What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-02-19 compared with 2024-02-21 · 342 added, 324 removed, 1118 unchanged (37% of the section changed)

32 unchanged sentences

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Assessments – Commercial Reporting Unit

As described in Notes 1 and 8 to the consolidated financial statements, the Company’s consolidated goodwill balance was $651 million as of December 31, 2023.

The goodwill associated with the Commercial reporting unit was nil.

Management tests goodwill for impairment annually or more frequently if an event or change in circumstances indicate the asset may be impaired.

Management performed the annual goodwill impairment test as of October 1, 2023.

Impairment testing for goodwill is done at the reporting unit level.

The fair value of the reporting unit is determined utilizing a combination of both an income approach and a market approach.

The income approach utilizes a discounted cash flow analysis based upon the forecasted future business results of the reporting unit.

The market approach utilizes the guideline public company method.

If the fair value of a reporting unit is less than its carrying amount, an impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

In September 2023, the Company entered into a Custodial Transfer and Asset Purchase Agreement (the "Purchase Agreement") to transfer its BenefitWallet health savings account and medical savings account portfolio (the "Portfolio"), which is reported within the Company’s Commercial segment.

Since the Purchase Agreement does not represent a disposition of a business, no goodwill was allocated to the Portfolio related to this transaction.

Consequently, the Purchase Agreement was identified as a triggering event for the Commercial reporting unit that required the Company to evaluate goodwill for impairment.

This evaluation resulted in a full impairment of the Commercial reporting unit's goodwill, totaling $287 million.

The impairment charge was primarily driven by the Purchase Agreement and was recognized in the third quarter of 2023.

As disclosed by management, the most significant assumptions used in the goodwill impairment assessment relate to revenue growth rates, the discount rate and the long-term organic growth rate.

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments for the Commercial reporting unit is a critical audit matter are (i) the significant judgment by management when determining the fair value of the Commercial reporting unit;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to revenue growth rates, the discount rate and the long-term organic growth rate;

Recognition of a Built-in Capital Loss Related to the Internal Reorganization of the Top Tier Foreign Holding Company

As described in Note 14 to the consolidated financial statements, the Company recorded a tax provision of $78 million for the year ended December 31, 2024.

In the fourth quarter of 2024, the Company implemented an internal reorganization in which it sold a portion of its top tier foreign holding company to a lower tier subsidiary.

This transaction and a subsequent tax election to treat the holding company as a partnership resulted in recognition of a built-in capital loss for tax purposes that offset capital gains from divestitures, resulting in net tax savings of $59 million.

The determination of the tax characteristic of this transaction requires management to make judgments about the application of tax laws and regulations.

The United States Internal Revenue Service could determine a different tax treatment that would have an adverse impact on the Company.

The principal considerations for our determination that performing procedures relating to the recognition of a built-in capital loss related to the internal reorganization of the top tier foreign holding company is a critical audit matter are (i) the significant judgment by management in applying tax laws and regulations in determining the built-in capital loss to be recognized related to the internal reorganization;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to the built-in capital loss recognized related to the internal reorganization based on management’s application of tax laws and regulations;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the Company’s goodwill impairment assessments, including controls over the determination of the fair value of the Commercial reporting unit.

These procedures also included, among others (i) testing management’s process for determining the fair value of the Commercial reporting unit;

(ii) evaluating the appropriateness of the discounted cash flow analysis;

(iii) testing the completeness and accuracy of underlying data used in the discounted cash flow analysis;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to revenue growth rates, the discount rate and the long-term organic growth rate.

Evaluating management’s significant assumptions related to revenue growth rates and the long-term organic growth rate involved evaluating whether the assumptions used by management were reasonable considering (i) the current

CNDT 2023 Annual Report

and past performance of the Commercial reporting unit;

(ii) the consistency with external market and industry data;

and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the discounted cash flow analysis and (ii) the reasonableness of the long-term organic growth rate and the discount rate assumptions.

These procedures included testing the effectiveness of controls relating to accounting for income taxes, including management’s judgments in applying tax laws and regulations in determining the built-in capital loss to be recognized related to the internal reorganization.

These procedures also included among others (i) evaluating the step-plan for the internal reorganization;

(ii) evaluating management’s assessment of whether the internal reorganization qualifies for recognition of a built-in capital loss;

and (iii) evaluating third-party opinions used by management to support recognition of the built-in capital loss related to the internal reorganization.

Professionals with specialized skill and knowledge were used to assist in evaluating management’s judgments in applying relevant tax laws and regulations in determining the built-in capital loss to be recognized related to the internal reorganization.

/s/ PricewaterhouseCoopers LLP

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/s/ CLIFFORD SKELTON /s/ STEPHEN WOOD

Chief Executive Officer Chief Financial Officer & Principal Accounting Officer

President and Chief Executive Officer Executive Vice President and Chief Financial Officer

/s/ GEORGE ABATE

Vice President and Chief Accounting Officer

CNDT 2024 Annual Report

96 unchanged sentences

Goodwill impairment 28 287 358

Write-off of implementation costs — — 28

Deferred income taxes ( 5 ) ( 54 ) 9

(Gain) loss from investments — — 5

Amortization of debt financing costs 3 4 4

2 unchanged sentences

Stock-based compensation 19 19 21

Allowance for credit losses — — 1

Changes in operating assets and liabilities:

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Payments on debt ( 676 ) ( 41 ) ( 33 )

Debt issuance costs — — ( 9 )

Premium on debt redemption — — ( 2 )

Treasury stock purchases ( 182 ) ( 27 ) —

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Stock incentive plans, net — — 14 — — — 14

Treasury stock purchases — — — — — — —

Contribution from noncontrolling interest — — — — — — —

Comprehensive Income (Loss):

17 unchanged sentences

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

Contribution from noncontrolling interest — — — — — 4 4

Comprehensive Income (Loss):

Net Loss — — — ( 296 ) — — ( 296 )

Net Income — — — 426 — — 426

Other comprehensive income (loss), net — — — — ( 37 ) — ( 37 )

11 unchanged sentences

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.

Conduent leverages cloud computing, artificial intelligence, machine learning, automation and advanced analytics to deliver mission-critical business process solutions.

Through a dedicated global team of 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.

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

Through a dedicated global team of approximately 56,000 associates, as well as 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

5 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 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 February 19, 2025.

Conduent's common stock began trading on January 3, 2017, on the New York Stock Exchange, under the ticker "CNDT".

In December 2019, Conduent changed the listing of its publicly traded common stock from the New York Stock Exchange to the Nasdaq Global Select Market ("Nasdaq"), where it remains listed under the ticker "CNDT".

The common stock of Conduent trades on the Nasdaq Global Select Market ("Nasdaq") under the ticker "CNDT".

Use of Estimates

The Company prepared the Consolidated Financial Statements using financial information available at the time of preparation, which requires it to make estimates and assumptions that affect the amounts reported.

The Company's most significant estimates pertain to intangible assets, valuation of goodwill, contingencies and litigation and income taxes.

The Company's most significant estimates pertain to valuation of goodwill, contingencies and litigation and income taxes.

These estimates are based on management's best knowledge of current events, historical experience, and on various other assumptions that are believed to be reasonable under the circumstances.

As a result, actual results may be different from these estimates.

As of December 31, 2023, the effects of global macroeconomic and geopolitical uncertainty on the Company's business, results of operations and financial condition continue to evolve.

As a result, many of the Company's estimates and assumptions continue to require 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 2023 Annual Report

New Accounting Standards

Segment Reporting:

In November 2023, the Financial Accounting Standards Board ("FASB") issued final guidance that expands reportable segment disclosures, particularly incremental segment expense disclosures.

This guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

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.

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

Income Taxes:

In December 2023, the FASB issued final guidance designed to improve income tax disclosures, particularly disclosures around business entities' income tax rate reconciliation and income taxes paid.

In December 2023, the Financial Accounting Standards Board ("FASB") issued final guidance designed to improve income tax disclosures, particularly disclosures around business entities' income tax rate reconciliation and income taxes paid.

The guidance requires consistent categories and greater disaggregation of information in the reconciliation of an entity's statutory tax rate to its effective tax rate and information about income taxes paid disaggregated by jurisdiction.

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

CNDT 2024 Annual Report

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.

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

Recently Adopted Accounting Standards

The Company did not adopt any new accounting standards in 2023 that had a material impact on its Consolidated Financial Statements.

Segment Reporting:

In November 2023, the FASB issued final guidance that expands reportable segment disclosures, particularly incremental segment expense disclosures.

This guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

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

The required additional disclosure is included in Note 3 – Segment Reporting.

Summary of Accounting Policies

1 unchanged sentence

Cash and cash equivalents consist of cash on hand, including money market funds and investments with original maturities of three months or less.

Receivable Sales

Accounts Receivable, Net and Receivable Sales

Credit risk has not historically been significant to the Company's business due to the nature of its customers, which are state and federal governments, public sector, and large commercial corporations.

The Company believes that the credit risk associated with its receivables is limited due to the creditworthiness of its customers.

There were no allowances for credit losses at December 31, 2024 or 2023.

The Company enters into factoring agreements in the normal course of business as part of our cash and liquidity management, to sell certain accounts receivable without recourse to third-party financial institutions.

