What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-11-06 compared with 2024-08-07 · 142 added, 107 removed, 525 unchanged (32% of the section changed)

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions, except per share data) 2024 2023 2024 2023

7 unchanged sentences

Interest expense 16 28 62 82

Goodwill impairment — 287 — 287

(Gain) loss on divestitures and transaction costs, net ( 188 ) 3 ( 696 ) 8

14 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2024 2023 2024 2023

11 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions, except share data in thousands) June 30, 2024 December 31, 2023

(in millions, except share data in thousands) September 30, 2024 December 31, 2023

Cash and cash equivalents $ 393 $ 498

42 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Six Months Ended

Nine Months Ended

September 30,

(in millions) 2024 2023

5 unchanged sentences

Deferred income taxes 23 ( 23 )

Goodwill impairment — 287

Amortization of debt financing costs 3 3

21 unchanged sentences

Dividends paid on preferred stock ( 7 ) ( 7 )

Contribution from noncontrolling interest — 3

Net cash provided by (used in) financing activities ( 781 ) ( 48 )

3 unchanged sentences

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

(1) Includes $ 7 million and $ 5 million of restricted cash as of June 30, 2024 and 2023, respectively, that were included in Other current assets on their respective Condensed Consolidated Balance Sheets.

(1) Includes $ 11 million and $ 4 million of restricted cash as of September 30, 2024 and 2023, respectively, that were included in Other current assets on the respective Condensed Consolidated Balance Sheets.

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

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

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

Non-controlling Interest Shareholders'

Balance at March 31, 2024 $ 2 $ ( 44 ) $ 3,941 $ ( 2,752 ) $ ( 446 ) $ 4 $ 705

Balance at June 30, 2024 $ 2 $ ( 196 ) $ 3,947 $ ( 2,539 ) $ ( 463 ) $ 4 $ 755

Dividends - preferred stock, $ 20 /share

2 unchanged sentences

Treasury stock purchases — ( 14 ) — — — ( 14 )

Contribution from noncontrolling interest — — — — — — —

Comprehensive Income (Loss):

2 unchanged sentences

Total Comprehensive Income (Loss), Net — — — 123 14 — 137

Balance at June 30, 2024 $ 2 $ ( 196 ) $ 3,947 $ ( 2,539 ) $ ( 463 ) $ 4 $ 755

Three Months Ended June 30, 2023

Balance at September 30, 2024 $ 2 $ ( 210 ) $ 3,952 $ ( 2,418 ) $ ( 449 ) $ 4 $ 881

Three Months Ended September 30, 2023

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

Non-controlling Interest Shareholders'

Balance at March 31, 2023 $ 2 $ — $ 3,926 $ ( 2,551 ) $ ( 448 ) $ — $ 929

Balance at June 30, 2023 $ 2 $ ( 1 ) $ 3,931 $ ( 2,561 ) $ ( 444 ) $ — $ 927

Dividends - preferred stock, $ 20 /share

2 unchanged sentences

Treasury stock purchases — ( 6 ) — — — — ( 6 )

Contribution from noncontrolling interest — — — — — 3 3

Comprehensive Income (Loss):

2 unchanged sentences

Total Comprehensive Income (Loss), Net — — — ( 289 ) ( 19 ) — ( 308 )

Balance at June 30, 2023 $ 2 $ ( 1 ) $ 3,931 $ ( 2,561 ) $ ( 444 ) $ — $ 927

Six Months Ended June 30, 2024

Balance at September 30, 2023 $ 2 $ ( 7 ) $ 3,937 $ ( 2,852 ) $ ( 463 ) $ 3 $ 620

Nine Months Ended September 30, 2024

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

5 unchanged sentences

Treasury stock purchases — ( 183 ) — — — — ( 183 )

Contribution from noncontrolling interest — — — — — — —

Comprehensive Income (Loss):

