adjusted Net Income (Loss) Available to Common Shareholders $ ( 9 ) $ ( 18 ) $ ( 114 ) $ ( 1,360 )

Adjusted Net Loss Available to Common Shareholders $ ( 13 ) $ ( 51 )

Weighted Average Common Shares Outstanding 212,250 211,093

Common shares issuable with respect to:

Stock options — — — —

Restricted stock and performance units / shares — — — —

Adjusted Weighted Average Common Shares Outstanding 209,244 209,626 209,958 208,741

Net Income (Loss) per Share:

Net Loss per Share:

Basic $ ( 0.06 ) $ ( 0.24 )

Diluted $ ( 0.06 ) $ ( 0.24 )

There were no securities excluded from the computation of diluted earnings per share for being either contingently issuable shares or shares that if included would have been anti-dilutive for the three months ended March 31, 2021 or 2020.

CNDT Q1 2021 Form 10-Q

1 unchanged sentence

The components of Other assets and liabilities were as follows:

(in millions) September 30, 2020 December 31, 2019

(in millions) March 31, 2021 December 31, 2020

Other Current Assets

3 unchanged sentences

Restricted cash 10 8

Current portion of capitalized cloud computing implementation costs, net 10 8

Net receivable from buyers of divested businesses 53 53

4 unchanged sentences

Current operating lease liabilities 78 81

Restructure reserves 5 15

Restructuring liabilities 3 1

Income tax payable 16 16

5 unchanged sentences

Product software, net 79 72

Capitalized cloud computing implementation costs, net 41 40

Cloud computing implementation costs, net 31 33

Total Other Long-term Assets $ 413 $ 413

3 unchanged sentences

Unearned income 33 29

Restructuring reserves 5 6

Restructuring liabilities — 5

Total Other Long-term Liabilities $ 106 $ 108

(1) CARES ACT – Coronavirus Aid, Relief, and Economic Security Act.

(1) The CARES Act allows for deferred payment of the employer-paid portion of social security taxes through the end of 2020, with 50% due on December 31, 2021 and the remainder due on December 31, 2022.

The current portion of this liability is included in Accrued compensation and benefits costs.

CNDT Q1 2021 Form 10-Q

Note 15 – Related Party Transactions

During the third quarter of 2019, Carl C.

Icahn and his affiliates (shareholders) increased their ownership interest in the Company.

In the normal course of business, the Company provides services to, and purchases from, certain related parties with the same shareholders.

5 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2021 2020

1 unchanged sentence

Purchases from related parties $ 7 $ 6

The Company's receivable and payable balances with related party entities were not material as of September 30, 2020 and December 31, 2019 .

The Company's receivable and payable balances with related party entities were not material as of March 31, 2021 and December 31, 2020 .

Note 16 – Goodwill

The following table presents the changes in the carrying amount of goodwill, by reportable segments:

The following table presents the changes in the carrying amount of goodwill, by reportable segment:

(in millions) Commercial Industries Government Services Transportation Total

1 unchanged sentence

Foreign currency translation ( 7 ) ( 3 ) ( 5 ) ( 15 )

Balance at September 30, 2020 $ 823 $ 618 $ 65 $ 1,506

In the first, second and third quarters of 2020, the Company performed its ongoing assessment to consider whether events or circumstances had occurred that could more likely than not reduce the fair value of a reporting unit below its carrying value.

Balance at March 31, 2021 $ 830 $ 620 $ 63 $ 1,513

Gross goodwill $ 2,383 $ 1,374 $ 643 $ 4,400

Accumulated impairment ( 1,553 ) ( 754 ) ( 580 ) ( 2,887 )

Balance at March 31, 2021 $ 830 $ 620 $ 63 $ 1,513

In the first quarter of 2021, the Company performed its ongoing assessment to consider whether events or circumstances had occurred that could more likely than not reduce the fair value of a reporting unit below its carrying value.

After evaluating and weighing all relevant events and circumstances, we concluded that it is not more likely than not that the fair values of any of our reporting units were less than their carrying values.

1 unchanged sentence

To the extent the COVID-19 pandemic continues to disrupt the economic environment, such as a decline in the performance of the reporting units or loss of a significant contract or multiple significant contracts, the fair value of one or more of the reporting units could fall below their carrying value, resulting in a goodwill impairment charge.

In addition, the Company has assessed whether any impairment of its amortizable assets existed and has determined that no charges were deemed necessary under applicable accounting standards as of September 30, 2020.

Note 17 – Subsequent Event

On May 1, 2021, the Company redeemed all the outstanding $ 34 million 10.50 % Senior Notes due 2024.

CNDT Q1 2021 Form 10-Q

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

What changed 10-Q

Item 1. Financial Statements