What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-05-29 compared with 2025-05-30 · 300 added, 212 removed, 1318 unchanged (28% of the section changed)

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In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2026 and 2025, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2026 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of March 31, 2026, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because material weaknesses in internal control over financial reporting existed as of that date related to (i) the Company’s senior finance executives failing to set an appropriate tone at the top within the control environment component of the COSO framework, including a lack of transparency such that disclosure processes were impacted and lacked an appropriate complement of finance personnel with sufficient understanding of their responsibilities as disclosure committee members;

(ii) the Company not designing and maintaining effective controls to ensure appropriate communication pertaining to the disclosure process between certain functions within the Company;

and (iii) the Company not designing and maintaining effective controls regarding the internal investigation, escalation, and documentation of complaints made through the Company’s reporting hotline and certain other available reporting channels.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses referred to above are described in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.

We considered these material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the 2026 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits.

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Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Such procedures included examining, on a test basis, evidence regarding the amounts and

disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

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A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the

transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

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If the consideration promised in a contract includes a variable amount, management estimates the amount to which it expects to be entitled using either the expected value or most likely amount method.

The principal consideration for our determination that performing procedures relating to revenue recognition for certain services is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s revenue recognition.

The principal considerations for our determination that performing procedures relating to revenue recognition for certain services is a critical audit matter is a high degree of auditor effort in performing procedures and evaluating the various sources of audit evidence related to the Company’s revenue recognition.

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 revenue recognition process.

These procedures also included, among others (i) evaluating the Company’s accounting policies related to the recognition of revenue for services;

These procedures also included, among others (i) evaluating the Company’s

accounting policies related to the recognition of revenue for services;

(ii) testing revenue recognized for a sample of certain services revenue transactions by obtaining and inspecting source documents such as master services agreements, individual statements of work, invoices, and cash receipts;

and (iii) confirming, on a sample basis, outstanding customer invoice balances as of year-end and, for confirmations not returned, obtaining and inspecting source documents, such as invoices and subsequent cash receipts, where applicable.

/s/ PricewaterhouseCoopers LLP

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Interest expense

Other expense

Other expense (income)

Total costs and expenses

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Weighted-average diluted shares outstanding

* Including related-party revenue of $ 287 for the year ended March 31, 2023

† Including related-party cost of service of $ 1,382 for the year ended March 31, 2023

The accompanying notes are an integral part of the financial statements.

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Curtailments and settlements

Amortization of prior service (credits) costs

Amortization of prior service costs (credits)

Amortization of net (gains) losses

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Value-added tax and income tax liabilities

Current portion of long-term debt

Current portion of long-term debt and short-term debt

Accrued compensation and benefits

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Stockholders’ equity

Common stock, par value $ 0.01 per share, and additional paid-in capital

(shares authorized:

Common stock, par value $ 0.01 per share, and additional paid-in capital (shares

shares issued:

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Net income (loss)

Adjustments to reconcile net income (loss) to cash provided by operating activities:

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation and amortization:

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Change in operating assets and liabilities:

Deferred costs (excluding amortization)

Right-of-use assets and liabilities (excluding depreciation)

Workforce rebalancing liabilities

Current accounts receivable

Lease and other receivables

Accounts payable

Deferred transition costs and prepaid software (excluding amortization)

Capitalized contract costs (excluding amortization)

Other assets and other liabilities

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Debt repayments

Proceeds from borrowings under the revolving credit facility

Proceeds from issuance of debt, net of debt issuance costs

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Other financing activities, net

Net cash used in financing activities

Net cash provided by (used in) financing activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash

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Equity – March 31, 2024

Net income (loss)

Other comprehensive income (loss), net of tax

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Equity – March 31, 2025

Net income (loss)

Other comprehensive income (loss), net of tax

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SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Kyndryl Holdings, Inc.

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As the world’s largest IT infrastructure services provider, the Company designs, builds, manages and modernizes the complex information systems that the world depends on every day.

Description of Business

Our purpose is to design, build and manage secure and responsive private, public and multi-cloud environments to serve our customers’ needs and accelerate their digital transformations.

We have a long track record of helping enterprises navigate major technological changes, particularly by enabling our customers to focus on the core aspects of their businesses during these shifts while trusting us with their most critical systems.

We provide engineering talent, operating solutions and insights derived from our knowledge and data around IT systems.

This enables us to deliver advisory, implementation and managed services at scale across technology infrastructures that allow our customers to de-risk and realize the full value of their digital transformations.

We do this while embracing new technologies and solutions and continually expanding our skills and capabilities, as we help advance the vital systems that power progress for our customers.

We deliver technology services capabilities, insights and depth of expertise to modernize and manage IT environments based on our customers’ unique needs.

We offer services across domains such as cloud services, core enterprise and zCloud services, applications, data and artificial intelligence services, digital workplace services, security and resiliency services and network and edge services as we continue to support our customers through technological change.

Our services enable us to modernize and manage cloud and on-premises environments as “one” for our customers, enabling them to scale seamlessly.

We offer services across a number of areas of expertise, such as cloud services, core enterprise services, applications, data and artificial intelligence services, digital workplace services, security and resiliency services and network and edge services as we continue to support our customers through technological change.

Our services enable us to modernize and manage cloud, on-premises and hybrid IT environments as “one” for our customers, enabling them to scale seamlessly.

To deliver these services, we rely on our global team of skilled practitioners.

Kyndryl’s History

Prior to November 3, 2021, the Company was wholly owned by International Business Machines Corporation (“IBM” or “former Parent”).

In November 2021, our former Parent effected the spin-off (the “Separation” or the “Spin-off”) of the infrastructure services unit of its Global Technology Services segment through the distribution to IBM stockholders of shares of Kyndryl’s common stock representing 80.1 % of total shares outstanding.

Kyndryl’s stock began trading as an independent company on November 4, 2021, and IBM disposed of its 19.9 % retained interest in Kyndryl common stock in the year following the Spin-off.

In connection with the Separation, the Company entered into several agreements with IBM governing the relationship of the parties following the Separation.

Kyndryl was formed in November 2021 from a spin-off (the “Separation,” the “Spin-off” or “spin”) from International Business Machines Corporation (“IBM” or “former Parent”) of the infrastructure services unit of IBM’s Global Technology Services segment.

Basis of Presentation

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Estimates are used in determining the following, among others:

revenue, costs to complete service contracts, income taxes, pension assumptions, valuation of assets including goodwill and intangible assets, the depreciable and amortizable lives of long-lived assets, loss contingencies, allowance for credit losses, deferred transition costs and other matters.

Actual results may be different from these estimates.

The Company accounts for a contract with a client when it has written approval, the contract is committed, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration is probable of collection.

Revenue is recognized when, or as, control of a promised service or product transfers to a client, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring those products or services.

If the consideration promised in a contract includes a variable amount, the Company estimates the amount to which it expects to be entitled using either the expected value or most likely amount method.

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Conditional contract assets are included in Prepaid expenses and other current assets in the Consolidated Balance Sheet.

Unconditional contract assets (“unbilled accounts receivable”) are included in accounts receivable in the Consolidated Balance Sheet.

Unconditional contract assets (“unbilled accounts receivable”) are included in Accounts receivable and Other noncurrent assets in the Consolidated Balance Sheet.

Refer to Note 3 – Revenue Recognition for contract assets for the periods presented.

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When an arrangement contains multiple separate performance obligations, revenue follows the specific revenue recognition policies for each performance obligation, depending on the type of offering.

The Company determines if the products or services are distinct and allocates the consideration to each separate performance obligation on a relative standalone selling price basis.

The Company determines if the products or

services are distinct and allocates the consideration to each separate performance obligation on a relative standalone selling price basis.

When products and services are not distinct, the Company determines an appropriate measure of progress based on the nature of its overall promise for the single performance obligation.

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Estimating SSP is a formal process that includes review and approval by the Company’s management.

Lessor Revenue

Our service contracts may contain embedded leases for assets used to fulfill our obligations.

A contract contains an embedded lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Our embedded leases are recognized as either sales-type or operating leases.

For sales-type leases, revenue and cost are recognized upon commencement of the lease in Revenue and Cost of services on the Consolidated Income Statement, respectively.

Lease income from operating leases is recognized straight-line over the lease term and recorded as Revenue on the Consolidated Income Statement.

Where a contract contains an embedded lease, the contract’s transaction price is allocated to the contract performance obligations and the lease component based upon the relative standalone selling price.

Nature of Products and Services

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In outsourcing, other managed services, application management and other cloud-based services arrangements, the Company determines whether the services performed during the initial phases of the arrangement, such as setup activities, are distinct.

In most cases, the arrangement is a single performance obligation comprised of a series of distinct

services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service).

In most cases, the arrangement is a single performance obligation comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer (i.e., distinct days of service).

The Company applies a measure of progress (typically time-based) to any fixed consideration and allocates variable consideration to the distinct periods of service based on usage.

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Revenue from time-and-material contracts is recognized on an output basis as labor hours are delivered and/or direct expenses are incurred.