2 unchanged sentences

Total Comprehensive Income (Loss), Net — — — 438 ( 14 ) — 424

Balance at June 30, 2024 $ 2 $ ( 196 ) $ 3,947 $ ( 2,539 ) $ ( 463 ) $ 4 $ 755

Six Months Ended June 30, 2023

Balance at September 30, 2024 $ 2 $ ( 210 ) $ 3,952 $ ( 2,418 ) $ ( 449 ) $ 4 $ 881

Nine Months Ended September 30, 2023

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

5 unchanged sentences

Treasury stock purchases — ( 7 ) — — — — ( 7 )

Contribution from noncontrolling interest — — — — — 3 3

Comprehensive Income (Loss):

2 unchanged sentences

Total Comprehensive Income (Loss), Net — — — ( 302 ) 3 — ( 299 )

Balance at June 30, 2023 $ 2 $ ( 1 ) $ 3,931 $ ( 2,561 ) $ ( 444 ) $ — $ 927

Balance at September 30, 2023 $ 2 $ ( 7 ) $ 3,937 $ ( 2,852 ) $ ( 463 ) $ 3 $ 620

(1) AOCL - Accumulated other comprehensive loss.

6 unchanged sentences

Conduent Incorporated is a New York corporation, organized in 2016.

As a global technology-led company, Conduent delivers digital business solutions and services to streamline and manage enterprise processes on behalf of commercial, government and transportation organizations – creating valuable outcomes for its clients and the millions of people who count on them.

Conduent’s solutions combine innovative technology platforms with automation, artificial intelligence, process expertise and services that improve quality, efficiency and productivity.

With a dedicated global team of approximately 55,000 associates, Conduent solutions span customer service, business administration and operations, healthcare administration and payment management.

Across many industries and government agencies, Conduent reduces costs, improves end-user experiences and enables digital transformation for its global clients.

Conduent delivers digital business solutions and services spanning the commercial, government and transportation spectrum – creating valuable outcomes for its clients and the millions of people who count on them.

The Company leverages cloud computing, artificial intelligence, machine learning, automation and advanced analytics to deliver mission-critical solutions.

Through a dedicated global team of approximately 55,000 associates, process expertise and advanced technologies, Conduent’s solutions and services digitally transform its clients’ operations to enhance customer experiences, improve performance, increase efficiencies and reduce costs.

Basis of Presentation

1 unchanged sentence

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 Securities and Exchange Commission (the "SEC").

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

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

GAAP for complete financial statements.

7 unchanged sentences

This adjustment resulted in a reduction to revenue and income (loss) before income taxes of $ 7 million and a corresponding decrease to accounts receivable of $ 1 million and an increase to other current liabilities of $ 6 million in the first quarter of 2023.

The Company evaluated the impact of the out-of-period adjustment and concluded it was not material to any previously issued interim or annual consolidated financial statements and the adjustment is not material to the year ending December 31, 2023.

The Company has evaluated subsequent events through August 7, 2024, and no material subsequent events were identified.

The Company evaluated the impact of the out-of-period adjustment and concluded it was not material to any previously issued interim or annual consolidated financial statements and the adjustment was not material to the year ending December 31, 2023.

The Company has evaluated subsequent events through November 6, 2024, and no material subsequent events were identified.

Use of Estimates

5 unchanged sentences

Summary of Significant Accounting Policies

There have been no changes to the Company's significant accounting policies as described in the Note 1 - Basis of Presentation and Summary of Significant Accounting Policies in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

The Company's significant accounting policies are described in Note 1 – Basis of Presentation and Summary of Significant Accounting Policies in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

During 2024, there have been no changes to the Company's significant accounting policies as described therein.

CNDT Q3 2024 Form 10-Q

Note 2 – Recent Accounting Pronouncements

New Accounting Standards Adopted

5 unchanged sentences

The Company is not early adopting this guidance.

The Company is currently in the process of gathering the data required to be disclosed upon adoption.

The Company has gathered the data required to be disclosed upon adoption.

As the guidance is disclosure-related, adoption will not have any impact on the Company's Condensed Consolidated Financial Statements.

6 unchanged sentences

As the guidance is disclosure-related, adoption will not have any impact on the Company's Condensed Consolidated Financial Statements.