These transactions are treated as a sale and are accounted for as a reduction in accounts receivable because the agreement transfers effective control over, and risk related to, the receivables to the buyers.

Cash proceeds from this arrangement are included in cash flow from operating activities in the Consolidated Statements of Cash Flows.

In 2024, 2023 and 2022, the Company sold certain accounts receivable and derecognized the corresponding receivable balance.

Refer to Note 5 – Accounts Receivable, Net for more details on the Company's receivable sales.

Accounts receivable sales for the years ended December 31, 2024 and 2023 were $ 624 million and $ 616 million, respectively.

Assets/Liabilities Held for Sale

9 unchanged sentences

Conversely, gains are not recognized on the sale of a long-lived asset (disposal group) until the date of sale.

The fair value of a long-lived asset (disposal group) less any costs to sell is assessed each reporting period it remains classified as held for sale and any subsequent changes are reported as an adjustment to the carrying value of the asset (disposal group), as long as the new carrying value does not exceed the carrying value of the asset at the time it was initially classified as held for sale.

CNDT 2024 Annual Report

Refer to Note 4 – Assets/Liabilities Held for Sale and Divestitures to the Consolidated Financial Statements for additional information.

of the asset (disposal group), as long as the new carrying value does not exceed the carrying value of the asset at the time it was initially classified as held for sale.

Refer to Note 4 – Divestitures and Assets/Liabilities Held for Sale to the Consolidated Financial Statements for additional information.

Land, Buildings and Equipment

6 unchanged sentences

Internal Use Software:

The Company capitalizes direct costs associated with developing, purchasing or otherwise acquiring software for internal use and amortizes these costs on a straight-line basis over the expected useful life of the software, beginning when the software is implemented.

The Company capitalizes direct costs associated with developing, purchasing or otherwise acquiring software for internal use and amortizes these costs on a straight-line basis over the estimated useful life of the software, beginning when the software is implemented.

Costs for upgrades and enhancements that will not result in additional functionality are expensed as incurred.

Amounts incurred for Internal Use Software are included in Cash Flows from Investing Activities.

Amounts paid for Internal Use Software are included in Cash Flows from Investing Activities.

Produc t Software :

The Company also capitalizes certain costs related to the development of software solutions to be sold to its customers upon reaching technological feasibility.

The Company expenses product software costs to Research and development prior to technological feasibility.

Upon reaching technological feasibility, certain costs related to the development of software solutions to be sold to its customers are capitalized.

These costs are amortized on a straight-line basis over the estimated economic life of the software.

Amounts incurred for Product Software are included in Cash Flows from Operating activities.

Amounts paid for Product Software are included in Cash Flows from Operating activities.

The Company performs annual reviews to ensure that unamortized Product Software costs remain recoverable from estimated future operating profits (net realizable value).

1 unchanged sentence

Internal use and Product software are included in Other long-term assets on the Company's Consolidated Balance Sheets.

Refer to Note 6 – Land, Buildings, Equipment and Software, Net for further information.

Cloud Computing Arrangements

The Company incurs costs to implement cloud computing arrangements that are hosted by third party vendors.

Implementation costs associated with cloud computing arrangements are capitalized when incurred during the application development phase.

Amortization is calculated on a straight-line basis over the contractual term of the cloud computing arrangement, which includes renewal options that are reasonably certain to be exercised.

Capitalized amounts related to such arrangements are recorded within Other current assets and Other long-term assets in the Consolidated Balance Sheets.

The amortization expense and the associated hosting fees are included in Cost of services and Selling, general and administrative expenses, depending on the nature of the underlying use of the cloud computing arrangement, in the Company’s Consolidated Statements of Income (Loss).

In the fourth quarter of 2021, the Company wrote-off approximately $ 28 million of previously capitalized implementation costs.

There were no such write-offs in either 2023 or 2022.

Refer to Note 6 – Land, Buildings, Equipment and Software, Net for further information.

Refer to Note 5 – Land, Buildings, Equipment and Software, Net and Note 9 – Supplementary Financial Information for further information.

The Company determines if an arrangement is a lease at the inception of the contract and whether that lease meets the classification criteria of a finance or operating lease.

5 unchanged sentences

The incremental borrowing rate represents an estimate of the interest rate that the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease within a particular currency environment.

CNDT 2023 Annual Report

The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option based on economic factors.

4 unchanged sentences

Refer to Note 6 – Leases for further information.

CNDT 2024 Annual Report

Contingencies and Litigation

15 unchanged sentences

For the Company’s business acquisitions, the purchase price is allocated to identifiable intangible assets separate from goodwill if they are from contractual or other legal rights, or if they could be separated from the acquired business and sold, transferred, licensed, rented or exchanged.

The Company tests goodwill for impairment annually or more frequently if an event or change in circumstances indicate the asset may be impaired.

Impairment testing for goodwill is done at the reporting unit level.

Goodwill is tested for impairment using a qualitative and/or quantitative assessment.

The Company tests goodwill for impairment annually as of October 1st, or more frequently if an event or change in circumstances indicate the asset may be impaired.

Impairment testing for goodwill is performed at the reporting unit level using a qualitative and/or quantitative assessment.

For the quantitative assessment, the Company determines the fair value of its reporting units utilizing a combination of both an Income Approach and a Market Approach.

The Income Approach utilizes a discounted cash flow analysis based upon the forecasted future business results of its reporting units.

The Income Approach applies a discounted cash flow analysis based on forecasted future business results of the reporting units.

The Market Approach utilizes the guideline public company method.

If the fair value of a reporting unit is less than its carrying amount, an impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

These valuation approaches require significant judgment and consider several factors that include, but are not limited to, expected future cash flows, growth rates and discount rates and comparable multiples from publicly traded companies in our industry.

In addition, the Company is required to make certain assumptions and estimates regarding the current economic environment, industry factors and the future profitability of its businesses.

When performing its discounted cash flow analysis for each reporting unit, the Company incorporates the use of projected financial information and discount rates that are developed using market participant-based assumptions.

The cash-flow projections are based on three-year financial forecasts developed by management that include revenue and expense projections, restructuring activities, capital spending trends and investment in working capital to support anticipated revenue growth or other changes in the business.

The selected discount rates consider the risk and nature of the respective reporting units' cash flows, appropriate capital structure and rates of return that market participants would require to invest their capital in our reporting units.

The Company believes these assumptions are appropriate and reflect its forecasted long-term business model and considers its historical results as well as the current economic environment and markets that the Company serves.

The most significant assumptions used in the goodwill analysis relate to discount rates and long-term organic growth rates.

For the 2024 annual impairment test, specifically with regards to the Transportation reporting unit, while the Market Approach was considered, the fair value assessment relied solely on the Income Approach due to near-term financial metrics not being at normalized levels.

If the fair value of a reporting unit is less than its carrying amount,

CNDT 2024 Annual Report

an impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to the reporting unit.

Refer to Note 7 – Goodwill and Intangible Assets, Net for further information.

3 unchanged sentences

Refer to Note 7 – Goodwill and Intangible Assets, Net for further information.

CNDT 2023 Annual Report

Impairment of Long-Lived Assets

22 unchanged sentences

On May 16, 2023, the Board of Directors authorized a share repurchase program, granting approval for the Company to repurchase up to $ 75 million of its common stock over the next three years .

The Company has the discretion to repurchase shares periodically through open market transactions and may include Rule 10b5-1 trading plans.

This share repurchase program does not obligate the Company to acquire a specific number of shares and the program may be modified, suspended or discontinued at any time at the Company’s discretion without prior notice.

This program was completed in September 2024.

The Company had the discretion to repurchase shares periodically through open market transactions and may include Rule 10b5-1 trading plans.

This share repurchase program did not obligate the Company to acquire a specific number of shares and the program could have been modified, suspended or discontinued at any time at the Company’s discretion without prior notice.

CNDT 2024 Annual Report

The Company holds repurchased shares of common stock as treasury stock.

1 unchanged sentence

The Company accrues the cost of repurchased shares and excludes such shares from the calculation of basic and diluted earnings per share, as of the trade date.

The Company recognizes a liability for share repurchases which have not settled and for which cash has not been paid in Other current liabilities on the Company's Consolidated Balance Sheets.

The Company recognized a liability for share repurchases which had not settled and for which cash had not been paid in Other current liabilities on the Company's Consolidated Balance Sheets.

Noncontrolling Interest

3 unchanged sentences

Net income (loss) is allocated to the noncontrolling interest based on ownership interest.

CNDT 2023 Annual Report

In May 2023, the Company signed a new customer contract with the State of Victoria, Australia to provide the next generation of the state's public transport ticketing system.

2 unchanged sentences

For the year ended December 31, 2024, noncontrolling interest in Conduent Victoria was not material to the Company's Consolidated Statements of Income (Loss) or Consolidated Statements of Comprehensive Income (Loss) and, therefore, the Company did not present any separate disclosures for such noncontrolling interest in those statements.

Foreign Currency Translation and Re-measurement

Foreign Currency Translation

The functional currency for most foreign operations is the local currency.

3 unchanged sentences

A combination of current and historical exchange rates is used in re-measuring the local currency transactions of these subsidiaries and the resulting exchange adjustments are recorded in Currency (gains) and losses within Other (income) expenses, net together with other foreign currency re-measurements.