Revenue from as-a-service type contracts is recognized either on a straight-line basis or on a usage basis, depending on the terms of the arrangement (such as whether the Company is standing ready to perform or whether the contract has usage-based metrics).

whether the contract has usage-based metrics).

If an as-a-service contract includes setup activities, those promises in the arrangement are evaluated to determine if they are distinct.

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Certain eligible, nonrecurring costs (i.e., setup costs) incurred in the initial phases of outsourcing contracts and other cloud-based services contracts, are capitalized when the costs relate directly to the contract, the costs generate or enhance resources of the Company that will be used in satisfying the performance obligation in the future and the costs are expected to be recovered.

These costs consist of transition and setup costs related to the installation of systems and processes and other deferred fulfillment costs, including, for example, prepaid assets used in services contracts (i.e., prepaid software or prepaid maintenance).

These costs consist of transition and setup costs related to the installation of systems and processes and other deferred fulfillment costs, including deferred software cost (e.g., committed multi-year, on-premises software purchases).

Deferred costs to fulfill contracts also include prepaid assets used in services contracts (e.g., prepaid hardware maintenance).

Capitalized costs are amortized on a straight-line basis over the expected period of benefit, which approximates the pattern of transfer to the client of the services to which the asset relates and includes anticipated contract renewals or extensions.

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Incremental costs of obtaining a contract include only those costs the Company incurs to obtain a contract that it would not have incurred if the contract had not been obtained.

The Company has determined that certain commissions programs meet the requirements to be capitalized.

The Company has determined that certain

commissions programs meet the requirements to be capitalized.

For contracts shorter than one year, the Company has elected the practical expedient to recognize sales commissions as incurred.

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Advertising and promotional expense, which includes media, agency and promotional expense directly incurred by the Company was $ 69 million, $ 83 million, and $ 115 million for the years ended March 31, 2026, 2025 and 2024, respectively.

Costs related to the initial establishment of the Kyndryl brand are recorded in Transaction-related costs in the Consolidated Income Statement.

All other advertising and promotional costs are recorded in SG&A in the Consolidated Income Statement.

Advertising and promotional costs are recorded in SG&A in the Consolidated Income Statement.

Other Expense

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The service cost component of net benefit cost is recorded in Cost of services and SG&A in the Consolidated Income Statement (unless eligible for capitalization) based on the employees’ respective functions.

The other components of net benefit cost are presented separately from service cost within other expense in the Consolidated Income Statement.

other components of net benefit cost are presented separately from service cost within Other expense (income) in the Consolidated Income Statement.

Actuarial (gains) losses and prior service costs (credits) are recognized as a component of OCI in the Consolidated Statement of Comprehensive Income (Loss) as they arise.

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Performance-conditioned stock units are granted to employees with vesting conditions based on the attainment of operational targets (e.g., signings and free cash flows) and are cliff vested at the end of the three-year performance period.

Certain performance-conditioned stock units are also subject to a market condition such that the actual number of shares that vest at the end of the respective three-year performance period is determined based on the Company’s achievement of operational targets and market condition over the same three-year performance period.

Stock options are vested over a one - to four-year period and have a ten-year contractual term.

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The fair value of the performance-conditioned stock units is determined on the grant date based on Kyndryl’s stock price and subsequently adjusted based upon the probability of attainment.

For awards with both a performance and a market condition, the fair value of each stock unit is determined on the date of grant using a Monte-Carlo simulation model, and subsequently adjusted based upon the probability of attainment of operational targets.

The fair value of stock options is determined on the grant date using a Black-Scholes model.

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Transfers of Financial Assets

The Company has entered into arrangements with third-party financial institutions to sell certain financial assets (primarily trade receivables) without recourse.

The Company has entered into arrangements with third-party financial institutions to sell certain financial assets (primarily accounts receivables) without recourse.

The Company has determined these are true sales.

The carrying value of the financial asset sold is derecognized, and a net gain or loss on the sale is recognized, at the time of the transfer.

The first agreement, which was executed in November 2021 and subsequently amended, enabled us to sell certain of our trade receivables to the counterparty.

The first agreement, which was executed in November 2021 and subsequently amended, enabled us to sell certain of our accounts receivables to the counterparty.

The initial term of this agreement was 18 months , and the agreement automatically resets to a term of 18 months after every six months , unless either party elects not to extend.

This agreement was further amended during the quarter ended September 30, 2024 to reduce the committed facility limit from $ 1 billion to $ 600 million and to add an incremental uncommitted facility limit of $ 200 million that is subject to the counterparty’s sole discretion to purchase such incremental amounts.

The second agreement was executed in June 2022 with a separate third-party financial institution and renews automatically on its anniversary date, unless either party elects not to extend.

At this time, the agreement will expire in April 2027.

We have also entered into additional agreements with a separate third-party financial institution that enable us to sell receivables.

These agreements were first executed in June 2022 and subsequently amended to renew automatically every 18 months , unless either party elects not to extend.

The net proceeds from these arrangements are reflected as cash provided by operating activities in the Consolidated Statement of Cash Flows.

Gross proceeds from receivables sold to third parties were $ 2.4 billion, $ 3.2 billion, and $ 3.6 billion for the years ended March 31, 2026, 2025 and 2024, respectively.

Of the receivables sold and derecognized from the Consolidated Balance Sheet, $ 0.9 billion, $ 1.0 billion and $ 1.1 billion remained uncollected from customers at March 31, 2026, 2025 and 2024, respectively.

The fees associated with the transfers of receivables were $ 18 million, $ 38 million, and $ 49 million for the years ended March 31, 2026, 2025 and 2024, respectively.

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The level of an asset or liability within the fair value hierarchy is determined based on the lowest level of any input that is significant to the fair value measurement.

The determination of fair value considers various factors including yield curves and time value underlying the financial instruments.

The determination of fair value considers various factors

including yield curves and time value underlying the financial instruments.

For derivatives and debt securities, the Company uses a discounted cash flow analysis using discount rates commensurate with the duration of the instrument.

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The Company does not provide secured legal assets or other forms of guarantees under the arrangements.

The Company is not a party to the arrangement between its suppliers and the financial institution.

The Company or the financial institution may terminate the agreement upon at least 180 days ’ notice.

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The obligations outstanding under this program at March 31, 2026 and March 31, 2025 were immaterial.

When procuring goods or services, the Company determines whether an arrangement contains a lease at its inception.

When entering into a procurement contract, the Company determines whether an arrangement contains a lease at its inception.

As part of that evaluation, the Company considers whether there is an implicitly or explicitly identified asset in the arrangement and whether the Company, as the lessee, has the right to control the use of that asset.

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The Company’s variable lease payments generally relate to payments tied to various indexes, non-lease components and payments above a contractual minimum fixed amount.

Operating leases are included in operating right-of-use assets net, operating lease liabilities (current and non-current) in the Consolidated Balance Sheet.

Finance leases are included in property and equipment, current portion of long-term debt and long-term debt in the Consolidated Balance Sheet.

Operating leases are included in Operating right-of-use assets net and Operating lease liabilities (current and noncurrent) in the Consolidated Balance Sheet.

Finance leases are included in Property and equipment, Current portion of long-term debt and short-term debt, and Long-term debt in the Consolidated Balance Sheet.

The lease term includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

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The Company classifies certain expenses and benefits related to the Separation, acquisitions and divestitures as Transaction-related costs (benefits) in the Consolidated Income Statement.

Transaction-related costs include gains or

losses, employee retention expenses, information technology costs, marketing expenses to establish the Kyndryl brand, legal, accounting, consulting and other professional service costs, costs and benefits resulting from settlements with our former Parent associated with pre-Separation and Separation-related matters, and other costs related to contract and supplier novation and integration, associated with acquisitions, divestitures or the Separation.

Transaction-related costs include gains or losses, employee retention expenses, information technology costs, marketing expenses to establish the Kyndryl brand, legal, accounting, consulting and other professional service costs, costs and benefits resulting from settlements with our former Parent associated with pre-Separation and Separation-related matters, and other costs related to contract and supplier novation and integration, associated with acquisitions, divestitures or the Separation.

Workforce Rebalancing and Site-Rationalization Charges

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Information technology equipment (acquired as used) (2)

1.5 to 3 years

Information technology equipment (acquired as new) (3)

(1) Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease term, rarely exceeding 10 years .

(2) Extended from one and a half to three years to three to four years effective April 1, 2025.

The impact of this change was not material.

(3) Extended from five to six years effective April 1, 2024.

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Valuation allowances are recognized to reduce deferred tax assets to the amount that will more likely than not be realized.

In assessing the need for a valuation allowance, management considers all available evidence for each jurisdiction including past operating results, estimates of future taxable income and the feasibility of ongoing tax planning strategies and actions.

planning strategies and actions.

When there is a change in the determination as to the amount of deferred tax assets that can be realized, the valuation allowance is adjusted with a corresponding impact to provision for income taxes in the period in which such determination is made.

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Benefits from tax positions are measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement.

Unrecognized tax benefits are generally recorded as liabilities;

however, to the extent they relate to tax attributes such as net operating loss or tax credit carryforwards, they are recorded as reductions to the related deferred tax assets.

