REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS

3 Months Ended

Mar. 31, 2022

REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS

REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS

NOTE 14. REVISION OF PRIOR-PERIOD FINANCIAL STATEMENTS

During the quarter ended March 31, 2022, the Company identified and corrected an $87 million over-accrual in its accrued contract costs balance that related to a majority-owned, consolidated joint venture in our Principal Markets segment. This over-accrual was principally built up over the pre-Separation periods of January 1, 2012, to November 3, 2021, resulting in overstatements of cost of services and accrued contract costs. The Company concluded that such impacts were not material to any prior annual or interim period. We further determined that the correction of the over-accrual within the transition period would be significant to the three-month results, and as a result it will be corrected as an immaterial revision to our 2021 Annual Report in a separate Form 8-K filing subsequent to the release of this Transition Report and will be reflected as a revision to prior interim periods in our subsequent Quarterly Reports on Form 10-Q. Because the majority of the over-accrual originated prior to 2019, we decreased the opening balance of accrued contract costs as of January 1, 2019, by $57 million and increased the opening balance of equity by $43 million, net of the tax effect of $14 million.

A summary of the impact of the revision to the accompanying prior-period consolidated balance sheet and consolidated statement of equity is presented in the tables below. The impacts to the consolidated statements of operations, comprehensive income (loss) and cash flow for the period ended March 31, 2021, are considered immaterial.

	At December 31, 2021
Consolidated Balance Sheet ($ in millions)	As Previously Reported		Adjustments		As Revised
Accrued contract costs	$	585	$	(87)	$	498
Total current liabilities		4,544		(87)		4,457
Other liabilities		501		22		522
Total liabilities		10,511		(65)		10,446
Common stock, par value $0.01 per share, and additional paid-in capital (1,000.0 shares authorized, 224.2 shares issued)		4,218		66		4,284
Accumulated other comprehensive income/(loss)		(1,143)		(1)		(1,143)
Total stockholders’ equity before non-controlling interests		2,700		65		2,765
Total equity		2,702		65		2,767

	At March 31, 2021
Consolidated Statement of Equity ($ in millions)	As Previously Reported		Adjustments		As Revised
Net parent investment	$	5,976	$	51	$	6,027
Accumulated other comprehensive income (loss)		(1,186)		4		(1,182)
Total equity		4,848		54		4,902

	At January 1, 2021
Consolidated Statement of Equity ($ in millions)	As Previously Reported		Adjustments		As Revised
Net parent investment	$	5,972	$	51	$	6,023
Accumulated other comprehensive income (loss)		(1,100)		4		(1,096)
Total equity		4,931		54		4,985