Disaggregation of Income Statement Expenses:

In November 2024, the FASB issued final guidance designed to enhance financial reporting by requiring public business entities to disclose additional details regarding specific expense categories in the notes to the financial statements for both interim and annual periods.

The new guidance is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027.

The Company is not early adopting this guidance.

The Company is currently evaluating the impact this guidance will have on its disclosures.

Note 3 – Revenue

Disaggregation of Revenue

During the second quarter of 2024, revenue for the BenefitWallet Portfolio (as defined in Note 5 – Divestitures and Assets/Liabilities Held for Sale) and the Curbside Management and Public Safety businesses were reclassified to the Divestitures segment from the Commercial and Transportation segments, respectively.

During the second quarter of 2024, revenue from the BenefitWallet Portfolio and the Curbside Management and Public Safety businesses were reclassified to the Divestitures segment from the Commercial and Transportation segments, respectively.

In addition, during the third quarter of 2024, revenue from the Casualty Claims Solutions business was reclassified to the Divestitures segment from the Commercial segment.

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

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.

Refer to Note 4 – Segment Reporting for additional information on the Company's reportable segments.

Refer to Note 4 – Segment Reporting for additional information on the Company's reportable segments and Note 5 – Divestitures and Assets/Liabilities Held for Sale for additional information on the Company's divestitures.

CNDT Q3 2024 Form 10-Q

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2024 2023 2024 2023

25 unchanged sentences

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

(in millions) June 30, 2024 December 31, 2023

Contract Assets (Unearned Income)

(in millions) September 30, 2024 December 31, 2023

Contract Assets (Liabilities)

Current contract assets $ 152 $ 178

3 unchanged sentences

( 53 ) ( 55 )

Net Contract Assets $ 4 $ 44

Net Contract Assets (Liabilities) $ ( 12 ) $ 44

Accounts receivable, net $ 528 $ 559

1 unchanged sentence

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

Revenues of $ 25 million and $ 69 million were recognized during the three and six months ended June 30, 2024, respectively, related to the Company's unearned income at December 31, 2023.

Revenues of $ 13 million and $ 42 million were recognized during the three and six months ended June 30, 2023, respectively, related to the Company's unearned income at December 31, 2022.

Revenues of $ 12 million and $ 81 million were recognized during the three and nine months ended September 30, 2024, respectively, related to the Company's unearned income at December 31, 2023.

Revenues of $ 8 million and $ 50 million were recognized during the three and nine months ended September 30, 2023, respectively, related to the Company's unearned income at December 31, 2022.

CNDT Q3 2024 Form 10-Q

The Company had no material asset impairment charges related to contract assets for the three and six months ended June 30, 2024 or 2023.

The Company had no material asset impairment charges related to contract assets for the three and nine months ended September 30, 2024 or 2023.

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 June 30, 2024 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 September 30, 2024 was approximately $ 1.5 billion.

The Company expects to recognize approximately 70 % of this revenue over the next two years and the remainder thereafter.

2 unchanged sentences

The Company's segments involve the delivery of business process solutions on behalf of its clients to improve cost, performance, and end-user experiences.

As described in Note 5 – Divestitures and Assets/Liabilities Held for Sale, the Company transferred or sold certain businesses including (i) its BenefitWallet Portfolio and (ii) its Curbside Management and Public Safety Solutions businesses to third parties in the first half of 2024.

Accordingly, the results of these disposed businesses, which had previously been reported in the Commercial segment and the Transportation segment, respectively, have been reclassified to the Divestitures segment.

As described in Note 5 – Divestitures and Assets/Liabilities Held for Sale, the Company transferred or sold certain businesses to third parties in 2024 including (i) the BenefitWallet Portfolio, (ii) the Curbside Management and Public Safety Solutions businesses, and (iii) the Casualty Claims Solutions business.

Accordingly, the results of these divested businesses, previously reported within the Commercial and Transportation segments, have been reclassified to the Divestitures segment.

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

The Company's financial performance is based on Segment Profit (Loss) for its three reportable segments (Commercial, Government and Transportation), Divestitures and Unallocated Costs.