Stock-based Compensation

Stock-based compensation expense for stock-based awards which include restricted stock units (RSUs) and performance stock units (“PSUs") is based on the grant date fair value of those awards.

Stock-based compensation expense is recognized for RSUs as shares vest over the requisite service period.

Vesting of PSUs is contingent on meeting performance targets.

If the minimum performance targets are not met, no compensation cost is recognized and any recognized compensation cost is reversed.

Refer to Note 17 – Shareholders’ Equity for further information.

Revenue Recognition

5 unchanged sentences

Accordingly, the promise to stand-ready is accounted for as a single-series performance obligation.

CNDT 2024 Annual Report

Once the Company determines the performance obligations, the Company determines the transaction price, which is based on fixed and/or variable consideration.

12 unchanged sentences

The Company recognizes revenue for non-refundable upfront implementation fees on a straight-line basis over the period between the initiation of the services through the end of the contract term.

CNDT 2023 Annual Report

When more than one party is involved in providing services to a customer, the Company evaluates whether it is the principal, and reports revenue on a gross basis, or an agent, and reports revenue on a net basis.

11 unchanged sentences

Refer to Note 2 – Revenue for further discussion.

Costs to Obtain and Fulfill a Contract

The Company capitalizes commission expenses paid to internal sales personnel that are incremental costs related to obtaining customer contracts.

These costs are recorded as Deferred contract costs, net within Other long-term assets.

The judgments made in determining the costs to be capitalized include whether the commissions are incremental and directly related to a successful acquisition of a customer contract.

Capitalized costs are amortized within Depreciation and amortization over the term of the contract or the estimated life of the customer relationship if renewals are expected and the renewal commission is not commensurate with the initial commission.

Sales commissions are expensed as incurred if the amortization period is one year or less.

In addition, the Company may provide inducement payments to secure customer contracts.

These inducement payments are capitalized and amortized as a reduction of revenue over the term of the customer contract.

The Company also capitalizes costs incurred to fulfill its contracts that (i) relate directly to the contract, (ii) are expected to generate resources that will be used to satisfy the Company’s performance obligation under the contract and (iii) are expected to be recovered through revenue generated under the contract.

These costs primarily

CNDT 2024 Annual Report

consist of set-up and transition activities and are included in Deferred contract costs, net within Other long-term assets.

Contract fulfillment costs are amortized within Depreciation and amortization on a systematic basis over the expected period of benefit as the Company satisfies its performance obligations by transferring services to the customer.

Deferred contract costs are periodically reviewed for impairment.

Refer to Note 2 – Revenue for further discussion.

Note 2 – Revenue

Disaggregation of Revenue

In 2024, revenue from the BenefitWallet Portfolio and the Casualty Claims Solutions business were reclassified to the Divestitures segment from the Commercial segment.

In addition, in 2024, revenue from the Curbside Management and Public Safety businesses was reclassified to the Divestitures segment from the Transportation segment.

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

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

13 unchanged sentences

Transit solutions 341 233 226

Curbside management solutions 76 85 82

Public safety solutions 58 62 67

Commercial vehicles 1 8 8

1 unchanged sentence

Divestitures 180 402 377

Total Other — 7 70

Total Consolidated Revenue $ 3,356 $ 3,722 $ 3,858

3 unchanged sentences

Total Revenue $ 3,356 $ 3,722 $ 3,858

CNDT 2023 Annual Report

The Company's contracts with customers are broadly similar in nature throughout the Company's major service offerings.

1 unchanged sentence

Customer Experience Management :

The Company delivers a full range of omni-channel customer contact services and customer communications, including customer care, technical support, loyalty management, and outbound and inbound sales.

The Company delivers a full range of customer contact services and customer communications, including customer care, technical support, loyalty management, and outbound and inbound sales, handling many complex interactions and representing the brands of its clients.

The Company creates better experiences across the customer lifecycle through a variety of channels including social media, chat, email, voice and virtual agent to help customers where and how they want to engage.

Through omni-channel communications, automation and analytics, as well as labor efficiencies, the Company helps its clients reduce costs, enable scale and drive revenue growth and efficiencies.

The Company serves marquee clients across multiple

CNDT 2024 Annual Report

sectors including financial services, health and life sciences, logistics, retail, technology and telecom, travel, and hospitality sectors, helping to resolve complex issues for the customers with empathy and effectiveness.

Business Operations Solutions :

The Company helps its clients transform business processes and drive efficiency, automation and scale across essential business functions.

The Company streamlines mission-critical operations through its deep industry experience, understanding of its clients’ operations and the latest technology solutions, to reduce costs, improve security, performance and accuracy and enable revenue growth, while enhancing the end-user experience.

The Company helps its clients digitally transform business processes and drive efficiency, automation and scale across essential business functions.

The Company streamlines client operations through its deep industry experience, understanding of its clients’ needs and the latest technology solutions to reduce costs, improve security, performance and accuracy, and enable revenue growth, while enhancing the end-user experience.

The Company's portfolio of solutions spans automated document and data management, payments processing, finance, accounting, and procurement and financial industry solutions.

Healthcare Claims and Administration Solutions :

On behalf of the healthcare and casualty insurance industries, the Company delivers administration, clinical support, bill review and medical management solutions across the health ecosystem to reduce costs, increase compliance and enhance utilization, while improving health outcomes and experiences for members and patients.

On behalf of the healthcare industry, the Company delivers administration, clinical support, claims management and patient assistance solutions across the healthcare ecosystem to reduce costs, increase compliance and enhance utilization, while improving outcomes and experiences for members and patients.

The Company's solutions span:

trials, sales, access, and adherence to pharmaceutical clients;

medical bill review, claim processing, care integration, subrogation and payment integrity solutions to managed care companies;

and workers compensation medical bill review, intake mailroom/data capture and medical management services to claims payers and third-party administrators .

clinical trials, sales, access, and adherence to pharmaceutical clients;

claim processing, care integration, subrogation and payment integrity solutions to managed care companies;

and intake mailroom/data capture and medical management services to claims payers and third-party administrators .

Human Capital Solutions :

The Company provides services to support its clients' employees at all stages of their employment from on-boarding through retirement.

The Company's solutions span Benefits Administration Solutions, Human Resources ("HR") and Payroll Solutions, Health Savings Account Solutions and Learning Solutions.

On behalf of global organizations and governments, the Company delivers mission-critical, technology-led HR services and solutions that improve business processes across the employee journey to maximize business performance, while increasing employee satisfaction, engagement, and overall well-being.

These solutions span health, benefits, payroll, onboarding and learning administration, annual enrollment, wealth and retirement, HR, talent, and workforce management.

The Company's solutions span Benefits Administration, Human Resources ("HR") and Payroll and Learning.

On behalf of global organizations and governments, the Company delivers technology-led HR services and solutions that improve business processes across the employee journey to maximize business performance, while increasing employee satisfaction, engagement, and overall well-being.

These solutions help empower millions of employees and span health, benefits, payroll, onboarding and learning administration, annual enrollment, wealth and retirement, pensions administration, HR, talent, and workforce management.

Government Healthcare Solutions :

The Company provides mission-critical program administration solutions for government healthcare programs with a range of innovative solutions such as Medicaid management, provider services, Medicaid business intelligence, pharmacy benefits management, eligibility and enrollment support, customer contact services, application processing, premium billing, and case management solutions.

The Company provides program administration solutions for government healthcare programs with a range of innovative solutions such as Medicaid management, provider services, Medicaid business intelligence, pharmacy benefits management, eligibility and enrollment support, customer contact services, application processing, premium billing, and case management solutions.

Government Services Solutions :

The Company is a leader in government payment disbursements for federally sponsored programs including Supplemental Nutrition Assistance Program ("SNAP"), and Women, Infant and Children ("WIC") as well as government-initiated cash disbursements including child support and Unemployment Insurance ("UI").

The Company also offers a broad set of child support services predominately to State Disbursement Units ("SDUs"), including processing and distributing payment, child support payment cards, childcare credentialing, and case management, among others, to help states comply with federal standards.

Road Usage Charging & Management Services :

The Company's electronic tolling, urban congestion management and mileage-based user solutions help its clients get travelers to where they need to go while generating revenue for infrastructure improvements.

The Company is a leader in government payment disbursements for federally sponsored programs including benefit card programs and payment card programs.

Benefit card programs are closed loop solutions that support Supplemental Nutrition Assistance Program ("SNAP"), Temporary Assistance for Needy Families ("TANF") and Women, Infants and Children ("WIC").

Payment card programs are open loop solutions that support child support and Unemployment Insurance ("UI").

The Company also offers a broad set of child support services predominately to State Disbursement Units ("SDUs"), including processing and distributing payments, child support payment cards, childcare credentialing and case management, among others, to help states comply with federal standards.

Road Usage Charging and Management Services :

The Company's electronic tolling, urban congestion management and mileage-based user solutions help its clients accurately assess and collect payments millions of times every day to generate revenue for infrastructure improvements.

The Company's solutions include vehicle passenger detection systems, electronic toll collection, automated license plate recognition and congestion management solutions.

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For train, bus, subway, metro and other transit travelers, the Company helps make journeys more personalized and convenient while increasing fare collections for authorities and agencies.

