REVISION OF PRIOR PERIOD FINANCIAL STATEMENTS

9 Months Ended

Dec. 31, 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 and immaterial revisions to prior interim periods in our 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.

(Dollars in millions)	Three Months Ended December 31, 2021
Consolidated Income Statement	As Previously Reported		Adjustments		As Revised
Cost of services	$	4,011	$	(12)	$	3,999
Total costs and expenses		5,287		(12)		5,276
Income (loss) before income taxes		(732)		12		(720)
Provision for income taxes		8		3		11
Net income (loss)		(740)		9		(731)

(Dollars in millions)	Nine Months Ended December 31, 2021
Consolidated Income Statement	As Previously Reported		Adjustments		As Revised
Cost of services	$	12,252	$	(20)	$	12,233
Total costs and expenses		15,405		(20)		15,385
Income (loss) before income taxes		(1,519)		20		(1,499)
Provision for income taxes		305		5		311
Net income (loss)		(1,825)		15		(1,810)

(Dollars in millions)	Three Months Ended December 31, 2021
Consolidated Statement of Comprehensive Income (Loss)	As Previously Reported		Adjustments		As Revised
Net income (loss)	$	(740)	$	9	$	(731)
Foreign currency translation adjustments		401		(1)		400
Other comprehensive income (loss), before tax		496		(1)		495
Other comprehensive income (loss), net of tax		470		(1)		470
Total comprehensive income (loss)		(270)		8		(262)

(Dollars in millions)	Nine Months Ended December 31, 2021
Consolidated Statement of Comprehensive Income (Loss)	As Previously Reported		Adjustments		As Revised
Net income (loss)	$	(1,825)	$	15	$	(1,810)
Foreign currency translation adjustments		295		(4)		290
Other comprehensive income (loss), before tax		409		(4)		405
Other comprehensive income (loss), net of tax		379		(4)		375
Total comprehensive income (loss)		(1,446)		11		(1,435)

(Dollars in millions)	At December 31, 2021
Consolidated Balance Sheet	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		4,218		66		4,284
Accumulated other comprehensive income/(loss)		(1,143)		(1)		(1,143)
Total stockholders’ equity before noncontrolling interests		2,700		65		2,765
Total equity		2,702		65		2,767

(Dollars in millions)	Nine Months Ended December 31, 2021
Consolidated Statement of Cash Flows	As Previously Reported		Adjustments		As Revised
Cash flows from operating activities:
Net income (loss)	$	(1,825)	$	15	$	(1,810)
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Taxes (including items settled with former Parent)		915		5		920
Other assets and other liabilities		670		(20)		650

(Dollars in millions)	At March 31, 2021
Consolidated Statement of Equity	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

(Dollars in millions)	At September 30, 2021
Consolidated Statement of Equity	As Previously Reported		Adjustments		As Revised
Net Parent investment	$	7,045	$	57	$	7,102
Accumulated other comprehensive income/(loss)		(1,615)		1		(1,614)
Total equity		5,481		57		5,539

(Dollars in millions)	At December 31, 2021
Consolidated Statement of Equity	As Previously Reported		Adjustments		As Revised
Common Stock	$	4,218	$	66	$	4,284
Accumulated other comprehensive income/(loss)		(1,143)		(1)		(1,143)
Total equity		2,702		65		2,767