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

Additionally, the Company's CODM does not evaluate operating segments using discrete asset information as a significant portion of the assets is managed at the total Company level.

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

2 unchanged sentences

federal, state and local government agencies and foreign governments for public assistance, healthcare programs and administration, transaction processing and payment services.

The solutions in this segment help governments provide constituents access and delivery of benefits, respond to changing rules for eligibility and keep pace with increasing citizen expectations.

The solutions in this segment help governments provide constituents access to and delivery of benefits, respond to changing rules for eligibility and keep pace with increasing citizen expectations.

Transportation:

1 unchanged sentence

The Company delivers mission-critical mobility and digital payment solutions for public transit and road usage charging that streamline operations, increase revenue and reduce congestion while creating safe, seamless travel experiences for consumers while reducing impact on the environment.

Divestitures includes the Company's BenefitWallet Portfolio for which the Company completed the transfer to a third party in the second quarter of 2024 and its Curbside Management and Public Safety Solutions businesses which it sold to a third party in the second quarter of 2024.

Divestitures includes the Company's BenefitWallet Portfolio, the transfer of which was completed in the second quarter of 2024, its Curbside Management and Public Safety Solutions businesses which it sold in the second quarter of 2024, and its Casualty Claims business, which it sold in the third quarter of 2024.

Refer to Note 5 – Divestitures and Assets/Liabilities Held for Sale for additional information.

1 unchanged sentence

CNDT Q3 2024 Form 10-Q

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

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

Three Months Ended

September 30,

(in millions) Commercial Government Transportation Divestitures Unallocated Costs Total

3 unchanged sentences

Segment profit (loss) $ ( 19 ) $ 84 $ ( 5 ) $ 26 $ ( 75 ) $ 11

Six Months Ended

Nine Months Ended

September 30,

(in millions) Commercial Government Transportation Divestitures Unallocated Costs Total

4 unchanged sentences

(in millions) Three Months Ended

June 30, Six Months Ended

Segment Profit (Loss) Reconciliation to Pre-tax Income (Loss) 2024 2023 2024 2023

September 30, Nine Months Ended

September 30,

Segment Profit (Loss) Reconciliation to Income (Loss) Before Income Taxes 2024 2023 2024 2023

Income (Loss) Before Income Taxes $ 159 $ ( 313 ) $ 586 $ ( 328 )

3 unchanged sentences

Interest expense 16 28 62 82

Goodwill impairment — 287 — 287

(Gain) loss on divestitures and transaction costs, net ( 188 ) 3 ( 696 ) 8

19 unchanged sentences

The Company recorded $ 101 million of income tax expense in connection with the BenefitWallet transfer.

The BenefitWallet Portfolio generated revenue and pre-tax profit, excluding unallocated costs as follows:

The BenefitWallet Portfolio generated revenue and pre-tax profit as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2024 2023 2024 2023

Revenue $ — $ 30 $ 30 $ 89

Pre-tax profit, excluding unallocated costs 2 23 20 44

Pre-tax profit — 22 20 67

Divestiture of Curbside Management and Public Safety Solutions Businesses

2 unchanged sentences

On April 30, 2024, Conduent completed the sale of this business.

The Company received $ 174 million of cash consideration, a $ 50 million non-interest bearing note payable to the Company on April 30, 2025, and other amounts receivable of $ 56 million related to:

The Company received $ 174 million of cash consideration, a $ 50 million non-interest bearing note payable to the Company due on April 30, 2025, and other amounts receivable of $ 56 million related to:

(i) the reimbursement for payments made by the Company related to finance lease liabilities and related costs;

4 unchanged sentences

The Company recorded $ 30 million of income tax expense in connection with the divestiture.

The Curbside Disposal Group generated revenue and pre-tax profit, excluding unallocated costs as follows:

The Curbside Disposal Group generated revenue and pre-tax profit as follows:

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2024 2023 2024 2023

Revenue $ — $ 34 $ 50 $ 101

Pre-tax profit, excluding unallocated costs 3 1 6 1

Pre-tax profit — 2 6 3

Divestiture of Casualty Claims Solutions Business

On May 3, 2024, the Company entered into a definitive agreement to sell the Company’s Casualty Claims Solutions business to MedRisk.