The Company combines fare collection and intelligent mobility to provide clients with the added efficiency of a single point of management for all transit solutions.

Curbside Management Solutions :

The Company delivers intelligent curbside management systems that simplify parking programs and deliver convenient and hassle-free experiences for drivers.

The Company's curbside solutions include citation and permit administration, parking enforcement and curbside demand management.

CNDT 2023 Annual Report

Public Safety Solutions :

The Company provides data analytics, automated photo enforcement and other public safety solutions to make streets and communities safer.

Photo enforcement systems include red light, fixed and mobile speed, school bus, work zone, school zone, bus lane, high occupancy and other forms of photo enforcement systems.

The Company combines fare collection, account-based ticketing and intelligent mobility to provide clients with the added efficiency of a single point of management for all transit solutions.

Commercial Vehicles :

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Accounts receivable are recorded when the right to consideration becomes unconditional.

Contract assets are the Company’s rights to consideration for services provided when the right is conditioned on something other than passage of time (for example, meeting a milestone for the right to bill under the cost-to-cost measure of progress).

Contract assets are the Company’s rights to consideration for services provided when the right is conditioned on something other than passage of time (for

CNDT 2024 Annual Report

example, meeting a milestone for the right to bill under the cost-to-cost measure of progress).

Contract assets are transferred to Accounts receivable, net when the rights to consideration become unconditional.

Unearned income includes payments received in advance of performance under the contract, which are realized when the associated revenue is recognized under the contract.

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

The following table provides information about significant movements in contract assets (current and long-term):

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

Contract Assets (Unearned Income)

Current contract assets $ 178 $ 171

Long-term contract assets (1)

Current unearned income ( 91 ) ( 81 )

Long-term unearned income (2)

Beginning balance $ 190 $ 184

Additional contract assets recognized 139 236

Billed and transferred to Accounts receivable and other ( 194 ) ( 227 )

Impairments — ( 3 )

Ending balance (1)

(1) Of which $ 3 million and $ 12 million are included in Other long-term assets as of December 31, 2024 and 2023, respectively.

The following table provides information about significant movements in unearned income balances (current and long-term):

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

Beginning balance $ 146 $ 123

Additional deferral of income 276 361

Revenue recognized related to deferral of income (1)

( 267 ) ( 330 )

Net Contract Assets $ 44 $ 60

Accounts receivable, net $ 559 $ 630

(1) Presented in Other long-term assets in the Consolidated Balance Sheets

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

Revenues of $ 61 million and $ 76 million were recognized during the years ended December 31, 2023 and 2022, respectively, related to the Company's unearned income at December 31, 2022 and December 31, 2021.

The Company recorded a $ 3 million asset impairment charge related to contract assets for the year ended December 31, 2023.

There were no material asset impairment charges related to contract assets in the years ended December 31, 2022 or 2021.

Other — ( 8 )

Ending balance (2)

(1) Of which $ 92 million and $ 62 million were recognized during the years ended December 31, 2024 and 2023, respectively, that related to the Company's unearned income as of December 31, 2023 and 2022, respectively.

(2) Of which $ 52 million and $ 55 million are included in Long-term unearned income as of December 31, 2024 and 2023, respectively.

Transaction Price Allocated to the Remaining Performance Obligations

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Costs to Obtain and Fulfill a Contract

The Company capitalizes commission expenses paid to internal sales personnel that are incremental costs related to obtaining customer contracts.

As of December 31, 2023 and 2022, the net book value of these costs was $ 21 million and $ 24 million, respectively, and is included in Deferred contract costs, net within Other long-term assets.

The judgments made in determining the amount of costs incurred include whether the commissions are incremental and directly related to a successful acquisition of a customer contract.

These costs are amortized in Depreciation and amortization over the term of the contract or the estimated life of the customer relationship if renewals are expected and the renewal commission is not commensurate with the initial commission.

The Company expenses sales commissions when incurred if the amortization period of the sales commission is one year or less.

In addition, the Company may provide inducement payments to secure customer contracts.

These inducement payments are capitalized and amortized as a reduction of revenue over the term of the customer contract.

CNDT 2023 Annual Report

book value of these costs totaled $ 10 million and $ 28 million as of December 31, 2023 and 2022, respectively, and are included in Deferred contract costs, net within Other long-term assets.

The Company capitalizes costs incurred to fulfill its contracts that (i) relate directly to the contract, (ii) are expected to generate resources that will be used to satisfy the Company’s performance obligation under the contract and (iii) are expected to be recovered through revenue generated under the contract.

The net book value of these costs, which comprise set-up/transition activities, was $ 60 million and $ 30 million as of December 31, 2023 and 2022, respectively, and are included in Deferred contract costs, net within Other long-term assets.

Contract fulfillment costs are expensed to Depreciation and amortization as the Company satisfies its performance obligations by transferring the service to the customer.

These costs are amortized on a systematic basis over the expected period of benefit.

These costs are periodically reviewed for impairment.

The following table shows the net book value of the capitalized costs to obtain and fulfill a contract:

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

Costs to obtain a contract $ 19 $ 21

Costs to fulfill a contract 99 60

The amortization of costs incurred to obtain and fulfill a contract, excluding contract inducements, for the years ended December 31, 2024, 2023 and 2022 were $ 40 million, $ 40 million and $ 34 million, respectively.

The expected amortization expense for the next five years and thereafter for these costs to obtain and fulfill a contract is as follows (in millions):

The expected amortization expense for the next five years and thereafter for the costs to obtain and fulfill a contract is as follows (in millions):

2025 2026 2027 2028 2029 Thereafter

$ 36 $ 26 $ 17 $ 10 $ 9 $ 20

The net book value of contract inducement costs was $ 8 million and $ 10 million as of December 31, 2024 and 2023, respectively.

CNDT 2024 Annual Report

Note 3 – Segment Reporting

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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) for its three reportable segments (Commercial, Government and Transportation), Other and Unallocated Costs.

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

Divestitures includes the Company's BenefitWallet Portfolio for which the Company completed the transfer 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.

Additionally, Divestitures includes the Company's Midas business which it sold in the first quarter of 2022.

Refer to Note 4 – Divestitures and Assets/Liabilities Held for Sale for additional information.

The Company's CODM evaluates the Company's financial performance based on Segment profit (loss) for its three reportable segments - Commercial, Government and Transportation.

The Company's CODM uses Segment profit (loss) information to monitor budget versus actual results and then uses this information to help make informed decisions about future resource investment, potential restructuring of segments to enhance overall company performance, and future divestitures and acquisitions.

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.

• Commercial:

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

Across the Commercial 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 better experiences for their consumers and employees.

The Commercial segment provides business process services that span its clients' businesses end-to-end from the front-office to the back-office for a variety of commercial industries.

These solutions are both cross-industry and industry-specific in nature.

Across the Commercial segment, the Company operates on its clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enhance performance for the Company's clients and deliver better experiences for their consumers and employees.

• Government:

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

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

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

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

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

In this segment, the Company helps governments respond to changing rules for eligibility and keep pace with increasing citizen expectations, modernize legacy technology systems, combat benefits fraud and shift in response to an evolving regulatory environment.

• Transportation:

The Transportation segment provides systems, support, and revenue-generating solutions, to government transportation agency clients.

The Company delivers mission-critical public safety, mobility and digital payment solutions 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 Midas Suite of patient safety, quality and advanced analytics solutions which it sold to a third party in the first quarter of 2022.

Other includes the Company's Midas business, which was sold in the first quarter of 2022.

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 the reportable segments.

The Transportation segment provides government agencies and transportation authorities around the world with solutions serving toll and fare collections as well as mobility and digital payments that help streamline operations and increase revenue, systems, support, and revenue-generating solutions to government transportation agencies.

With an expanded focus on sustainability and enhancing the quality of life for citizens and communities around the world, the Company's solutions help reduce congestion and greenhouse emissions, while creating seamless travel experiences for consumers throughout transportation ecosystems.

CNDT 2024 Annual Report

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

The Company adopted the new segment guidance for the year ended December 31, 2024 on a retrospective basis.

The following table presents revenues, expenses and segment profit (loss) for the Company's reportable segments:

Year Ended December 31,

(in millions) Commercial Government Transportation Other Unallocated Costs Total

2023 Divestitures Other

Revenue $ 1,932 $ 1,094 $ 696 $ — $ — $ — $ 3,722

(in millions) Commercial Government Transportation Total (1)

Segment revenue $ 1,606 $ 984 $ 586 $ 3,176

Wages and benefits $ 1,081 $ 420 $ 256 $ 1,757

Services and supplies 212 282 279 773

Rent lease and maintenance expense 145 66 46 257

Other operating expense 1 6 6 13

Depreciation and amortization expense 90 44 24 158

Segment expenses $ 1,529 $ 818 $ 611 $ 2,958

Segment profit (loss) $ 77 $ 166 $ ( 25 ) $ 218

Revenue $ 1,992 $ 1,150 $ 709 $ 7 $ — $ — $ 3,858

Segment Revenue $ 1,668 $ 1,094 $ 558 $ 3,320

Wages and benefits $ 1,132 $ 411 $ 247 $ 1,790

Services and supplies 224 284 242 750

Rent lease and maintenance expense 140 65 43 248

Other operating expense 8 9 10 27

Depreciation and amortization expense 128 41 23 192

Segment expenses $ 1,632 $ 810 $ 565 $ 3,007

Segment profit (loss) $ 36 $ 284 $ ( 7 ) $ 313

Revenue $ 2,017 $ 1,307 $ 746 $ 70 $ — $ — $ 4,140

Segment Revenue $ 1,769 $ 1,150 $ 562 $ 3,481

Wages and benefits $ 1,174 $ 419 $ 228 $ 1,821

Services and supplies 275 328 234 837

Rent lease and maintenance expense 148 67 40 255

Other operating expense 8 5 6 19

Depreciation and amortization expense 93 37 20 150

Segment expenses $ 1,698 $ 856 $ 528 $ 3,082

Segment profit (loss) $ 71 $ 294 $ 34 $ 399

(1) Total excludes Divestitures and Unallocated Costs.