The noncurrent portion of tax liabilities is included in Other noncurrent liabilities in the Consolidated Balance Sheet.

To the extent that new information becomes available which causes the Company to change its judgment regarding the adequacy of existing tax liabilities, such changes to tax liabilities will impact income tax expense in the period in which such determination is made.

To the extent that new information becomes available which causes the Company to change its judgment regarding the adequacy of existing tax liabilities or reductions to deferred tax assets, such changes will impact income tax expense in the period in which such determination is made.

Interest and penalties, if any, related to accrued liabilities for potential tax assessments are included in income tax expense.

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Standards Implemented

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures , which is intended to improve reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses.

The guidance should be applied retrospectively, effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company adopted the guidance for the fiscal year ended March 31, 2025.

For additional information, see Note 4 – Segments.

Recent Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures , which is intended to enhance the transparency and usefulness of income tax disclosures through improved reporting related to the rate reconciliation and income taxes paid.

The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The Company has elected not to early adopt this ASU and is currently evaluating the impact of this guidance on the disclosures in its consolidated financial statements.

The Company adopted the guidance prospectively for the fiscal year ended March 31, 2026.

For additional information, see Note 5 – Taxes.

Recent Pronouncements

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses , which is intended to improve the usefulness of expense information contained in public entity income statements through the disaggregation of relevant expense captions in the notes to the financial statements.

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In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810):

Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity , which amends the guidance for determining the accounting acquirer in certain transactions.

Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity , which amends the guidance for determining the acquirer in certain transactions.

The guidance should be applied prospectively, effective for the fiscal years beginning after December 15, 2026 and interim reporting periods within fiscal years beginning after December 15, 2026, with early adoption permitted.

The Company has evaluated the impact of the guidance and does not expect it to have a material impact on the Company’s consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles – Goodwill and Other (Topic 350):

Targeted Improvements to the Accounting for Internal-Use Software , which amends the criteria for capitalization of internal-use software costs.

The guidance is effective for the fiscal years beginning after December 15, 2027 and interim reporting periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

The Company has

evaluated the impact of the guidance and does not expect it to have a material impact on the Company’s consolidated financial statements.

REVENUE RECOGNITION

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Contract Balances

The following table provides information about accounts receivable, contract assets and deferred income balances:

The following table provides information about receivables, contract assets and deferred income balances:

(Dollars in millions)

Accounts receivable (net of allowances for credit losses of $ 7 at March 31, 2026 and $ 13 at March 31, 2025) (1)

Long-term accounts receivable (2)

Sales-type leases receivable

Contract assets (3)

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(1) Including unbilled receivable balances of $ 431 million at March 31, 2026 and $ 425 million at March 31, 2025.

(2) Long-term accounts receivable included unbilled receivable balances of $ 46 million and immaterial at March 31, 2026 and 2025, respectively, and is included within Other noncurrent assets in the Consolidated Balance Sheet.

(3) Contract assets represent services performed by the Company prior to billing the client, which give the Company the right to consideration that is typically subject to milestone completion or client acceptance.

They are included within Prepaid expenses and other current assets in the Consolidated Balance Sheet.

The change in deferred income is primarily driven by the timing difference of invoice billing and revenue recognition.

The amount of revenue recognized during the year ended March 31, 2026 that was included within the deferred income balance at March 31, 2025 was $ 714 million.

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* Primarily represents translation adjustments .

The contract assets allowance for expected credit losses was not material in any of the periods presented.

The allowance for expected credit losses of long-term accounts receivable, sales-type leases receivable, and contract assets was not material in any of the periods presented.

Major Clients

No single client represented more than 10 percent of the Company’s total revenue during the years ended March 31, 2026, 2025 and 2024.

No single client represented more than 10 percent of the Company’s total accounts receivable balance as of March 31, 2025.

Other than receivables with the former Parent, no single client represented more than 10 percent of the Company’s total accounts receivable balance as of March 31, 2024.

No single client represented more than 10 percent of the Company’s total accounts receivable balance as of March 31, 2026 and 2025.

Deferred Costs

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Total deferred costs†

* Prepaid software costs include deferred costs for committed multi-year, on-premises software purchase contracts.

† Of the total deferred costs, $ 1,166 million was current and $ 1,880 million was noncurrent at March 31, 2026, and $ 1,009 million was current and $ 1,040 million was noncurrent at March 31, 2025.

The amount of total deferred costs amortized during the year ended March 31, 2025 was $ 1.7 billion, composed of $ 291 million of amortization of deferred transition costs, $ 986 million of amortization of prepaid software and $ 420 million of amortization of capitalized contract costs.

The amount of total deferred costs amortized during the year ended March 31, 2024 was $ 1.8 billion, composed of $ 335 million of amortization of deferred transition costs, $ 921 million of amortization of prepaid software and $ 531 million of amortization of capitalized contract costs.

The amount of total deferred costs amortized during the year ended March 31, 2023 was $ 1.7 billion, composed of $ 342 million of amortization of deferred transition costs, $ 857 million of amortization of prepaid software and $ 472 million of amortization of capitalized contract costs.

The amount of total deferred costs amortized during the year ended March 31, 2026 was $ 1.7 billion, composed of $ 238 million of amortization of deferred transition costs, $ 1,001 million of amortization of prepaid software costs and $ 458 million of amortization of capitalized contract costs.

The amount of total deferred costs amortized during the year ended March 31, 2025 was $ 1.7 billion, composed of $ 291 million of amortization of deferred transition costs, $ 986 million of amortization of prepaid software costs and $ 420 million of amortization of capitalized contract costs.

The amount of total deferred costs amortized during the year ended March 31, 2024 was $ 1.8 billion, composed of $ 335 million of amortization of deferred transition costs, $ 921 million of amortization of prepaid software costs and $ 531 million of amortization of capitalized contract costs.

There were no material impairment losses incurred in any period.

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Strategic Markets:

This reportable segment is comprised of our operations in all other countries in which we operate.

The Company made a minor change to its geographic reportable segments effective June 1, 2024 to reflect how the Company manages its operations and measures business performance, transitioning the reporting and management of its operations in Australia/New Zealand from the Principal Markets segment to the Strategic Markets segment.

All historical segment information has been recast to reflect this change.

This reportable segment is comprised of our operations in all other countries in which we operate, which includes countries in regions such as Latin America, Benelux, ASEAN, and Australia / New Zealand.

The measure of segment operating performance used by Kyndryl’s CODM is adjusted EBITDA , which allows our CODM to evaluate operating results excluding certain items whose fluctuation from period to period do not necessarily correspond to changes in the operations of our business.

Adjusted EBITDA is defined as net income (loss) excluding income taxes, interest expense, depreciation and amortization (excluding depreciation of right-of-use assets and amortization of capitalized contract costs), charges related to ceasing to use leased and owned fixed assets, charges related to lease terminations, transaction-related costs and benefits, pension expenses other than pension servicing costs and multi-employer plan costs, stock-based compensation expense, workforce rebalancing charges incurred prior to March 31, 2024, impairment expense, significant litigation costs and benefits, and currency impacts of highly

inflationary countries.

The CODM reviews budget-to-actual variances of revenue and adjusted EBITDA to assess performance and allocate resources to the segments.

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The resulting revenues and costs from these contracts may be apportioned among the participating geographic markets.

The economic environment and its effects on the industries served by our geographic markets affect revenues and operating expenses within our geographic markets to differing degrees.

environment and its effects on the industries served by our geographic markets affect revenues and operating expenses within our geographic markets to differing degrees.

Currency fluctuations also tend to affect our geographic markets differently, depending on the geographic concentrations and locations of their businesses.

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Selling, general and administrative expenses, excluding depreciation and amortization (1)

Other items (2)

Segment adjusted EBITDA

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Selling, general and administrative expenses, excluding depreciation and amortization (1)

Other items (2)

Segment adjusted EBITDA

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Selling, general and administrative expenses, excluding depreciation and amortization (1)

Other items (2)

Segment adjusted EBITDA

* Cost of service, excluding depreciation and amortization and selling, general and administrative expenses, excluding depreciation and

amortization are both used in calculating segment adjusted EBITDA and exclude depreciation of property, equipment and capitalized software

and amortization of transition costs and prepaid software.

† Other items include workforce rebalancing charges incurred subsequent to March 31, 2024 and other expense .

(1) Cost of service, excluding depreciation and amortization and selling, general and administrative expenses, excluding depreciation and amortization are both used in calculating segment adjusted EBITDA and exclude depreciation of property, equipment and capitalized software and amortization of transition costs and prepaid software.

(2) Other items include workforce rebalancing charges incurred subsequent to March 31, 2024 and other expense (income).

(3) Effective June 1, 2024, the Company made a minor change to its geographic reportable segments to reflect how it manages its operations and measures business performance, transitioning the reporting and management of its operations in Australia/New Zealand from the Principal Markets segment to the Strategic Markets segment.

Historical fiscal 2024 segment information was recast to reflect this change in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025.