The sale is for $ 240 million in cash and is subject to certain purchase price adjustments.

The consummation of the transaction is subject to regulatory approval and the satisfaction or waiver of customary closing conditions and is expected to close during the third quarter of 2024.

The assets and liabilities of these businesses (collectively referred to as the "Casualty Disposal Group") have been reclassified as held for sale and measured at the lower of carrying value or fair value less costs to sell.

The Casualty Disposal Group generated revenue and pre-tax profit, excluding unallocated costs as follows:

On May 3, 2024, the Company entered into a definitive agreement to sell the Company’s Casualty Claims Solutions business (collectively referred to as the "Casualty Disposal Group") to MedRisk.

On September 1, 2024, the sale was completed and MedRisk paid Conduent $ 224 million of cash consideration, subject to certain post-closing adjustments.

These adjustments are expected to be finalized in the first quarter of 2025 and are not expected to be material.

In the third quarter of 2024, the Company recorded a gain on the sale of $ 195 million less costs to sell of $ 7 million, which is recorded in Gain (loss) on divestitures and transaction costs.

Additionally, the Company recorded $ 35 million of income tax expense related to the divestiture.

The Casualty Disposal Group generated revenue and pre-tax profit as follows:

CNDT Q3 2024 Form 10-Q

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2024 2023 2024 2023

Revenue $ 26 $ 38 $ 100 $ 111

Pre-tax profit, excluding unallocated costs 7 7 14 13

CNDT Q2 2024 Form 10-Q

Pre-tax profit 3 2 6 5

Assets/Liabilities Held for Sale

As noted above, the BenefitWallet Portfolio did not have any associated assets and liabilities to disclose as held for sale in the Company's Condensed Consolidated Balance Sheet at December 31, 2023.

The divestiture of the Company's Curbside Management and Public Safety Solutions businesses was announced in December 2023 and completed in the second quarter of 2024.

Accordingly, the assets and liabilities of these businesses were disclosed as held for sale as of December 31, 2023 and removed as of June 30, 2024.

The assets and liabilities of the Casualty Disposal Group are disclosed as held for sale as of June 30, 2024.

The following is a summary of the major categories of assets and liabilities that have been reclassified as held for sale for each of these transactions:

Casualty Disposal Group Curbside Disposal Group

(in millions) June 30, 2024 December 31, 2023

The divestiture of the Curbside Disposal Group was announced in December 2023 and completed in the second quarter of 2024.

Accordingly, the assets and liabilities of these businesses were disclosed as held for sale as of December 31, 2023.

In the second quarter of 2024, the assets and liabilities of the Casualty Disposal Group were disclosed as held for sale as of June 30, 2024.

Since the sale of the Casualty Disposal Group was completed during the third quarter of 2024, no associated assets or liabilities are reported as held for sale as of September 30, 2024.

The following is a summary of the major categories of assets and liabilities that have been reclassified as held for sale for the Curbside Disposal Group:

(in millions) December 31, 2023

Accounts Receivable, net $ 49

3 unchanged sentences

Intangible assets, net —

Goodwill — 35

Other long-term assets 35

12 unchanged sentences

The implementation of the Company's operational efficiency improvement initiatives has reduced the Company's real estate footprint across all geographies and segments resulting in lease right-of-use ("ROU") 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, and bringing certain technology functions in-house, which totaled $ 2 million and $ 2 million for the three months ended June 30, 2024 and 2023, respectively, and $ 3 million and $ 4 million for the six months ended June 30, 2024 and 2023, respectively.

Also included in Restructuring and related costs are incremental, non-recurring costs related to the consolidation of the Company's data centers and bringing certain technology functions in-house, which totaled $ 1 million and $ 3 million for the three months ended September 30, 2024 and 2023, respectively, and $ 4 million and $ 7 million for the nine months ended September 30, 2024 and 2023, 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.

CNDT Q3 2024 Form 10-Q

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.