CNDT 2024 Annual Report

Other operating expense shown above is primarily comprised of third-party legal fees and other miscellaneous expenses.

The following is a reconciliation of Segment profit (loss) to Income (loss) before income taxes:

(in millions) Year Ended December 31,

Segment Profit (Loss) Reconciliation to Pre-tax Income (Loss) 2023 2022 2021

Income (Loss) Before Income Taxes $ ( 332 ) $ ( 127 ) $ ( 25 )

2024 2023 2022

Segment Profit (Loss) $ 218 $ 313 $ 399

Reconciling items:

Divestitures profit (1)

Unallocated costs (2)

( 287 ) ( 304 ) ( 293 )

Amortization of acquired intangible assets ( 5 ) ( 7 ) ( 13 )

6 unchanged sentences

Other income (expenses), net 13 3 1

Segment Profit (Loss) $ 112 $ 176 $ 237

Income (Loss) Before Income Taxes $ 504 $ ( 332 ) $ ( 127 )

(1) Divestitures profit is Income (loss) before income taxes.

(2) 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 the reportable segments.

Refer to Note 2 – Revenue for additional information on disaggregated revenues of the reportable segments.

No sales to an individual customer accounted for more than 10% of revenue for the years ended December 31, 2024, 2023 or 2022.

Geographic area data is based upon the location of the subsidiary reporting the revenue or long-lived assets and is as follows for each of the years ended December 31:

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(1) Long-lived assets are comprised of (i) Land, buildings and equipment, net, (ii) Internal use software, net, (iii) Product software, net and (iv) Operating lease right-of-use assets.

Note 4 – Divestitures and Assets/Liabilities Held for Sale

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 (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 were finalized in the first quarter of 2025 and were not material.

In 2024, the Company recorded a gain on the sale of $ 194 million less costs to sell of $ 8 million, which is recorded in Gain (loss) on divestitures and transaction costs .

Additionally, the Company recorded $ 33 million of income tax expense related to the divestiture.

CNDT 2024 Annual Report

Note 4 – Assets/Liabilities Held for Sale and Divestitures

The Casualty Disposal Group generated revenue and income (loss) before income taxes as follows:

(in millions) 2024 2023 2022

Revenue $ 100 $ 146 $ 157

Income (loss) before income taxes

Divestiture of Curbside Management and Public Safety Solutions Businesses

In December 2023, the Company signed a definitive agreement to sell its Curbside Management and Public Safety Solutions businesses to Modaxo, a division of Constellation Software Inc., for $ 230 million (plus the assumption of certain indebtedness), subject to customary purchase price adjustments.

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

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

The Company received $ 181 million of cash consideration and a $ 50 million non-interest bearing note payable to the Company due on April 30, 2025.

Additionally, the Company received reimbursement for payments made by the Company related to finance lease liabilities and related costs and the reimbursement for the purchase of certain equipment made by the Company on the buyer's behalf.

In 2024, the Company recorded a gain on the sale of $ 103 million less costs to sell of $ 5 million, which is recorded in Gain (loss) on divestitures and transaction costs .

The Company recorded $ 28 million of income tax expense in connection with the divestiture.

The Curbside Disposal Group generated revenue and income (loss) before income taxes as follows:

(in millions) 2024 2023 2022

Revenue $ 50 $ 137 $ 146

Income (loss) before income taxes

Transfer of BenefitWallet Portfolio

In September 2023, the Company entered into a Custodial Transfer and Asset Purchase Agreement to transfer its BenefitWallet health savings account and medical savings account portfolio (collectively, the "BenefitWallet Portfolio") to HealthEquity, Inc.

for an aggregate purchase price of $ 425 million, subject to customary purchase price adjustments.

As of December 31, 2023, there were no asset or liability balances related to the BenefitWallet Portfolio that would require disclosure as assets and liabilities held for sale on the Company's Consolidated Balance Sheet.

The transfer of the BenefitWallet Portfolio closed in multiple tranches from March to May 2024 and the Company received aggregate cash consideration of $ 425 million as the tranches closed.

The Company recorded a gain on the transfer of $ 425 million less costs to sell of $ 11 million, which is recorded in Gain (loss) on divestitures and transaction costs, net .

The Company recorded $ 102 million of income tax expense in connection with the transfer of the BenefitWallet Portfolio.

The BenefitWallet Portfolio generated revenue and income (loss) before income taxes as follows:

(in millions) 2024 2023 2022

Revenue $ 30 $ 118 $ 65

Income (loss) before income taxes

Divestiture of Midas Business

On February 8, 2022, the Company completed the sale of its Midas business to Symplr Software, Inc.

The Company received $ 322 million of cash consideration for this divestiture.

The divestiture generated a pre-tax gain of $ 166 million, which is included in (Gain) loss on divestitures and transaction costs .

The Company recorded approximately $ 62 million of income taxes in connection with the divestiture.

CNDT 2024 Annual Report

The Midas business generated revenue and income (loss) before income taxes as follows:

Year Ended December 31,

(in millions) 2024 2023 2022

Revenue $ — $ — $ 7

Income (loss) before income taxes

Assets/Liabilities Held for Sale

In December 2023, the Company signed a definitive agreement to sell its Curbside Management and Public Safety Solutions businesses for $ 230 million (plus the assumption of certain indebtedness), subject to customary purchase price adjustments.

The sale is expected to close in the first half of 2024 and is subject to the s atisfaction certain customary closing conditions.

The assets and liabilities of these businesses, collectively referred to as the 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 Disposal Group is currently reported in the Transportation segment.

The Disposal Group generated revenue of $ 134 million, $ 146 million and $ 149 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The pre-tax profit of the Disposal Group, excluding unallocated costs, was $ 22 million, $ 36 million and $ 54 million for the years ended December 31, 2023, 2022 and 2021, respectively.

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

As of December 31, 2023, the sale of the Curbside Management and Public Safety Solutions businesses had not yet closed.

Accordingly, the assets and liabilities of this portfolio, collectively referred to as the Curbside Disposal Group, were reclassified as held for sale and measured at the lower of carrying value or fair value less costs to sell.

As described above, the sale closed in the second quarter of 2024 and the assets and liabilities held for sale have been removed from the Company's Consolidated Balance Sheets.

The following is a summary of the major categories of assets and liabilities that were classified as held for sale as of December 31, 2023:

(in millions) December 31, 2023

14 unchanged sentences

Total Liabilities held for sale $ 58

Announced Transfer of BenefitWallet Portfolio

("HealthEquity") for $ 425 million, subject to customary purchase price adjustments.

The Portfolio is reported within the Company's Commercial segment.

The transfer is expected to close in multiple tranches during the first half of 2024 and is subject to the satisfaction of certain customary closing conditions.

As of December 31, 2023, there were no asset or liability balances related to the Portfolio that would require disclosure as assets and liabilities held for sale on the Company's Consolidated Balance Sheet.

The Portfolio generated revenue of $ 127 million, $ 71 million and $ 44 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The pre-tax profit of the Portfolio, excluding unallocated costs, was $ 103 million, $ 48 million and $ 16 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Completed Divestiture

On February 8, 2022, the Company completed the sale of its Midas business to Symplr Software, Inc.

The Company received $ 322 million of cash consideration for this divestiture.

The divestiture generated a pre-tax gain of $ 166 million, which is included in (Gain) loss on divestitures and transaction costs, net .

The Company recorded approximately $ 62 million of income taxes in connection with the divestiture.

The revenue generated by this

CNDT 2024 Annual Report

business was $ — million , $ 7 million and $ 70 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Note 5 – Accounts Receivable, Net

The Accounts receivable, net balance was $ 559 million and $ 630 million at December 31, 2023 and 2022, respectively.

There were no allowances for credit losses at December 31, 2023 or 2022.

Cash proceeds from this arrangement are included in cash flow from operating activities in the Consolidated Statements of Cash Flows.

Accounts receivable sales for the years ended December 31, 2023 and 2022 were $ 616 million and $ 507 million, respectively.

Note 5 - Land, Buildings, Equipment and Software, Net

11 unchanged sentences

Depreciation expense for the years ended December 31, 2024, 2023 and 2022 was $ 80 million, $ 102 million and $ 111 million, respectively.

CNDT 2023 Annual Report

Internal Use and Product Software

13 unchanged sentences

Product software, net

Useful lives of our Internal use and Product software generally vary from one to seven years .

The useful lives of the Company's Internal use software and enhancements range from one to five years .