The following table reconciles segment adjusted EBITDA to consolidated pretax income (loss):

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A reconciliation of the statutory U.S.

federal tax rate to the Company’s effective tax rate from continuing operations was as follows:

federal tax rate to the Company’s effective tax rate from continuing operations pursuant to the disclosure requirements of ASU 2023-09 for the year ended March 31, 2026 is as follows:

Year Ended March 31,

(Dollars in millions)

federal statutory tax rate

State and local income taxes, net of federal income tax effect*

Foreign tax effects:

Changes in valuation allowances

Withholding taxes

Other foreign jurisdictions

Effect of cross-border tax laws:

Branch income

Foreign tax credits

Changes in valuation allowances

Nontaxable or nondeductible items:

Equity-based compensation

Changes in unrecognized tax benefits

Effective tax rate

* The states that contribute to the majority (greater than 50%) of the tax effect in this category include New York, California, New Jersey, Illinois, Georgia, and Texas.

A reconciliation of the statutory U.S.

federal tax rate to the Company’s effective tax rate from continuing operations for the years ended March 31, 2025 and 2024, prior to the adoption of ASU 2023-09 is as follows:

Year Ended March 31,

Statutory rate

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The provision for income taxes for the year ended March 31, 2026 was $ 215 million as compared to $ 184 million for the year ended March 31, 2025.

The increase in income tax expense was primarily driven by an increase in pretax book income.

The increase in income tax expense was primarily driven by the increase in unrecognized tax benefits and foreign taxes, partially offset by the release of valuation allowances.

The provision for income taxes for the year ended March 31, 2025 was $ 184 million as compared to $ 172 million for the year ended March 31, 2024.

The decrease in income tax expense was primarily driven by valuation allowances established in fiscal year 2023, changes in uncertain tax positions during fiscal year 2024 as a result of audit settlements and statutes of limitations lapsing, offset by increases in taxes on foreign operations.

The increase in income tax expense between 2024 and 2025 was primarily driven by an increase in pretax income.

The Company’s effective tax rate for the year ended March 31, 2026 was higher than the Company’s statutory tax rate primarily due to uncertain tax positions and taxes on foreign operations.

The Company’s effective tax rate for the year ended March 31, 2025 was higher than the Company’s statutory tax rate primarily due to the Company’s pretax income in fiscal year 2025, compared to a pretax loss in fiscal year 2024.

The Company’s effective tax rate for the year ended March 31, 2024 was lower (more negative) than the Company’s statutory tax rate primarily due to the Company’s pretax loss being significantly lower in fiscal year 2024 and current year losses not benefitted due to the existing valuation allowances.

The Company’s effective tax rate for the year ended March 31, 2023 was lower than the Company’s statutory tax rate primarily due to changes in valuation allowances, taxes on foreign operations and uncertain tax positions.

The Organization for Economic Cooperation and Development’s Pillar Two rules, effective beginning in fiscal year 2025, did not significantly affect the Company’s tax rate or cash flows for the year ending March 31, 2025.

In July 2025, the U.S.

government enacted new tax legislation that, among other things, made permanent items such as 100% bonus depreciation on certain fixed assets, immediate expensing of domestic research costs and an increased business interest expense limitation.

It also included modifications to several international tax provisions.

The Company has recorded no material incremental tax expense or benefit related to the legislation.

The following table summarizes the income taxes paid by jurisdiction, prepared in accordance with the disclosure requirements of ASU 2023-09, for the year ended March 31, 2026.

Year Ended March 31,

(Dollars in millions)

Cash paid during the period for income taxes, net of refunds:

State and local

All other foreign

Total cash paid for taxes

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

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Gross deferred tax liabilities

As of March 31, 2025, the Company had tax-affected U.S.

As of March 31, 2026, the Company had tax-effected U.S.

and foreign net operating loss/credit carryforwards deferred tax assets of $ 676 million and $ 29 million, respectively.

As of March 31, 2024, the Company had tax-affected U.S.

As of March 31, 2025, the Company had tax-effected U.S.

and foreign net operating loss/credit carryforwards deferred tax assets of $ 520 million and $ 75 million, respectively.

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The change in valuation allowances primarily reflects an increase in the U.S.

due to current-year tax credit carryforwards generated and the impact of purchase accounting related to acquired net operating losses, which are not more likely than not to be realized.

This increase was partially offset by the release and reduction in the valuation allowance for certain foreign jurisdictions resulting from the reversal of deductible temporary differences.

due to net operating losses and current-year tax credit carryforwards generated, which are not more likely than not to be realized, offset by the release and reduction in the valuation allowance for certain foreign jurisdictions resulting from the refinement of certain tax positions.

Estimates of future taxable income could change, perhaps materially, which may require us to revise our assessment of the recoverability of the deferred tax asset at that time.

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Liabilities related to unrecognized tax benefits for which the Company is liable are reported within the Consolidated Balance Sheet based upon tax authorities’ ability to assert the Company may be the primary obligor for historical taxes, among other factors.

With limited exceptions, the Company is generally subject to income tax audits for tax years subsequent to September 1, 2021, or post-Separation, including in the U.S., Germany, Japan and Spain.

With limited exceptions, the Company is generally subject to income tax audits for tax years subsequent to Separation, including in the U.S., Germany, Japan and Spain.

Pursuant to the terms of the Separation, any tax liabilities attributable to the tax period (or portion thereof) ending on or before November 3, 2021, are generally not the Company’s liability.

As of March 31, 2025, the Company is not aware of any material open income tax audits that would result in a liability owed by the Company.

The Company does not expect a significant increase or decrease in unrecognized tax benefits within the next twelve months.

The net amount of $ 168 million unrecognized tax benefits, if recognized, would favorably affect the Company’s effective tax rate.

During the year ended March 31, 2026, the Company recorded refinements to certain tax reserves related to prior periods based on new information obtained and updated analyses performed during the year, including evolving interpretations and assessments of technical tax matters.

These adjustments reflect refinements to management’s prior estimates using information that was not reasonably knowable or readily accessible at the time the original amounts were recorded.

While the Company does not expect material changes in unrecognized tax benefits within the next twelve months, this assessment could change subject to future developments such as the result of audit developments and settlement discussions.

Interest and penalties related to income tax liabilities are included in income tax expense.

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In addition, our former Parent had obligations to indemnify the Company for tax liabilities attributable to tax periods (or portions thereof) ending on or before November 3, 2021.

During fiscal year 2025, an agreement was executed with our former Parent that resolved both parties’ obligations related to the Separation.

During fiscal year 2025, an agreement was executed with our former Parent that resolved, with limited exceptions, both parties’ obligations related to the Separation.

The agreement did not have a material impact on the Company’s financial statements.

As of March 31, 2025, the Company’s undistributed earnings from certain non-U.S.

subsidiaries were not indefinitely reinvested.

As of March 31, 2026, with the exception of a certain subsidiary’s earnings, the Company’s undistributed earnings were not indefinitely reinvested.

Accordingly, the Company recorded a deferred tax liability of $ 7 million for the estimated taxes associated with the repatriation of these earnings.

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and undistributed earnings to the extent the foreign earnings are not restricted by local laws and can be accessed in a cost-effective manner.

With respect to the undistributed earnings of a certain foreign subsidiary which are permanently reinvested, the Company estimates that the amount of the deferred tax liability

related to these earnings is approximately $ 22 million, although this amount could vary due to the complexity and variability of the assumptions required to assess the amount and timing of future repatriations.

EARNINGS PER SHARE

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Diluted earnings (loss) per share

For the years ended March 31, 2024 and 2023, the number of shares on which basic and diluted earnings (loss) per share is calculated was the same as a result of the net loss incurred in the period.

For the year ended March 31, 2024, the number of shares on which basic and diluted earnings (loss) per share is calculated was the same as a result of the net loss incurred in the period.

The following securities were not included in the computation of diluted earnings per share because to do so would have been anti-dilutive:

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Foreign exchange contracts

The gross balances of derivative assets, including accrued interest, are contained within prepaid expenses and other current assets and other noncurrent assets, and the gross balances of derivative liabilities are contained within other accrued expenses and liabilities, or other noncurrent liabilities in the Consolidated Balance Sheet.

The gross balances of derivative assets, including accrued interest, are contained within Prepaid expenses and other current assets and Other noncurrent assets, and the gross balances of derivative liabilities are contained within

Other accrued expenses and liabilities, or Other noncurrent liabilities in the Consolidated Balance Sheet.

The Company may enter into master netting agreements with certain counterparties that allow for netting of exposures.

There was no netting

of derivative assets against liabilities in the Consolidated Balance Sheet at March 31, 2025 and 2024.

There was no netting of derivative assets against liabilities in the Consolidated Balance Sheet at March 31, 2026 and 2025.

The Company manages counterparty risk by seeking counterparties of high credit quality and by monitoring credit ratings, credit spreads and other relevant public information about its counterparties.

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There were no impairments of financial assets recognized for any of the periods presented.

The balance of these time deposits with maturities of 90 days or less contained within cash and cash equivalents in the Consolidated Balance Sheet at March 31, 2025 and 2024 was $ 765 million and $ 828 million, respectively.