1 unchanged sentence

Asset impairment costs related to the reduction of the Company's real estate footprint include impairment of operating lease ROU assets and associated leasehold improvements.

CNDT Q2 2024 Form 10-Q

A summary of the Company's restructuring program activity during the six months ended June 30, 2024 and 2023 is as follows:

A summary of the Company's restructuring program activity during the nine months ended September 30, 2024 and 2023 is as follows:

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

4 unchanged sentences

Charges against reserve and currency ( 15 ) ( 11 ) ( 2 ) ( 28 )

Accrued Balance at June 30, 2024 $ 5 $ 2 $ — $ 7

Accrued Balance at September 30, 2024 $ 3 $ — $ — $ 3

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

4 unchanged sentences

Charges against reserve and currency ( 24 ) ( 17 ) ( 7 ) ( 48 )

Accrued Balance at June 30, 2023 $ 19 $ — $ — $ 19

Accrued Balance at September 30, 2023 $ 10 $ 1 $ — $ 11

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

1 unchanged sentence

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions) 2024 2023 2024 2023

6 unchanged sentences

(1) Represents costs related to the consolidation of the Company's data centers, operating lease ROU assets impairment, termination and other costs not allocated to the segments.

CNDT Q3 2024 Form 10-Q

Note 7 – Debt

Long-term debt was as follows:

(in millions) June 30, 2024 December 31, 2023

(in millions) September 30, 2024 December 31, 2023

Term loan A due 2026 $ 191 $ 238

1 unchanged sentence

Senior notes due 2029 520 520

Revolving credit facility maturing 2026 — —

Finance lease obligations 29 22

3 unchanged sentences

Total Long-term Debt $ 718 $ 1,248

As of June 30, 2024, the Company had no outstanding borrowings under its revolving credit facility (the "Revolver").

Additionally, the Company utilized $ 3 million of the Revolver to issue letters of credit as of June 30, 2024.

The net Revolver available to be drawn upon as of June 30, 2024 was $ 547 million.

CNDT Q2 2024 Form 10-Q

In March 2024, the Company utilized the proceeds from the closing of the first tranche of the BenefitWallet Transfer to voluntarily prepay $ 164 million of principal of the Senior Secured Term Loan B due 2028 ("Term Loan B") and wrote-off related debt issuance costs of $ 2 million which is included in Loss on extinguishment of debt in the Condensed Consolidated Statements of Income (Loss) for the six months ended June 30, 2024.

In April and May 2024, the Company voluntarily prepaid $ 300 million of principal of the Term Loan B and wrote-off related debt issuance costs of $ 3 million for the three months ended June 30, 2024, which is included in Loss on extinguishment of debt in the Condensed Consolidated Statements of Income (Loss).

At June 30, 2024, the Company was in compliance with all debt covenants related to the borrowings in the table above.

As of September 30, 2024, the Company had no outstanding borrowings under its $ 550 million revolving credit facility (the "Revolver").

Additionally, the Company utilized $ 11 million of the Revolver to issue letters of credit as of September 30, 2024.

The net Revolver available to be drawn upon as of September 30, 2024 was $ 539 million.

In April and May 2024, the Company voluntarily prepaid $ 300 million of principal of the Term Loan B.

In September 2024, the Company voluntarily prepaid (i) the entire remaining outstanding balance of the Term Loan B in an amount equal to $ 38 million and (ii) $ 37 million of the Senior Secured Term Loan A due 2026 ("Term Loan A").

In connection with these voluntary prepayments, the Company wrote-off related debt issuance costs of $ 1 million and $ 6 million for the three and nine months ended September 30, 2024, respectively, which is included in Loss on extinguishment of debt in the Condensed Consolidated Statements of Income (Loss).

At September 30, 2024, the Company was in compliance with all debt covenants related to the borrowings in the table above.

Note 8 – Financial Instruments

1 unchanged sentence

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 June 30, 2024 and December 31, 2023, the Company had outstanding forward exchange contracts with gross notional values of $ 189 million and $ 148 million, respectively.

