WORKFORCE REBALANCING AND SITE-RATIONALIZATION CHARGES

3 Months Ended

Jun. 30, 2023

WORKFORCE REBALANCING AND SITE-RATIONALIZATION CHARGES.

WORKFORCE REBALANCING AND SITE-RATIONALIZATION CHARGES

NOTE 14. WORKFORCE REBALANCING AND SITE-RATIONALIZATION CHARGES

During the fiscal year ended March 31, 2023, the Company initiated actions to reduce our overall cost structure and increase our operating efficiency. These actions are anticipated to occur over several quarters and result in workforce rebalancing charges, charges related to ceasing to use leased and owned fixed assets, and lease termination charges (collectively, the “charges”). We expect the total charges to be incurred for this program to be approximately $270 million, consisting of $150 million in workforce rebalancing charges and $120 million in charges related to ceasing to use leased and owned fixed assets and lease termination charges. The Company expects that these actions will reduce future payroll costs, rent expenses and depreciation of property and equipment. We will continue to seek opportunities to increase our operational efficiency and reduce costs, which may result in additional charges in future periods.

The following table presents the segment breakout of charges incurred during the three months ended June 30, 2023.

	Three Months Ended		Costs Incurred
(Dollars in millions)	June 30, 2023		to Date
United States	$	12	$	25
Japan		1		4
Principal Markets		24		86
Strategic Markets		28		75
Corporate charges not allocated to the segments		3		13
Total charges	$	68	$	203

The following table presents the classification of workforce rebalancing and site-rationalization activities in the Consolidated Income Statement during the three months ended June 30, 2023. Charges in the three months ended June 30, 2022 were immaterial.

	Three Months Ended
(Dollars in millions)	June 30, 2023
Cost of services	$	1
Selling, general and administrative expenses		10
Workforce rebalancing charges		58
Total charges	$	68

The following table presents the components of and changes in our workforce rebalancing and site-rationalization charges liabilities during the three months ended June 30, 2023.

			Liabilities		Liabilities
	Workforce		Related to		Related to		Liabilities Related
	Rebalancing		Ceasing to Use		Lease		to Ceasing to Use
(Dollars in millions)	Liabilities*		Leased Assets		Terminations		Fixed Assets		Total
Balance at March 31, 2023	$	55	$	—	$	3	$	—	$	58
Charges		58		2		1		8		68
Cash payments		(73)		—		(4)		(4)		(80)
Non-cash adjustments		(1)		(2)		—		(4)		(7)
Balance at June 30, 2023	$	39	$	—	$	—	$	—	$	39

* Excludes historical workforce rebalancing liabilities of $42 million as of March 31, 2023 and $35 million as of June 30, 2023 as well as $6 million cash paid for workforce rebalancing liabilities that were inherited from the former Parent. Workforce rebalancing liabilities are recorded within Other Liabilities on the Consolidated Balance Sheet.