The balance of these time deposits with maturities of 90 days or less contained within Cash and cash equivalents in the Consolidated Balance Sheet at March 31, 2026 and 2025 was $ 1.7 billion and $ 765 million, respectively.

If measured at fair value in the consolidated financial statements, time deposits with maturities of 90 days or less would be categorized as Level 2 in the fair value hierarchy.

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Cash Flow Hedges

The Company has foreign exchange derivative financial instruments designated as cash flow hedges to manage the volatility of cash flows that relate to operating expenses denominated in certain currencies.

At March 31, 2025, the maximum remaining length of time over which the Company has hedged its exposures is approximately one year .

The Company has foreign exchange derivative financial instruments designated as cash flow hedges to manage the volatility of cash flows that relate to operating expenses and intercompany payments for royalties denominated in certain currencies.

At March 31, 2026, the maximum remaining length of time over which the Company has hedged its

exposure is approximately one year .

At March 31, 2026 and 2025, the weighted-average remaining maturity of these instruments was approximately 0.5 years.

At March 31, 2025 and 2024, in connection with cash flow hedges of foreign currency cost transactions, the Company had unrealized losses of $ 1 million and unrealized gains of $ 2 million (each before taxes), respectively, in AOCI.

At March 31, 2026 and 2025, in connection with cash flow hedges of foreign currency transactions, the Company had unrealized losses of $ 7 million and unrealized losses of $ 1 million (each before taxes), respectively, in AOCI.

The Company estimates that $ 7 million (before taxes) of deferred net losses on derivatives in AOCI at March 31, 2026 will be reclassified to net income within the next twelve months, providing an offsetting economic impact against the underlying anticipated transactions.

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dollars at specified forward rates.

At March 31, 2025, the maximum remaining length of time over which the Company has hedged its exposure is approximately nine years .

At March 31, 2025 and 2024, the weighted-average remaining maturity of these instruments was approximately three and ten years , respectively.

At March 31, 2026, the maximum remaining length of time over which the Company has hedged its exposure is approximately eight years .

At March 31, 2026 and 2025, the weighted-average remaining maturity of these instruments was approximately three years.

At March 31, 2026 and 2025, the Company had unrealized losses of $ 81 million and unrealized losses of $ 6 million (each before taxes), respectively, in AOCI related to net investment hedges.

As of March 31, 2026, $ 39 million of these unrealized losses relate to settled instruments.

Derivatives Not Designated as Hedging Instruments

The Company enters into currency forward and swap contracts to hedge exposures related to assets and liabilities across its subsidiaries.

The Company enters into currency forward and swap contracts to hedge exposures related to assets, liabilities and earnings across its subsidiaries.

The terms of these contracts are generally less than one year .

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Cost of services

Other expense

Derivative instruments in net investment hedges:

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Interest expenses

For the years ended March 31, 2025, 2024 and 2023, there were no gains or losses excluded from the assessment of hedge effectiveness for cash flow hedges, or associated with an underlying exposure that did not or was

not expected to occur, nor are there any anticipated in the normal course of business.

There were no net investment hedges in the year ended March 31, 2023.

For the years ended March 31, 2026, 2025 and 2024, there were no gains or losses excluded from the assessment of hedge effectiveness for cash flow hedges.

For the year ended March 31, 2026, the gains or losses due to underlying exposure that did not occur or was not expected to occur were immaterial.

For years ended March 31, 2025 and 2024, there were no such gains or losses.

The effects of derivatives not designated as hedging instruments on the Consolidated Income Statement are as follows:

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Other expense (income)

For the years ended March 31, 2026, 2025 and 2024, our net expense (income) included losses of $ 37 million, $ 1 million, and $ 14 million (each before taxes), respectively, from foreign currency transactions.

PROPERTY AND EQUIPMENT

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Depreciation of property and equipment was $ 733 million, $ 618 million, and $ 801 million for the years ended March 31, 2026, 2025 and 2024, respectively.

Additionally, as part of the site-rationalization program, the Company recognized $ 8 million, $ 21 million and $ 7 million of accelerated depreciation related to ceasing to use certain owned fixed assets for the years ended March 31, 2025, 2024 and 2023, respectively.

The balance of information technology equipment includes $ 80 million of fiscal year 2026 purchases that were settled using previously issued vendor credits.

Additionally, as part of the site-rationalization program, the Company recognized $ 8 million, and $ 21 million of accelerated depreciation related to ceasing to use certain owned fixed assets for the years ended March 31, 2025 and 2024, respectively.

Refer to Note 18 – Workforce Rebalancing and Site-Rationalization Charges for additional details.

The Company as a Lessee

The following table presents the various components of lease costs:

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We determined that we will no longer receive economic benefits from these leased properties and do not have the intent or practical ability to sublease or sell them.

Accordingly, we recorded accelerated depreciation in the amount of $ 39 million, $ 14 million and $ 69 million (representing the remaining carrying value of the identified right-of-use assets, not included in the operating lease costs in the table above) for the years ended March 31, 2025, 2024 and 2023, respectively.

Accordingly, we recorded accelerated depreciation in the amount of $ 39 million and $ 14 million (representing the remaining carrying value of the identified right-of-use assets, not included in the operating lease costs in the table above) for the years ended March 31, 2025 and 2024, respectively.

Refer to Note 18 – Workforce Rebalancing and Site-Rationalization Charges for details of this program.

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Lease liabilities:

Current – Current portion of long-term debt

Current – Current portion of long-term debt and short-term debt

Noncurrent – Long-term debt

The Company as a Lessor

During the year ended March 31, 2026, the Company entered into arrangements where the Company acts as lessor in certain sales-type leases.

Revenue and cost for these sales-type leases was recorded in the amount of $ 175 million and $ 149 million, respectively, for the year ended March 31, 2026.

Revenue and costs for sales-type leases were not material for the years ended March 31, 2025 and 2024.

The related interest income arising from these leases was not material for any of the periods presented.

Income from operating leases was not material for any of the periods presented.

At March 31, 2026 the Company had $ 156 million in leases receivable from sales-type leases, of which $ 25 million was current and $ 131 million was noncurrent, which are included within Prepaid expenses and other current assets and Other noncurrent assets in the Consolidated Balance Sheet, respectively.

The balance of leases receivable from sales-type leases was not material at March 31, 2025.

The allowance for expected credit losses for these leases receivable was not material in any of the periods presented.

There were no material uncollectable or past due leases receivable in any of the periods presented.

The Company’s sales-type leases receivable have terms ranging from five to six years and are usually collateralized by a security interest in the underlying assets, culminating with a sale of the asset at the end of the term.

The Company assigns an internal risk ratings to each lease based on the creditworthiness of the obligor at inception, and monitors credit quality over the term of the arrangement.

The Company’s internal risk ratings are based on a variety of sources including agency and market implied ratings, performing a current financial analysis, internal data such as payment history, relevant news and country and industry risk.

Accounts rated low risk typically have the equivalent of a Moody's rating of Baa3 or better.

Based on the Company’s internal risk ratings assigned as of March 31, 2026, the credit risk profile of the Company’s gross sales-type leases receivable balance of $ 156 million was low, and was all originated during the current fiscal year.

The following table provides the scheduled maturities of the Company’s minimum lease payments receivable from sales-type leases and minimum future rentals on non-cancelable operating leases from contracts with customers as of March 31, 2026:

Sales-Type Lease

Operating Lease

(Dollars in millions)

Payments Receivable

Minimum Future Rentals*

Year ending March 31:

Total undiscounted cash flows (minimum lease payments)

unearned income

Present value of lease payments (leases receivable)

* Excludes $ 18 million in minimum future rentals on non-customer operating subleases as of March 31, 2026 .

ACQUISITIONS AND DIVESTITURES

Pending Acquisition of Solvinity Group B.V.

In November 2025, the Company entered into an agreement to acquire all outstanding equity interests of Solvinity Group B.V.

(“Solvinity”), a provider of managed cloud platforms and services in the Netherlands, for cash consideration of approximately € 100 million.

As previously disclosed, the transaction was subject to customary closing conditions, including regulatory approval.

On May 25, 2026, the State Secretary for Economic Affairs and Climate Policy in the Netherlands issued a decision prohibiting the transaction pursuant to relevant legislation.

Costs associated with this pending acquisition for the year ended March 31, 2026 were immaterial.

Acquisition of Skytap

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(“Skytap”), a leading specialized workload services provider, by acquiring all outstanding equity interests of Skytap in exchange for cash consideration.

The acquisition of Skytap was accounted for as a business combination in accordance with ASC 805, Business

Combinations .

Our financial statements for the year ended March 31, 2025 reflect the assets, liabilities, operating results and cash flows of Skytap, commencing from the acquisition date.

The acquisition of Skytap was accounted for as a business combination in accordance with ASC 805, Business Combinations.

The Company acquired Skytap for cash consideration of approximately $ 45 million, net of cash acquired of $ 4 million.

Costs associated with this acquisition were immaterial.

Pro forma financial information has not been presented, as revenue and expenses related to the acquisition do not have a material impact on the Company’s Consolidated Financial Statements.