At June 30, 2024, approximately 77 % of these contracts mature within three months, 9 % in three to six months, 11 % in six to twelve months and 3 % in greater than twelve months.

At September 30, 2024 and December 31, 2023, the Company had outstanding forward exchange contracts with gross notional values of $ 181 million and $ 148 million, respectively.

At September 30, 2024, approximately 76 % of these contracts mature within three months, 9 % in three to six months, 11 % in six to twelve months and 4 % 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.

4 unchanged sentences

The levels of the fair value hierarchy are as follows:

CNDT Q3 2024 Form 10-Q

Fair value is determined using an unadjusted quoted price in an active market for identical assets or liabilities.

1 unchanged sentence

Fair value is estimated using unobservable inputs that are significant to the fair value of the assets or liabilities.

CNDT Q2 2024 Form 10-Q

Summary of Financial Assets and Liabilities Accounted for at Fair Value on a Recurring Basis

1 unchanged sentence

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

(in millions) June 30, 2024 December 31, 2023

(in millions) September 30, 2024 December 31, 2023

Foreign exchange contracts - forward $ 1 $ 1

4 unchanged sentences

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

(in millions) Carrying

9 unchanged sentences

The Company, at its discretion, matches a portion of employee contributions.

The Company recognized an expense related to its defined contribution plans of $ 2 million and $ 3 million for the three months ended June 30, 2024 and 2023, respectively, and $ 6 million and $ 6 million for the six months ended June 30, 2024 and 2023, respectively.

The Company recognized an expense related to its defined contribution plans of $ 2 million and $ 2 million for the three months ended September 30, 2024 and 2023, respectively, and $ 8 million and $ 8 million for the nine months ended September 30, 2024 and 2023, respectively.

The balance sheet and income statement impacts of any remaining defined benefit plans are immaterial for all periods presented in these Condensed Consolidated Financial Statements.

5 unchanged sentences

Other comprehensive income (loss) ( 14 ) — — ( 14 )

Balance at June 30, 2024 $ ( 468 ) $ 1 $ 4 $ ( 463 )

Balance at September 30, 2024 $ ( 455 ) $ 2 $ 4 $ ( 449 )

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

1 unchanged sentence

Other comprehensive income (loss) 3 — — 3

Balance at June 30, 2023 $ ( 451 ) $ 2 $ 5 $ ( 444 )

Balance at September 30, 2023 $ ( 469 ) $ 1 $ 5 $ ( 463 )

(1) All amounts are net of tax.

12 unchanged sentences

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 June 30, 2024.

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 more than any amounts accrued and could be material to the Company's results of operations, cash flows or financial position in any reporting period.

The Company believes it has recorded adequate provisions for any such matters as of September 30, 2024.

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

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.

3 unchanged sentences

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 consolidated financial position or liquidity.

As of June 30, 2024, the Company had accrued its estimate of liability incurred under its indemnification arrangements and guarantees.

As of September 30, 2024, the Company had accrued its estimate of liability incurred under its indemnification arrangements and guarantees.

CNDT Q3 2024 Form 10-Q

2 unchanged sentences

Conduent Business Services, LLC:

On February 3, 2020, plaintiffs Skyview LLC ("Skyview") filed a lawsuit in the Superior Court of New York County, New York.

The lawsuit relates to the sale of a portion of Conduent Business Service, LLC's ("CBS") select standalone customer care call center 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").

On February 3, 2020, plaintiffs Skyview Capital LLC and Continuum Global Solutions LLC (collectively "Skyview") filed a lawsuit in the Supreme Court of the State of New York, County of New York against Conduent Business Services, LLC, a wholly-owned subsidiary of the Company ("CBS").

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

Under the terms of the sale agreement, CBS received approximately $ 23 million in principal amount of promissory notes from plaintiffs (the "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.

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.

On August 20, 2020, CBS 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.

indemnification for breach of covenant;

Plaintiffs alleged 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 sought a judgment that they have no obligation to pay the Notes.