Product software is amortized over the shorter of:

(i) four years;

(ii) the expected economic life of the product;

or (iii) the term of the associated customer contract.

Amortization expense for Internal use and Product software for the years ended December 31, 2024, 2023 and 2022 was $ 79 million, $ 114 million and $ 71 million, respectively.

The 2023 amount includes the write-off of capitalized software costs totaling $ 25 million, stemming from management’s decision to abandon an internal use software product and a decision by a customer to not implement a product software solution.

Cloud Computing Arrangements

Cloud computing implementation costs are included in Other current assets and Other long-term assets on the Company's Consolidated Balance Sheets.

Additions to Cloud computing implementation costs as well as year-end balances for these assets were as follows:

(in millions) Year Ended December 31,

Additions to:

2023 2022 2021

Cloud computing implementation costs $ 2 $ 1 $ 6

(in millions) December 31,

Capitalized Costs, Net 2023 2022

Cloud computing implementation costs, at cost

Accumulated impairment charges ( 28 ) ( 28 )

Accumulated amortization ( 22 ) ( 17 )

Cloud computing implementation costs, net (1)

(1) Refer to Note 10 – Supplementary Financial Information for additional information on the current and long-term portions of this asset.

Useful lives of Cloud computing implementation costs are three to five years .

Amortization expense for Cloud computing implementation costs for the years ended December 31, 2023, 2022 and 2021 were $ 5 million, $ 6 million and $ 2 million, respectively.

As a result of the Company’s decision in the fourth quarter of 2021 to abandon an internal project, the Company wrote-off $ 28 million of its previously capitalized implementation costs.

Additionally, in connection with the abandonment of this project, the Company accrued $ 4 million of charges related to remaining hosting fees that would have continued to be incurred without any economic benefit.

This liability has been settled as of December 31, 2023.

The write-off and remaining hosting fee charges are included in Selling, general and administrative on the Consolidated Statements of Income (Loss).

CNDT 2024 Annual Report

54 unchanged sentences

Present value of lease liabilities $ 190 $ 26

As of December 31, 2023, the Company had entered into additional operating lease agreements for equipment totaling $ 1 million which have not commenced and have not been recognized on the Company's Consolidated Balance Sheet.

The leases are expected to commence in 2024 with average lease terms of 3 years.

Additionally, we have $ 11 million of commitments that have not yet commenced related to leases for businesses which have been classified as held for sale.

As of December 31, 2024, the Company had entered into additional operating lease agreements for equipment for $ 3 million, real estate for $ 8 million and finance leases for equipment for $ 25 million which have not commenced and have not been recognized on the Company's Consolidated Balance Sheet.

These leases are expected to commence in 2025 with average lease terms of 3 years, 7 years and 5 years, respectively.

CNDT 2024 Annual Report

5 unchanged sentences

Impairment ( 287 ) — — ( 287 )

Transfer of goodwill between segments 4 ( 4 ) — —

Assets Held For Sale — — ( 35 ) ( 35 )

Balance at December 31, 2023 $ — $ 623 $ 28 $ 651

1 unchanged sentence

Impairment — — ( 28 ) ( 28 )

Assets Held For Sale — — ( 35 ) ( 35 )

Balance at December 31, 2024 $ — $ 609 $ — $ 609

2 unchanged sentences

Balance at December 31, 2024 $ — $ 609 $ — $ 609

2024 Impairment Testing and Impairment Charge

The Company performed its annual goodwill impairment test as of October 1, 2024 for the Government and Transportation reporting units.

This testing did not identify any goodwill impairment for the Government reporting unit and, accordingly, no impairment charge was recorded.

However, the testing identified a $ 28 million goodwill impairment for the Transportation reporting unit, which was primarily due to a reduction in projected cash flows from new customer contract signings and increased delivery costs.

This represents a full impairment of goodwill for the Transportation reporting unit.

2023 Impairment Charge

In September 2023, the Company entered into a Custodial Transfer and Asset Purchase Agreement (the "Purchase Agreement") to transfer its BenefitWallet health savings account and medical savings account portfolio, which is reported within the Company’s Commercial segment.

Since the Purchase Agreement does not represent a disposition of a business, no goodwill was allocated to the Portfolio related to this transaction.

In September 2023, the Company entered into a Custodial Transfer and Asset Purchase Agreement (the "Purchase Agreement") to transfer its BenefitWallet Portfolio, which was reported within the Company’s Commercial segment.

Since the Purchase Agreement did not represent a disposition of a business, no goodwill was allocated to the BenefitWallet Portfolio related to this transaction.

Consequently, the Purchase Agreement was identified as a triggering event for the Commercial reporting unit that required the Company to evaluate goodwill for impairment.

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In connection with the Commercial reporting unit impairment assessment, the Company first performed a recoverability assessment of long-lived assets and concluded that such assets were not impaired.

Additionally, the Company performed its annual goodwill impairment test as of October 1, 2023, for the Government and Transportation reporting units.

This testing did not identify any goodwill impairment and, accordingly, no impairment charge was recorded.

2022 Impairment Charge

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Intangible Assets, Net

Net intangible assets were $ 32 million at December 31, 2023 of which $ 31 million, $ 1 million and $ 0 million relate to the Company's Commercial, Government and Transportation segments, respectively.

Net intangible assets were $ 14 million at December 31, 2024, substantially all of which is recorded in the Company's Commercial segment.

Intangible assets were comprised exclusively of Customer relationships as follows:

7 unchanged sentences

Total Intangible Assets 14 years $ 36 $ 22 $ 14 $ 85 $ 53 $ 32

In 2024, intangible assets with a net book value of $ 13 million were divested in connection with the sale of the Casualty Claims Solutions business.

Amortization expense related to intangible assets was $ 5 million, $ 7 million and $ 13 million for the years ended December 31, 2024, 2023 and 2022, respectively.

9 unchanged sentences

A summary of the Company's restructuring program activity during the two years ended December 31, 2024 is as follows:

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

(in millions) Severance and Related Costs Termination and Other Costs (2)

Asset Impairments Total

Balance at December 31, 2022 $ 10 $ — $ — $ 10

11 unchanged sentences

(2) During the year ended December 31, 2024, the Company incurred $ 4 million of costs for bringing certain technology functions in-house.

These costs are included in the above table in Termination and Other Costs.

CNDT 2023 Annual Report

The Company also incurred costs related to professional support services associated with the implementation of certain strategic transformation programs of $ 2 million and $ 4 million during the years ended December 31, 2022 and 2021, respectively.

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

Year Ended December 31,

(in millions) 2023 2022 2021

Commercial $ 28 $ 6 $ 4

Government — 1 1

Transportation 1 1 1

Unallocated Costs (1)

Total Net Restructuring Charges $ 62 $ 37 $ 41

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

The Company also incurred costs related to professional support services associated with the implementation of certain cost reduction and

CNDT 2024 Annual Report

strategic transformation programs of $ 4 million during the year ended December 31, 2024.

These costs are included in the above table in Termination and other costs.

No restructuring and related costs are allocated to the segments.

Note 9 – Supplementary Financial Information

The components of Other assets and liabilities were as follows:

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

(in millions) 2024 2023

2 unchanged sentences

Income taxes receivable 11 38

Value-added tax (VAT) receivable 8 10

Value-added tax receivable 7 8

Restricted cash 11 21

Net receivables from buyers of divested businesses 52 —

Other 103 103

Total Other Current Assets $ 261 $ 240

49 unchanged sentences

(iii) Senior Revolving Credit Facility maturing 2026 ("Revolving Credit Facility") with an aggregate available amount of $ 550 million including a sub-limit for up to $ 300 million available for the issuance of letters of credit.

During the first quarter of 2022, the Company repaid $ 100 million of its $ 550 million Revolving Credit Facility that was outstanding as of December 31, 2021.

As of December 31, 2024, the Company had no outstanding balance under its Revolving Credit Facility.

1 unchanged sentence

The net amount available to be drawn upon under the Revolving Credit Facility as of December 31, 2024, was $ 539 million.

The amount of borrowings outstanding under its Revolving Credit Facility at each quarter-end may be limited by our leverage covenant.

The Credit Agreement permits the Company to request incremental term loan borrowings and /or increase commitments, subject to certain limitations and satisfaction of certain conditions.

2 unchanged sentences

The margin for SOFR loans at December 31, 2024 was 2.25 %.

The applicable margin for the Term Loan B for SOFR loans does not change based on leverage ratios and is 4.25 % per annum and for base rate loans is 3.25 % per annum.

In addition to paying interest on outstanding principal under the Revolving Credit Facility, the Company is required to pay a commitment fee ranging from 0.3 % to 0.5 % per annum to the lenders in respect of unutilized commitments thereunder and the commitment fee was 0.4 % at December 31, 2024.

All obligations under the Credit Agreement are unconditionally guaranteed by the Company, CBS and CSLS, and the existing and future direct and indirect wholly owned domestic restricted subsidiaries of CBS (subject to certain exceptions).