The acquisition of Skytap expands the Company’s hybrid cloud services portfolio.

The final purchase price allocation resulted in approximately $ 43 million in intangible assets, primarily consisting of $ 13 million in completed technologies and $ 30 million in customer relationships with estimated useful lives of five and eight years , respectively, assets transferred of $ 24 million (inclusive of cash acquired of $ 4 million), liabilities assumed of $ 29 million, and goodwill of $ 11 million, primarily attributable to synergies expected to arise from this acquisition.

We do not expect the goodwill to be deductible for income tax purposes.

Since the completion of the acquisition, the Company has made immaterial adjustments to the preliminary purchase price allocation impacting the valuation of goodwill and assets transferred.

Goodwill is not deductible for income tax purposes.

Disposal of the Securities Industry Services (“SIS”) Platform in Canada

During the three months ended December 31, 2024, the Company completed the sale of its transaction processing platform for securities brokerage industry services in Canada (which is a component of the Company’s Principal Markets segment), for approximately $ 185 million in cash.

In connection with the sale, the Company recognized a $ 145 million pretax gain, which was recorded within transaction-related costs (benefits) on the Consolidated Income Statement.

This disposition is not accounted for as discontinued operations as it does not meet the relevant criteria.

In November 2024, the Company completed the sale of its transaction processing platform for securities brokerage industry services in Canada (which is a component of the Company’s Principal Markets segment), for approximately $ 185 million in cash.

In connection with the sale, the Company recognized a $ 145 million pretax gain, which was recorded within Transaction-related costs (benefits) on the Consolidated Income Statement during the year ended March 31, 2025.

This disposition was not accounted for as discontinued operations as it did not meet the relevant criteria.

The carrying value of the net assets sold was not material.

Other Disposal Activity

In April 2026, the Company entered into a definitive agreement to sell a digital solutions business within the Company's Principal Markets segment.

The closing of the transaction is subject to customary closing conditions, including regulatory approval, and is expected to occur in the quarter ended June 30, 2026.

The Company expects to record a pre-tax gain on the transaction of approximately $ 35 million.

INTANGIBLE ASSETS INCLUDING GOODWILL

Intangible Assets

The following tables present the Company’s intangible asset balances by major asset class:

The following table presents the Company’s intangible asset balances by major asset class:

At March 31, 2026

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There was no impairment of identifiable intangible assets recorded in the periods reported.

The net carrying amount of intangible assets increased by $ 29 million during the year ended March 31, 2025, primarily due to additions of capitalized software, partially offset by amortization.

The net carrying amount of intangible assets decreased by $ 53 million during the year ended March 31, 2026, primarily due to the reclassification of certain capitalized software intangibles to prepaid assets and other noncurrent assets resulting from the migration of on-premises software to a cloud-based solution.

The aggregate intangible asset amortization expense was $ 57 million, $ 72 million, and $ 63 million for the years ended March 31, 2026, 2025 and 2024, respectively.

Aggregate amortization expense in fiscal year 2026 included amortization of capitalized software of $ 30 million, which was reported in Depreciation of property, equipment and capitalized software on the Consolidated Statement of Cash Flows.

During the year ended March 31, 2025, the Company retired approximately $ 75 million of fully amortized intangible assets, primarily related to customer relationships.

The future amortization expense relating to intangible assets currently recorded in the Consolidated Balance Sheet was estimated to be the following at March 31, 2026:

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Balance as of March 31, 2024

Acquisitions and (Divestitures)*

Translation Adjustments

Balance as of March 31, 2025

Acquisitions and (Divestitures)*

Translation Adjustments

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Cumulatively, the Company has recorded $ 469 million in goodwill impairment charges within its former EMEA ($ 293 million) and current United States ($ 176 million) reporting units, all of which occurred immediately following the Separation.

The following table presents the components of our debt:

The Company’s total current portion of long-term debt and short‑term debt as of March 31, 2026 and 2025 was $ 1.8 billion and $ 129 million, respectively.

As of March 31, 2026, this balance primarily consisted of $ 796 million of current portion of long‑term debt, as detailed in the long‑term debt table below, and $ 1 billion outstanding under the Company’s revolving credit facility issued in February 2026.

As of March 31, 2025, the Company’s current portion of long‑term debt and short‑term debt consisted of the current portion of long‑term debt.

The following table presents the components of our long-term debt:

(Dollars in millions)

Interest Rate

Commercial loan agreement

Unsecured senior notes due 2026

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Unsecured senior notes due 2041

Finance lease obligations

Finance lease and other obligations

Unamortized discount

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persons in reliance on Regulation S of the Securities Act.

In connection with the issuance of the Initial Notes, we entered into a registration rights agreement with the purchasers of the Initial Notes, pursuant to which we completed a registered offering to exchange each series of Initial Notes for new notes with substantially identical terms during the quarter ended September 30, 2022.

In connection with the issuance of the Initial Notes, we entered into a registration rights agreement with the

purchasers of the Initial Notes, pursuant to which we completed a registered offering to exchange each series of Initial Notes for new notes with substantially identical terms during the quarter ended September 30, 2022.

In February 2024, we completed a registered offering of $ 500 million in aggregate principal amount of 6.35 % senior unsecured notes due 2034 (the “2034 Notes”).

We received proceeds of $ 494 million, net of debt issuance costs

and discounts.

We received proceeds of $ 494 million, net of debt issuance costs and discounts.

The 2034 Notes are the Company’s senior unsecured obligations and rank equally in right of payment with all of the Company’s other existing and future senior unsecured indebtedness.

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The Initial Notes and the 2034 Notes are subject to customary affirmative covenants, negative covenants and events of default for financings of this type and are redeemable at our option in a customary manner.

We have outstanding $ 700 million of fixed-rate notes that mature in October 2026.

We intend to refinance these notes at a future date, subject to market conditions.

Revolving Credit Agreement

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The total facility fees recorded by the Company for the Revolving Credit Agreement were $ 5 million and $ 5 million for the years ended March 31, 2026 and 2025, respectively.

As of March 31, 2025, there has been no drawdown on the Revolving Credit Agreement.

In February 2026, the Company borrowed $ 1 billion under the Revolving Credit Agreement, bearing an interest rate of 4.97 %.

The borrowing matures in August 2026 and may be refinanced utilizing the facility.

The Company had approximately $ 2.2 billion of additional borrowing capacity remaining at March 31, 2026.

Proceeds are intended to be used for working capital and other general corporate purposes, which may include repayment of indebtedness and acquisitions.

The Revolving Credit Agreement includes certain customary mandatory prepayment provisions.

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The Company is in compliance with its debt covenants.

Loan Agreement

The commercial loan agreement contains covenants, primarily for compliance with the scheduled payments in the loan agreement.

Failure to comply with the loan covenants could constitute an event of default and result in the immediate repayment of the principal and interest on the loan.

The Company is in compliance with all of the loan covenants and is expected to maintain a credit rating at or above the level outlined in the loan agreement.

The carrying amount of the loan approximates fair value and is classified as Level 2 in the fair value hierarchy.

OTHER LIABILITIES

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Workforce rebalancing (current)

Vendor software accruals (current)

Other current accruals*

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Income tax reserve

Vendor software accruals (noncurrent)

Other noncurrent liabilities

* Balances of “Vendor software accruals (current)” at March 31, 2025 were included in “Other current accruals”.

Balances of “Vendor software accruals (noncurrent)” at March 31, 2025 were included in “Other”.

In response to changing business needs, the Company has taken workforce rebalancing actions to increase productivity, enhance cost-competitiveness and rebalance skills.

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Refer to Note 18 – Workforce Rebalancing and Site-Rationalization Charges for details.

Pursuant to the terms of the Separation, the Company may be required to reimburse our former Parent for certain tax refunds we receive and to indemnify our former Parent for certain tax payments.

Pursuant to the terms of the Separation, the Company may be required to reimburse our former Parent for certain tax refunds received and to indemnify our former Parent for certain tax liabilities, although substantially all known matters have been resolved.

For more information, see Note 5 – Taxes.

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The Company has determined that these commitments may exceed the Company’s needs over the next two to three years .

If the Company is unable to satisfy, reduce or amend its contractual commitments, it will record the future charges for any payments related to excess commitments as cost of services.

If the Company is unable to satisfy, reduce or amend these contractual commitments, it will record the future charges for any payments related to excess commitments as cost of services.

At March 31, 2026, we had short-term (April 2026 through March 2027), mid-term (April 2027 through March 2029) and long-term (April 2029 onward) purchase commitments in the amount of $ 0.2 billion, $ 0.4 billion and $ 0.3 billion, respectively.

During the year ended March 31, 2025, contractual commitments decreased due to satisfaction of existing commitments outpacing new additions.

As a Fortune 500 company with customers and employees around the world, Kyndryl is subject to, or could become subject to, either as plaintiff or defendant, a variety of contingencies, including claims, demands and suits, investigations, tax matters and proceedings that arise from time to time in the ordinary course of its business.

Given the rapidly evolving external landscape of cybersecurity, privacy and data protection laws, regulations and threat actors, the Company or its clients could become subject to actions or proceedings in various jurisdictions.

