WORKFORCE REBALANCING AND SITE-RATIONALIZATION CHARGES

9 Months Ended

Dec. 31, 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 $300 million, consisting of approximately 65% for workforce rebalancing charges and approximately 35% for 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 and nine months ended December 31, 2023 and during the full length of the program.

	Three Months Ended		Nine Months Ended		Costs Incurred
(Dollars in millions)	December 31, 2023		December 31, 2023		to Date
United States	$	13	$	28	$	42
Japan		—		2		4
Principal Markets		12		55		118
Strategic Markets		7		52		99
Corporate charges not allocated to the segments		—		3		13
Total charges	$	33	$	140	$	275

The following table presents the classification of workforce rebalancing and site-rationalization activities in the Consolidated Income Statement during the three and nine months ended December 31, 2023 and during the full length of the program. Charges in the three and nine months ended December 31, 2022 were immaterial.

	Three Months Ended		Nine Months Ended		Costs Incurred
(Dollars in millions)	December 31, 2023		December 31, 2023		to Date
Cost of services	$	14	$	11	$	82
Selling, general and administrative expenses		1		14		23
Workforce rebalancing charges		19		115		171
Total charges	$	33	$	140	$	275

The following table presents the components of and changes in our workforce rebalancing and site-rationalization charges liabilities during the nine months ended December 31, 2023.

			Liabilities		Liabilities		Liabilities
	Workforce		Related to		Related to		Related to
	Rebalancing		Ceasing to Use		Lease		Ceasing to Use
(Dollars in millions)	Liabilities*		Leased Assets		Terminations		Fixed Assets		Total
Balance at March 31, 2023	$	55	$	—	$	3	$	—	$	58
Charges / (benefits)		115		10		(1)		16		140
Cash payments		(130)		—		(2)		(6)		(138)
Non-cash adjustments		(1)		(10)		—		(10)		(21)
Balance at December 31, 2023	$	39	$	—	$	—	$	—	$	39

* Excludes historical workforce rebalancing liabilities of $42 million as of March 31, 2023 and $29 million as of December 31, 2023 as well as $1 million of non-cash adjustments and $11 million cash paid for these historical workforce rebalancing liabilities for the nine months ended December 31, 2023 that were inherited from the former Parent. Workforce rebalancing liabilities are recorded within Other Liabilities on the Consolidated Balance Sheet.