All obligations under the Credit Agreement are secured, subject to certain exceptions, by a first-priority

All obligations under the Credit Agreement are secured, subject to certain exceptions, by a first-priority pledge of substantially all assets of CBS and the subsidiary guarantors, and all of the capital stock of CBS and each of CBS' wholly owned material restricted subsidiaries directly held by CBS and CSLS or a subsidiary guarantor

CNDT 2024 Annual Report

pledge of substantially all assets of CBS and the subsidiary guarantors, and all of the capital stock of CBS and each of CBS' wholly owned material restricted subsidiaries directly held by CBS and CSLS or a subsidiary guarantor (which pledges, in the case of any foreign subsidiary, are limited to 65% of the capital stock of any first-tier foreign subsidiary).

(which pledges, in the case of any foreign subsidiary, are limited to 65% of the capital stock of any first-tier foreign subsidiary).

The Credit Agreement contains certain customary affirmative and negative covenants, restrictions, prepayment terms and events of default.

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As of December 31, 2024, the Company was in compliance with all debt covenants related to the Senior Credit Facilities.

No mandatory debt prepayments were made as it was not required pursuant to the terms of the Credit Agreement.

No mandatory debt prepayments were made as they were not required pursuant to the terms of the Credit Agreement.

During 2024, the Company utilized a portion of the proceeds from the closing of its divestitures to voluntarily prepay all of the principal of the Term Loan B and $ 137 million of the Term Loan A.

In connection with these voluntary prepayments, the Company wrote-off related debt issuance costs of $ 8 million which is included in Loss on extinguishment of debt in the Consolidated Statements of Income (Loss) for the year ended December 31, 2024.

Concurrent with the Credit Agreement, on October 15, 2021, CBS and CSLS (collectively, the "Issuers") issued 6.00 % fixed rate senior notes due 2029 ("Senior Notes").

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No Senior Notes were redeemed in 2024 or 2023.

Debt Issuance Costs and Discount

In connection with the refinancing, the Company recorded deferred discounts and debt issuance costs of $ 30 million in 2021.

Additionally, the Company wrote-off debt issuance costs and discounts related to its previously outstanding credit facilities of $ 13 million which is included in Loss on extinguishment of debt in the Consolidated Statements of Income (Loss) for the year ended December 31, 2021.

Interest paid on short-term and long-term debt amounted to $ 72 million, $ 106 million and $ 84 million for the years ended December 31, 2024, 2023 and 2022, respectively.

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

Foreign exchange contract - forward $ 1 $ —

Foreign exchange contracts - forward $ — $ 1

Total Assets $ — $ 1

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

The Company recorded charges related to its defined contribution plans of $ 11 million in 2023, $ 10 million in 2022 and $ 21 million in 2021.

The Company recorded expenses related to its defined contribution plans of $ 5 million in 2024, $ 11 million in 2023 and $ 10 million in 2022.

Note 14 - Income Taxes

Loss before income taxes (pre-tax income (loss)) was as follows:

Income (loss) before income taxes was as follows:

Year Ended December 31,

(in millions) 2024 2023 2022

Domestic loss $ ( 349 ) $ ( 149 ) $ ( 68 )

Domestic income (loss) $ 461 $ ( 349 ) $ ( 149 )

Foreign income 43 17 22

Loss Before Income Taxes $ ( 332 ) $ ( 127 ) $ ( 25 )

Income (Loss) Before Income Taxes $ 504 $ ( 332 ) $ ( 127 )

Provision (benefit) for income taxes were as follows:

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( 1.7 ) % — % ( 17.9 ) %

Internal reorganization ( 13.4 ) % — % — %

Impairments (2)

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subsidiaries.

(2) Impairment represents adjustments for the non-deductible component of goodwill in 2023 and 2022 and impairment of an equity investment in 2021.

(2) Impairment represents adjustments for the non-deductible component of goodwill in 2024, 2023 and 2022.

(3) In 2024, 2023 and 2022, the "Other" line includes immaterial reconciling items.

In 2021, the "Other" line includes two reconciling items above 5% of the federal statutory rate.

The impact to the effective rate is driven by the low pretax book income in 2021, and these items are otherwise immaterial.

As such, the Company believes it is appropriate for these items to remain in "Other".

On a consolidated basis, the Company paid $ 44 million, $ 18 million and $ 53 million in combined income taxes to federal, foreign and state jurisdictions during the three years ended December 31, 2024, 2023 and 2022, respectively.

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The Company is also subject to ongoing tax examinations in numerous jurisdictions due to the extensive geographical scope of its operations.

Ongoing assessments of the more-likely-than-not outcomes of the examinations and related tax positions require judgment and can increase or decrease the Company's effective tax rate, as well as impact its operating results.

The Company's ongoing assessments of the more-likely-than-not outcomes of the examinations and related tax positions require judgment and can increase or decrease the Company's effective tax rate, as well as impact its operating results.

The specific timing of when the resolution of each tax position will be reached is uncertain.

In the fourth quarter of 2024, the Company implemented an internal reorganization in which it sold a portion of its top tier foreign holding company to a lower tier subsidiary.

The determination of the tax characteristic of this transaction requires management to make judgments about the application of tax laws and regulations.

The United States Internal Revenue Service could determine a different tax treatment that would have an adverse impact on the Company.

As of December 31, 2024, the Company had $ 19 million of unrecognized tax benefits that, if recognized, would impact the Company's effective tax rate.

Of this amount, $ 17 million is related to the valuation of the Company's foreign operations used in the calculation of the loss on the internal reorganization mentioned above.

CNDT 2024 Annual Report

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Balance at January 1 $ 10 $ 12 $ 23

Additions related to current year 17 — —

Additions related to prior years positions 2 — 1

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These foreign subsidiaries have aggregate cumulative undistributed earnings of $ 118 million as of December 31, 2024.

For years after 2017, the Tax Reform does allow for certain earnings to be repatriated free from U.S.

For years after 2017, current tax law allows for certain earnings to be repatriated free from U.S.

Federal taxes.

However, the repatriation of earnings could give rise to additional tax liabilities.

The Company has not provided for these liabilities.

The Company has also not provided for deferred taxes on outside basis differences in its investments in its foreign subsidiaries.

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The Company has provided for deferred taxes with respect to certain unremitted earnings of foreign subsidiaries that are not indefinitely reinvested between foreign subsidiaries outside of the U.S.

CNDT 2024 Annual Report

The tax effects of temporary differences that give rise to significant portions of the deferred taxes were as follows:

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Capitalized research and experimentation costs 24 21

Compensation related accruals 18 16

Subtotal 241 253

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Total Deferred Tax Assets (Liabilities), Net $ ( 1 ) $ ( 9 )

CNDT 2023 Annual Report

The deferred tax assets for the respective periods were assessed for recoverability and, where applicable, a valuation allowance was recorded to reduce the total deferred tax asset to an amount that will, more-likely-than-not, be realized in the future.

The net change in the total valuation allowance for the years ended December 31, 2023 and 2022 was a decrease of $ 2 million and an increase of $ 20 million, respectively.

The net change in the total valuation allowance for the years ended December 31, 2024 and 2023 was a decrease of $ 5 million and a decrease of $ 2 million, respectively.

The valuation allowance relates primarily to certain net operating loss carryforwards, tax credit carryforwards and deductible temporary differences for which the Company has concluded it is more-likely-than-not that these items will not be realized in the ordinary course of operations.

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Total $ 560 $ 84 $ 678 $ 98

CNDT 2024 Annual Report

The Company has $ 560 million of gross net operating loss carryforwards for income tax purposes including $ 439 million that will expire between 2025 and 2044, if not utilized, and $ 121 million available to offset future taxable income indefinitely.

The Company had $ 6 million of state capital loss carryforwards for income tax purposes that will expire in 2024, if not utilized, and $ 11 million of foreign capital losses available to offset future capital gains income indefinitely.

The Company had $ 7 million of foreign capital losses available to offset future capital gains income indefinitely.

The Company does not expect to receive a tax benefit for the majority of the NOLs presented above, as valuation allowances have been recorded against most of the state and foreign NOLs and capital losses.

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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.

Nonperformance under a contract could trigger an

CNDT 2023 Annual Report

obligation of the Company.

Nonperformance under a contract could trigger an obligation of the Company.

These potential claims include actions based upon alleged exposures to products, real estate, intellectual property such as patents, environmental matters and other indemnifications.

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Litigation Against the Company

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

Conduent Inc.

On March 8, 2019, a putative class action lawsuit alleging violations of certain federal securities laws in connection with our statements and alleged omissions regarding the Company's financial guidance and business and operations was filed against the Company, its former Chief Executive Officer, and its former Chief Financial Officer in the United States District Court for the District of New Jersey (the "Court").

The complaint sought certification of a class of all persons who purchased or otherwise acquired the Company's securities from February 21, 2018 through November 6, 2018, and also sought unspecified monetary damages, costs, and attorneys’ fees.

The Company moved to dismiss the class action complaint in its entirety.

In June 2020, the Court denied the motion to dismiss and allowed the claims to proceed.

The Court granted Class Certification on February 28, 2022.

Upon the substantial completion of document discovery, the parties agreed to engage in mediation, and the Court administratively terminated the litigation to permit those efforts to proceed.

Without any admission of liability or damages, in the third quarter of 2022, the parties settled this matter following that mediation, and filed the necessary documentation for preliminary approval by the court, class notice, and the claims administration process.

The Court granted preliminary approval of the settlement terms and related documentation on January 27, 2023, and conducted the final Settlement Hearing on May 24, 2023, at which time the settlement received final approval as did plaintiffs' fee request.