On August 20, 2020, CBS filed counterclaims against Skyview seeking the outstanding balance on the Notes, the amounts owed for operating certain Jamaica-based call centers on plaintiffs' behalf pending closing (the "Jamaica Deferred Closing"), other transition services agreement ("TSA") and TSA amendments, and late rent payment obligations.

CBS also moved to dismiss Skyview’s claims in 2020.

In May 2021, the court denied the motion and allowed the claims to proceed.

Fact and expert discovery has been concluded and the parties filed summary judgment motions on July 24, 2023.

Fact and expert discovery have concluded and the parties filed summary judgment motions on July 24, 2023.

On December 5, 2023, the court heard oral argument on the parties’ cross-motions for summary judgment, and rendered its decision on December 8, 2023, finding there are certain material issues of fact that require trial, and also entering partial summary judgment for each side.

1 unchanged sentence

On January 23, 2024, Skyview filed its own notice of appeal, challenging the decision granting a portion of CBS’s counterclaims.

CBS continues to deny all the plaintiffs' allegations, believes that it has strong defenses to all of plaintiffs’ claims and will continue to defend the litigation vigorously.

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.

Under the present schedule, the parties' appeals will be fully briefed as of November 8, 2024.

Oral argument has not yet been scheduled.

In July 2024, Skyview informed CBS of its intention to sell a portion of its call center business.

The parties reached an agreement on August 8, 2024, under which, contemporaneously with the closing of such a transaction, Skyview will pay the outstanding principal plus interest due on the outstanding Notes, fully discharging Skyview's obligations under the Notes, and will pay certain of CBS's litigation costs.

On September 24, 2024, Skyview and the buyer, Everise, announced a signed and binding asset purchase agreement.

Following regulatory review, the transaction is expected to close in the fourth quarter of 2024, at which point Skyview will pay CBS the outstanding principal and interest due on the Notes.

Skyview will then withdraw its arguments in the litigation regarding its purported right to set-off amounts due under the Notes, though Skyview's claims for alleged fraud, breach of covenant, and breach of representation and warranty otherwise will be unaffected.

In addition, CBS will dismiss its two counterclaims related to the Notes.

CBS's remaining counterclaims related to the Jamaica Deferred Closing, the TSAs and rent payment obligations will be unaffected.

CBS continues to deny all of plaintiffs' allegations, believes that it has strong defenses to all of plaintiffs’ claims, and will continue to defend the litigation vigorously.

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

Other Contingencies

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

As of June 30, 2024, the Company had $ 620 million of outstanding surety bonds issued to secure its performance of contractual obligations with its clients, and $ 166 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 September 30, 2024, the Company had $ 614 million of outstanding surety bonds issued to secure its performance of contractual obligations with its clients, and $ 177 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 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 to allow it to respond to future requests for proposals that require such credit support.

CNDT Q3 2024 Form 10-Q

Note 13 – Common Stock and Preferred Stock

2 unchanged sentences

Icahn and certain of his affiliates ("Icahn Parties") pursuant to which the Company agreed to purchase an aggregate of approximately 38 million shares of the Company’s common stock, at a price of $ 3.47 per share, the closing price on June 7, 2024, the last full trading day prior to the execution of the Purchase Agreement, for an aggregate purchase price of approximately $ 132 million.

The purchase was completed and settled on June 10, 2024 and was funded through a combination of cash on hand and a drawdown under the Company’s Revolver.

The purchase was completed and settled on June 10, 2024, and was funded through a combination of cash on hand and a drawdown under the Company’s Revolver, which has since been repaid.

Series A Preferred Stock

2 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.

CNDT Q2 2024 Form 10-Q

Note 14 – Earnings (Loss) per Share

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

(in millions, except per share data in whole dollars and shares in thousands) 2024 2023 2024 2023

22 unchanged sentences

The components of Other assets and Other liabilities were as follows:

(in millions) June 30, 2024 December 31, 2023

(in millions) September 30, 2024 December 31, 2023

Other Current Assets

3 unchanged sentences

Restricted cash 11 21

Net receivable from buyer of Curbside Management and Public Safety Solutions business 104 —

Net receivables from buyers of divested businesses 128 —

Other 112 103

21 unchanged sentences

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