Also, as is typical for companies of Kyndryl’s scope and scale, the Company is subject to, or could become subject to, actions and proceedings in various jurisdictions involving a wide range of labor and employment issues (including matters related to contested employment decisions, country-specific labor and employment laws, and the Company’s benefit plans), as well as actions with respect to contracts, securities, foreign operations, competition law and environmental matters.

These actions may be commenced by a number of different parties, including competitors, clients, employees, government and regulatory agencies, stockholders and representatives of the locations in which the Company does business.

Some of the actions to which the Company is, or may become, party may involve particularly complex technical issues, and some actions may raise novel questions under the laws of the various jurisdictions in which these matters arise.

Additionally, the Company is, or may be, a party to agreements pursuant to which it may be obligated to indemnify the other party with respect to certain matters.

Purchase commitments year-over-year have remained relatively consistent.

Purchases under these commitments were $ 0.5 billion for the year ended March 31, 2026.

As a Fortune 500 company with customers and employees around the world, Kyndryl is subject to, and could become subject to, either as plaintiff or defendant, a variety of contingencies, including claims, demands and suits, investigations, tax matters and other legal proceedings that arise from time to time, including in the ordinary course of its business.

In addition, given the rapidly evolving external landscape of cybersecurity, privacy and data protection laws, regulations and threat actors, the Company or its clients have and could become subject to actions or proceedings in various jurisdictions.

The Company is also subject to, and could become subject to, actions and proceedings in various jurisdictions involving a wide range of labor and employment issues (including matters related to contested employment decisions, country-specific labor and employment laws, and the Company’s benefit plans), as well as actions with respect to commercial matters, contracts, securities, foreign operations, competition law, environmental matters and regulatory compliance matters, among others.

These actions have been and may be commenced by a number of different parties, including competitors, clients, suppliers, service providers, licensees, employees, government and regulatory agencies, stockholders and representatives of the locations in which the Company does business.

Some of the actions to

which the Company is, or may become, party involve particularly complex technical issues, and some actions raise novel questions under the laws of the various jurisdictions in which these matters arise.

Additionally, the Company is, and may become, a party to agreements pursuant to which it may be obligated to indemnify the other party with respect to certain disputed matters.

The Company cannot predict the final outcome in any type of legal proceeding described above and there can be no assurance that the Company will be successful or obtain any requested relief or outcome in any matter.

Matters often develop over a long period of time and expectations can change as a result of new findings, rulings, appeals, settlements, legal or regulatory changes or other factors.

From time to time, the Company may discontinue or settle and compromise matters as appropriate in the Company’s best interest.

The Company records a provision with respect to a claim, suit, investigation or proceeding when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

In accordance with the relevant accounting guidance, the Company provides disclosures of matters for which the likelihood of material loss is at least reasonably possible.

In addition, the Company may also disclose matters based on its consideration of other matters and qualitative factors.

The Company reviews claims, suits, investigations and proceedings at least quarterly, and decisions are made with respect to recording or adjusting provisions and disclosing reasonably possible losses or range of losses (individually or in the aggregate) to reflect the impact and status of settlement discussions, discovery, procedural and substantive rulings, reviews by counsel and other information pertinent to a particular matter.

If the Company is unable to assess the outcome of a matter or estimate the possible loss or range of losses that could potentially result from such matter, a liability is not recorded.

The Company reviews claims, suits, investigations and proceedings, and decisions are made with respect to recording or adjusting provisions and relevant disclosures to reflect the impact and status of settlement discussions, discovery, procedural and substantive rulings, reviews by counsel and other information pertinent to a particular matter.

In the year ended March 31, 2026, the Company recorded a reserve related to an interim arbitration decision on a pre-spin customer contract dispute that was recorded as transaction-related costs.

Whether any losses, damages or remedies finally determined in any claim, suit, investigation or proceeding could reasonably have a material effect on the Company’s business, financial condition, results of operations or cash flows will depend on a number of variables, including the timing and amount of such losses or damages;

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and the unique facts and circumstances of the particular matter that may give rise to additional factors.

While the Company will continue to defend itself vigorously, it is possible that the Company’s business, financial condition, results of operations or cash flows could be affected in any particular period by the resolution of one or more of these matters.

In July 2017, BMC Software, Inc.

(“BMC”) filed suit against IBM in the U.S.

Court for the Southern District of Texas in a dispute involving various aspects of IBM’s business, including its managed infrastructure business.

BMC alleged IBM’s removal of BMC software from one of its client’s sites at the client’s request constituted breach of contract, fraudulent inducement and trade secret misappropriation.

In May 2022, the trial court entered a judgment against IBM and awarded BMC $ 717 million in direct damages and $ 717 million in punitive damages, plus interest, for which IBM might have tried to seek an indemnity from the Company.

However, IBM appealed the judgment, and in April 2024, the court of appeals overturned the judgment against IBM.

In March 2025, the United States Supreme Court denied a request by BMC to review the court of appeals’ ruling.

Accordingly, we do not expect to have any liability related to this judgment.

Separately, certain contractual disputes have arisen between Kyndryl and IBM following the Separation.

Over the course of this fiscal year, Kyndryl and IBM have resolved most of these matters, with certain of these matters resulting in a credit recorded in cost of services in the three months ended June 30, 2024, and other matters being resolved during the period largely in line with the Company’s accruals with no net cash outlays required by Kyndryl.

While the Company will continue to prosecute or defend itself vigorously, as appropriate, it is possible that the Company’s business, financial condition, results of operations or cash flows could be affected overall or in any particular fiscal period by any of these matters or any claims or legal proceedings that arise as a result of these matters.

In addition, the legal costs associated with the foregoing could be substantial, regardless of their outcome.

The Company continues to cooperate with the Division of Enforcement of the Securities and Exchange Commission (the “SEC”) in its investigation relating to the Company’s cash management practices, related disclosures, the efficacy of the Company’s internal control over financial reporting, and certain other matters.

The matter is ongoing and the Company cannot currently predict its final outcome.

Securities Litigation

In February and March 2026, two purported Company stockholders filed putative class actions in the U.S.

District Court for the Eastern District of New York and in the U.S.

District Court for the Southern District of New York against the Company and certain current and former officers, alleging false and misleading statements in the Company’s disclosures.

The plaintiffs in both actions seek monetary damages and costs and expenses.

The matters are ongoing and the Company cannot currently predict their final outcome.

The following tables present reclassifications and taxes related to items of other comprehensive income (loss) for the years ended March 31, 2026, 2025 and 2024:

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Retirement-related benefit plans:

Prior service (credits) costs

Prior service (costs) credits

Net gains (losses) arising during the period

Curtailments and settlements

Amortization of prior service costs (credits)

Amortization of net (gains) losses

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Foreign currency translation adjustments

Unrealized losses on net investment hedges

Unrealized gains (losses) on net investment hedges

Total foreign currency translation adjustments

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Retirement-related benefit plans:

Prior service (credits) costs

Prior service (costs) credits

Net gains (losses) arising during the period

Curtailments and settlements

Amortization of prior service (credits) costs

Amortization of net (gains) losses

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Foreign currency translation adjustments:

Foreign currency translation adjustments

Unrealized losses on net investment hedges

Total foreign currency translation adjustments

Unrealized gains (losses) on cash flow hedges:

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Retirement-related benefit plans:

Prior service (credits) costs

Prior service (costs) credits

Net gains (losses) arising during the period

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Share Repurchase Program

In November 2024, the Company’s Board of Directors authorized a share repurchase program of up to $ 300 million of the Company’s common stock (the “Share Repurchase Program”).

Under the Share Repurchase Program, the

Company may repurchase shares of its common stock from time to time in open market transactions and may also repurchase shares in accelerated share buyback programs, tender offers, privately negotiated transactions or by other means.

In November 2024, the Company’s Board of Directors authorized a share repurchase program of up to $ 300 million of the Company’s common stock, and in November 2025, the Company announced that the Board of Directors authorized an additional $ 400 million of repurchase capacity under this program (the “Share Repurchase Program”).

Under the Share Repurchase Program, the Company may repurchase shares of its common stock from time to time in open market transactions and may also repurchase shares in accelerated share buyback programs, tender offers, privately negotiated transactions or by other means.

Repurchases may also be made under a Rule 10b5-1 trading plan.

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The program does not have a set expiration date and may be suspended, modified or discontinued at any time without prior notice.

During the year ended March 31, 2025, the Company repurchased 2.6 million shares of its common stock at an aggregate cost of $ 94 million under the Share Repurchase Program.

During the years ended March 31, 2026 and March 31, 2025, the Company repurchased 11.6 million and 2.6 million shares of its common stock, respectively, at an aggregate cost of $ 304 million and $ 94 million under the Share Repurchase Program, respectively.

As of March 31, 2026, approximately $ 302 million of capacity remained available under the Share Repurchase Program.

STOCK-BASED COMPENSATION

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Awards granted

Adjustment for performance achievement

Awards vested

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Nonvested balance at March 31, 2026

* The grant-date fair value of performance-conditioned stock units issued was determined using the stock price at the grant date.