The Court's preliminary order had previously noted that it "will likely be able to approve the proposed Settlement as fair, reasonable and adequate under Federal Rule of Civil Procedure 23(e)(2)." The Company maintains insurance that covers the costs arising out of this litigation and resulting settlement having met the deductible and other terms and conditions thereof.

As a result, during the fourth quarter of 2022, the Company reversed the reserve pertaining to this matter.

Skyview Capital LLC and Continuum Global Solutions, LLC v.

Conduent Business Services, LLC:

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 Conduent Business Services, 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 obligations under a transition services agreement and TSA amendments (the "TSAs"), 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.

On January 5, 2024, CBS filed its notice of appeal of the portion of the ruling that did not grant its motion for summary judgment in its entirety and that granted certain limited relief in favor of plaintiffs.

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.

Conduent Business Services, LLC v.

Cognizant Business Services Corporation:

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

On January 5, 2024, CBS filed its notice of appeal of the portion of the ruling that

CNDT 2024 Annual Report

amended and supplemented (the "Contract").

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

The lawsuit alleges that Cognizant committed multiple breaches of the Contract, including Cognizant’s failure to properly perform its obligations as subcontractor to CBS under CBS's contract with the New York Department of Health to provide Medicaid Management Information Systems.

In the lawsuit, CBS seeks damages in excess of $ 150 million.

During the first quarter of 2018, CBS provided notice to Cognizant that it was terminating the Contract for cause and recorded in the same period certain charges associated with the termination.

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

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.

The parties participated in a mediation in late February 2023, and this matter settled, following negotiations that continued thereafter.

The parties executed the Settlement Agreement and Mutual Release on March 30, 2023, with no admission of liability or wrongdoing by either party.

In April 2023, each side made reciprocal payments of $ 6 million to the other, with Conduent’s payment made toward the termination fee payable under the applicable service delivery contract.

As a result of the settlement, during the first quarter of 2023, the Company adjusted the balance sheet amounts recorded pertaining to this matter.

As such, the Company recognized a $ 17 million benefit in Cost of services (excluding depreciation and amortization) and a $ 26 million benefit in Litigation settlements (recoveries), net.

did not grant its motion for summary judgment in its entirety and that granted certain limited relief in favor of plaintiffs.

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

The parties' appeals have been fully briefed and the parties await oral argument to be scheduled by the Court.

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 would pay the outstanding principal plus interest due on the outstanding Notes, fully discharging Skyview's obligations under the Notes, and would pay certain of CBS's litigation costs.

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

Following regulatory review, the transaction closed in December 2024, at which point Skyview paid CBS $ 33 million, representing the outstanding principal and interest due on the Notes and reimbursement of certain litigation costs.

Skyview has withdrawn 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 are unaffected.

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

CBS's remaining counterclaims related to the Jamaica Deferred Closing, the TSAs, and rent payment obligations are 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 Matters

During the first quarter of 2022, the Company entered into settlement agreements with six of its insurers under its 2012–2013 errors and omission insurance policy in which the Company agreed to resolve its claims for insurance coverage in connection with the previously disclosed State of Texas matter that settled in February 2019.

As a result of the settlement agreements entered with the insurers, the Company received an aggregate sum of $ 38 million, of which $ 14 million was recognized as defense costs recovery in Selling, general and administrative and $ 24 million was recognized in Litigation settlements (recoveries), net.

Since 2014, Xerox Education Services, Inc.

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The Company has recognized liabilities for these contingent obligations based on an estimate of the fair value of these contingencies at the time of acquisition.

Contingent obligations related to indemnifications arising from divestitures and contingent consideration provided for by acquisitions are not expected to be material to the Company's financial position, results of operations or cash flows.

CNDT 2024 Annual Report

obligations related to indemnifications arising from divestitures and contingent consideration provided for by acquisitions are not expected to be material to the Company's financial position, results of operations or cash flows.

Other Agreements:

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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.

Note 16 - Common Stock and Preferred Stock

Icahn Share Repurchase

On June 8, 2024, the Company entered into a purchase agreement (the "Icahn Purchase Agreement") with Carl C.

Icahn and certain of his affiliates pursuant to which the Company agreed to purchase an aggregate of approximately

CNDT 2024 Annual Report

Note 17 - Preferred Stock

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 Icahn Purchase Agreement, for an aggregate purchase price of $ 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 Revolving Credit Facility, which has since been repaid.

Series A Preferred Stock

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As of December 31, 2024, the Company had one class of preferred stock outstanding.

Refer to Note 17 – Preferred Stock for further information.

Refer to Note 16 – Common Stock and Preferred Stock for further information.

The Company is authorized to issue approximately 100 million shares of convertible preferred stock at $ 0.01 par value per share.

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The compensation expense is recorded over the vesting period based on management's estimate of the number of shares expected to vest.

The Company’s RSU awards typically vest in three separate and equal tranches over a three -year period.

The Company’s RSU awards typically vest in three separate and equal tranches over a 2.75 years period.

Each tranche vests annually, at December 31, following the date of grant.

CNDT 2024 Annual Report

In 2024, the Company issued 408,000 Deferred Stock Units ("DSU") to non-employee members of the Board of Directors.

DSU awards typically vest in accordance with certain service conditions.

CNDT 2023 Annual Report

Performance Stock Units / Shares ("PSUs"):

The Company has granted PSUs under various scenarios including:

• PSUs that vest contingent upon its achievement of certain specified financial performance criteria over a three-year period.

If the three-year actual results exceed the stated targets, then the plan participants have the potential to earn additional shares of common stock, which cannot exceed 50 % of the original grant.

• PSUs that vest contingent upon its achievement of certain specified financial performance criteria that are averaged over a three-year period.

If the three-year actual results exceed the stated targets, then the plan participants have the potential to earn additional shares of common stock, which cannot exceed 50 % and 100 % of the original grant for the awards granted in 2024 and 2023, respectively.

The fair value of these PSUs is based upon the market price of Conduent's common stock on the date of the grant.

Compensation expense is recognized over the vesting period, which is two years and nine months from the date of grant, based on management's estimate of the number of shares expected to vest.

Compensation expense is recognized over the vesting period, which is 2.75 years from the date of grant, based on management's estimate of the number of shares expected to vest.

If the stated targets are not met, any recognized compensation cost would be reversed.

• PSUs that vest contingent upon the increase of Conduent’s stock price to certain levels over a two year and nine-month period from the date of grant.

For PSUs granted in 2023, the number of shares eligible to vest may be adjusted upward or downward by 50 % based on a total shareholder return modifier, which measures the Company’s stock performance relative to the stock performance of the Company’s 2023 proxy peers over each measurement period.

For PSUs granted in 2022, the number of shares eligible to vest may be adjusted upward or downward by 5 % based on a total shareholder return modifier, which measures the Company’s stock performance relative to the stock performance of the Company’s 2022 proxy peers over each measurement period.

• PSUs that vest contingent upon the increase of Conduent’s stock price to certain levels over a 2.75 years period from the date of grant.

The number of shares eligible to vest may be adjusted upward or downward by 50 % based on total shareholder return, which measures the Company’s stock performance relative to the stock performance of the Company’s proxy peers over the measurement period.

These PSUs also have a service requirement that must be met for them to vest.

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Compensation expense is recognized over the vesting period based on management's estimate of the number of shares expected to vest.

The PSUs granted in 2022 were canceled at December 31, 2024 as the performance measures were not met.

Summary of Stock-based Compensation Activity

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CNDT 2024 Annual Report

The total intrinsic value and actual tax benefit realized for vested and exercised stock-based awards were as follows:

The total intrinsic value and actual tax benefit realized for vested stock-based awards were as follows:

(in millions) December 31, 2024 December 31, 2023 December 31, 2022

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Restricted Stock and Performance Units / Shares 3,224 0 0

8% Convertible Preferred Stock 5,393 0 0

Weighted Average Common Shares Outstanding - Diluted 191,130 216,779 215,886

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Note 20 – Related Party Transactions

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

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

The services provided to these entities included those related to human resources, end-user support and other services and solutions.

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Revenue and purchases from these entities were included in Revenue and Costs of services or Selling, general and administrative, respectively, on the Company's Consolidated Statements of Income (Loss).

Xerox Corporation ("Xerox") has historically been classified as a related party due to significant shares of both Xerox and the Company being held by entities controlled by one individual.

As of September 28, 2023, Xerox is no longer considered a related party due to the disposition of all Xerox stock by these entities and, therefore, the Company will not consider transactions with Xerox after that date to be transactions with related parties.

Xerox Corporation ("Xerox") was historically classified as a related party due to significant shares of both Xerox and the Company being held by entities controlled by one individual.

As of September 28, 2023, Xerox was no longer considered a related party due to the disposition of all Xerox stock by these entities and, therefore, the Company does not consider transactions with Xerox after that date to be transactions with related parties.

Transactions with related parties were as follows:

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Purchases from related parties $ — $ 18 $ 26

The Company's receivable and payable balances with related party entities were not material as of December 31, 2023 and 2022.

The Company had no receivable or payable balances with related party entities as of December 31, 2024 and 2023.

CNDT 2024 Annual Report

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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-K

Item 8. Financial Statements and Supplementary Data