REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS

3 Months Ended

Jun. 30, 2022

REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS

REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS

NOTE 14. REVISION OF PRIOR-PERIOD FINANCIAL STATEMENTS

During the three months 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 predominantly 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, and corresponding understatements of pretax and net income. The Company concluded that such impacts were not material to any prior annual or interim period. The Company further determined that the correction of the over-accrual within the transition period ended March 31, 2022 would be significant to the three-month results. As a result, we recorded an immaterial revision to portions of our 2021 Annual Report (see the Form 8-K/A) and are recording immaterial revisions to prior interim periods in this Quarterly Report as well as our subsequent Quarterly Reports on Form 10-Q.

A summary of the impact of the revision to the accompanying prior-period consolidated financial statements is presented in the tables below.

	Three Months Ended June 30, 2021
Consolidated Income Statement (Dollars in millions)	As Previously Reported		Adjustments		As Revised
Cost of services	$	4,167	$	(5)	$	4,162
Total costs and expenses		5,070		(5)		5,065
Income (loss) before income taxes		(319)		5		(313)
Provision for income taxes		74		1		76
Net income (loss)		(393)		4		(389)

	Three Months Ended June 30, 2021
Consolidated Statement of Comprehensive Income (Loss) (Dollars in millions)	As Previously Reported		Adjustments		As Revised
Net income (loss)	$	(393)	$	4	$	(389)
Foreign currency translation adjustments		19		(2)		17
Other comprehensive income (loss), before tax		24		(2)		22
Other comprehensive income (loss), net of tax		23		(2)		21
Total comprehensive income (loss)		(370)		2		(368)

	At June 30, 2021
Consolidated Balance Sheet (Dollars in millions)	As Previously Reported		Adjustments		As Revised
Accrued contract costs	$	489	$	(76)	$	413
Total current liabilities		3,752		(76)		3,676
Other liabilities		278		19		297
Total liabilities		6,190		(57)		6,134
Net Parent investment		5,985		55		6,040
Accumulated other comprehensive income/(loss)		(1,163)		2		(1,161)
Total Net Parent investment		4,822		57		4,879
Total equity		4,875		57		4,932

	Three Months Ended June 30, 2021
Consolidated Statement of Cash Flows (Dollars in millions)	As Previously Reported		Adjustments		As Revised
Cash flows from operating activities:
Net income (loss)	$	(393)	$	4	$	(389)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Taxes (including items settled with Parent)		105		1		106
Other assets and other liabilities		(38)		(5)		(43)

	At June 30, 2021
Consolidated Statement of Equity (Dollars in millions)	As Previously Reported		Adjustments		As Revised
Net Parent investment	$	5,985	$	55	$	6,040
Accumulated other comprehensive income/(loss)		(1,163)		2		(1,161)
Total Net Parent investment		4,822		57		4,879
Total equity		4,875		57		4,932