The Company used the following assumptions in the Monte-Carlo simulation pricing model to estimate the grant-date fair values of the market-conditioned stock units granted within each of the following fiscal years.

The Company used the following assumptions in the Monte-Carlo simulation pricing model to estimate the grant-date fair values of stock units granted with both a performance and a market condition for the year ended March 31, 2026, and market-conditioned stock units granted during the years ended March 31, 2025 and March 31, 2024.

Year Ended March 31,

Market-conditioned Stock Units:

Expected volatility

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Total net periodic pension cost

* These components of net periodic pension cost are included in other expense in the Consolidated Income Statement.

* These components of net periodic pension cost are included in Other expense (income) in the Consolidated Income Statement.

The following table presents the changes in net benefit obligation and plan assets for the defined benefit pension plans.

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Direct benefit payments

Business combination/divestiture

Foreign exchange impact

Amendments, curtailments, settlements and other

Plan amendments

Curtailments, settlements and other

Benefit obligation at end of period

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Employer contributions

Fair value of plan assets assumed from former Parent†

Plan participants’ contributions

Benefits paid from trust

Business combination/divestiture

Foreign exchange impact

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Funded status at end of period

The year-over-year change was primarily driven by lower inflation rates and demographic factors.

Due to the separation of a pension plan that used to be co-sponsored by Kyndryl and the former Parent.

The year-over-year change was primarily driven by higher discount rates.

The following table presents the amounts recorded in the Consolidated Balance Sheet for the defined benefit pension plans.

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The following table presents the weighted-average assumptions used to measure the net periodic pension cost and the year-end benefit obligations for the defined benefit pension plans.

Year Ended March 31,

Weighted-average assumptions used to measure:

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Over-the-counter derivatives are valued using pricing models.

These models require a variety of inputs, yield curves, credit curves,

measures of volatility and foreign exchange rates.

These models require a variety of inputs, yield curves, credit curves, measures of volatility and foreign exchange rates.

Derivative assets are classified as Level 1 or Level 2 depending on availability of quoted market prices.

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Fiscal year ending March 31,

The fiscal year 2026 expected benefit payments not covered by the respective plan assets represent a component of compensation and benefits, within current liabilities, in the Consolidated Balance Sheet.

The fiscal year 2027 expected benefit payments not covered by the respective plan assets represent a component of accrued compensation and benefits, within current liabilities, in the Consolidated Balance Sheet.

Defined Contribution Retirement Plans

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Additionally, the components resulting in a change in benefit obligation and the activity recognized in AOCI related to the nonpension postretirement benefit plans were not material for the periods presented.

The nonpension postretirement benefit plans had a noncurrent liability recorded in retirement and nonpension postretirement benefit obligation in the Consolidated Balance Sheet of $ 9 million at March 31, 2025 and $ 10 million at March 31, 2024.

The nonpension postretirement benefit plans had a noncurrent liability recorded in Retirement and nonpension postretirement benefit obligations in the Consolidated Balance Sheet of $ 8 million at March 31, 2026 and $ 9 million at March 31, 2025.

The weighted-average discount rate used to measure the nonpension postretirement benefit plan obligation was 3.97 %, 3.16 %, and 2.89 %, for the years ended March 31, 2026, 2025 and 2024, respectively.

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Future expected benefit payments to participants of the nonpension postretirement benefit plans are not expected to be material, and the Company expects contributions to the multi-employer and nonpension postretirement benefits plans to be immaterial in fiscal year 2027.

TRANSACTIONS WITH FORMER PARENT

Change in Beneficial Ownership

IBM transferred all of its 19.9 % initially retained interest in Kyndryl common stock to a third-party financial institution through exchange agreements in May and August 2022.

IBM ceased to be a related party of Kyndryl in August 2022.

Transactions related to former Parent after August 11, 2022 are no longer reported as related-party activities.

As a result, there was no related-party revenue or cost of services recognized subsequent to August 11, 2022.

Revenue and Purchases Related to Former Parent

While IBM was a related party, Kyndryl provided various services to IBM, including those related to hosting data centers and servicing IBM’s information technology infrastructure, which are reported as revenue in the Company’s Consolidated Income Statement.

Related-party revenue generated from these services was $ 287 million for the year ended March 31, 2023.

No related-party revenue was recognized after August 2022.

During the year ended March 31, 2024, the Company reached an agreement to collect previously reserved receivables from our former Parent, which resulted in a gain recorded within transaction-related costs (benefits).

Kyndryl utilizes various IBM products and services, recognized as costs of services, in the fulfillment of services contracts.

While IBM was a related party, total cost of services recognized from these related-party transactions in the Company’s Consolidated Income Statement was $ 1.4 billion for the year ended March 31, 2023.

No related-party cost of services was recognized after August 2022.

Capital Expenditures with Former Parent

Related-party capital expenditures for purchases of IBM hardware were reflected as payments for property and equipment within the investing section of the Company’s Consolidated Statement of Cash Flows in the amount of $ 89 million for the year ended March 31, 2023.

Additionally, as part of the Separation, IBM committed to provide Kyndryl, at no cost, up to approximately $ 265 million of upgraded hardware over an expected two-year period.

For the year ended March 31, 2024, $ 265 million of the upgraded hardware committed by IBM was delivered to Kyndryl.

The Company intends to recognize depreciation expense related to such equipment over its useful life in accordance with the Company’s depreciation policy, as described in Note 1 – Significant Accounting Policies.

WORKFORCE REBALANCING AND SITE-RATIONALIZATION CHARGES

On May 5, 2026, the Company approved, as part of its ongoing efforts to further streamline operations, workforce rebalancing actions to optimize and support the Company’s financial and operational efficiency in fiscal year 2027.

As a result of these actions, the Company expects to incur workforce rebalancing charges of approximately $ 200 million, primarily consisting of future cash expenditures for severance and related benefits.

Management expects that such workforce rebalancing efforts, once completed, will reduce operating expense in fiscal year 2028.

There can be no guarantee that the Company will achieve its expected costs savings.

The Company will continue to seek opportunities to improve operational efficiency and reduce costs, which may result in additional charges in future periods.

During the year ended March 31, 2026, the Company initiated actions to reduce our overall cost structure and increase our operating efficiency which continued through the end of the fiscal year 2026.

These actions resulted in workforce rebalancing charges (the “Fiscal 2026 Program”) of approximately $ 60 million.

During the year ended March 31, 2025, the Company initiated actions to reduce our overall cost structure and increase our operating efficiency which continued through the end of the 2025 fiscal year.

These actions resulted in workforce rebalancing charges and charges related to ceasing to use leased and owned fixed assets (collectively, the “Fiscal 2025 Program”).

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Total charges

* Kyndryl’s operations in Australia/New Zealand transitioned from Principal Markets to Strategic Markets in the quarter ended June 30, 2024;

historical segment information has been recast to reflect this change.

* Effective June 1, 2024, the Company made a minor change to its geographic reportable segments to reflect how it manages its operations and measures business performance, transitioning the reporting and management of its operations in Australia/New Zealand from the Principal Markets segment to the Strategic Markets segment.

Historical fiscal 2024 segment information was recast to reflect this change in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2025.

The following table presents the classification of workforce rebalancing and site-rationalization activities in the Consolidated Income Statement during the years ended March 31, 2026, 2025 and 2024.

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* Excludes $ 4 million liability adjustment related to workforce rebalancing actions taken by the former Parent prior to Separation.

The following table presents the components of and changes in our workforce rebalancing and site-rationalization charges liabilities during the years ended March 31, 2025, 2024 and 2023.

The following table presents the components of and changes in our liabilities related to workforce rebalancing and site-rationalization activities during the years ended March 31, 2026, 2025 and 2024.

Ceasing to Use

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Balance at March 31, 2023

Charges (benefits)

Cash payments

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Balance at March 31, 2024

Charges (benefits)

Cash payments

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Balance at March 31, 2025

Fiscal 2025 Program

Balance at March 31, 2024

Cash payments

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Balance at March 31, 2025

Cash payments

Balance at March 31, 2026

Fiscal 2026 Program

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Balance at March 31, 2026

Balance at March 31, 2022 excludes workforce rebalancing liabilities inherited from the former Parent of $ 57 million, charges of $ 16 million related to one-off terminations and cash payments of $ 32 million.

Balance as of March 31, 2023 excludes workforce rebalancing liabilities inherited from the former Parent of $ 42 million, charges of $ 4 million related to one-off terminations, cash payments of $ 15 million and ending balance of $ 29 million as of March 31, 2024.

Current-year movement excludes cash payments of $ 14 million, non-cash adjustments of $ 1 million and ending balance of $ 16 million related to actions initiated by the former Parent.

The Fiscal 2025 Program balance excludes cash payments of $ 14 million, non-cash adjustments of $ 1 million and ending balance of $ 16 million as of March 31, 2025 related to actions initiated by the former Parent, and current-year movement excludes cash payments of $ 7 million, non-cash adjustment of ($ 1 ) million and ending balance of $ 10 million related to actions initiated by our former Parent.

Workforce rebalancing liabilities are recorded within Other Liabilities;

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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