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What changed in CONDUENT Inc's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of CONDUENT Inc's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+300 added−311 removedSource: 10-K (2024-02-21) vs 10-K (2023-02-22)

Top changes in CONDUENT Inc's 2023 10-K

300 paragraphs added · 311 removed · 211 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

78 edited+12 added−23 removed52 unchanged
Biggest changeWe continue to advance our efforts towards embedding D&I in our talent management and recruiting practices and are proud to have received several global workplace diversity awards, including being recognized as a Top Employer for LGBT+ inclusion in India’s Workplace Equality Index (IWEI) 2022, a Best Place to Work for Disability Inclusion by the American Association of People with Disabilities and Disability:IN, and being named to Newsweek’s list of Top 100 Most Loved Workplaces.
Biggest changeWe continue to advance our efforts towards embedding DE&I in our talent management and recruiting practices and are proud to have received several global and regional workplace culture and diversity awards, including: • Top 100 Global Most Loved Workplaces (Newsweek: 2023) • Most Loved Workplaces in America (Newsweek: 2023) • America’s Best 500 Employers for Diversity (Forbes: 2023, 2022, 2021) • Corporate Equality Index top ranking (Human Rights Campaign: 2023, 2022) • Top Employer for LGBT+ Inclusion in India (IWEI: 2023, 2022) • LGBTQ+ Best Places to Work in Mexico (Human Rights Campaign Equidad MX: 2023,2022) • Best Place to Work for Disability Inclusion (Disability Equality Index: 2023) • Best for Vets Employers (Military Times: 2023) • ERS Silver Award (Armed Forces Covenant: 2023) Employee Learning and Development As a services company, we believe our associates are our most important asset, which is why we invest in associate growth and development programs.
Each day, Conduent's services and solutions interact in the lives of millions of people in many ways — from safer, more seamless commutes that reduce congestion to streamlined benefits enrollment, digital payments, customer experiences and government healthcare claims. Our commercial portfolio includes leading solutions in attractive growth markets, including customer experience management, business operations, healthcare and human capital solutions.
Each day, Conduent's solutions and services interact in the lives of millions of people in many ways — from safer, more seamless commutes that reduce congestion to streamlined benefits enrollment, digital payments, customer experiences and government healthcare claims. Our commercial portfolio includes leading solutions in attractive growth markets, including customer experience management, business operations, healthcare and human capital solutions.
Our directors must act in accordance with our Code of Business Conduct and Ethics for Members of the Board; our principal executive officer, principal financial officer, and principal accounting officer, among others, must act in accordance with our Finance Code of Conduct; and all of our executives and employees must act in accordance with our Code of Business Conduct.
Our directors must act in accordance with our Code of Business Conduct and Ethics for Members of the Board; our principal executive officer and principal financial and accounting officer, among others, must act in accordance with our Finance Code of Conduct; and all of our executives and employees must act in accordance with our Code of Business Conduct.
We streamline mission-critical operations through our deep industry experience, understanding of our clients’ operations and the latest technology solutions, to reduce costs, improve security and accuracy and enable revenue growth, while enhancing the end-user experience. Our portfolio of solutions spans automated document and data management, payments processing, finance, accounting, and procurement and financial industry solutions.
We streamline mission-critical operations through our deep industry experience, understanding of our clients’ operations and the latest technology solutions, to reduce costs, improve security, performance and accuracy and enable revenue growth, while enhancing the end-user experience. Our portfolio of solutions spans automated document and data management, payments processing, finance, accounting and procurement, and financial industry solutions.
We serve a substantial portion of the public sector, providing market-leading transportation and government solutions such as smart mobility solutions that seamlessly connect travelers and digital benefit payments that constituents depend on every day. Our transportation portfolio includes Road Usage Charging, Transit, Curbside Management, and Public Safety solutions.
We serve a substantial portion of the public sector, providing market-leading transportation and government offerings such as smart mobility solutions that seamlessly connect travelers and digital benefit payments that constituents depend on every day. Our transportation portfolio includes Road Usage Charging, Transit, Curbside Management and Public Safety solutions.
Transportation On behalf of government agencies and transportation authorities around the world, we deliver solutions serving toll and fare collection, mobility and digital payments, violation and citation management, photo enforcement and interoperability that help streamline operations and increase revenue.
Transportation On behalf of government agencies and transportation authorities around the world, we deliver solutions serving toll and fare collection, mobility and digital payments, violation and citation management, and photo enforcement that help streamline operations and increase revenue.
We have operations in 25 countries including India, the Philippines, Jamaica, Guatemala, Mexico, Romania, the United Kingdom and several locations within the United States, providing our customers the option for "onshore", "nearshore" or "offshore" outsourced business process services. This global delivery model allows us to leverage lower-cost production locations, consistent methodologies and processes, time zone advantages and business continuity plans.
We have operations in 26 countries including India, the Philippines, Jamaica, Guatemala, Mexico, Romania, the United Kingdom and several locations within the United States, providing our customers the option for "onshore", "nearshore" or "offshore" outsourced business process services. This global delivery model allows us to leverage lower-cost production locations, consistent methodologies and processes, time zone advantages and business continuity plans.
Our solutions span Health Savings Account Solutions, Benefits Administration Solutions, Human Resources (HR) and Payroll Solutions, and Learning Solutions. On behalf of global organizations and governments, we deliver mission-critical, technology-led HR services and solutions that improve business processes across the employee journey to maximize business performance, while increasing employee satisfaction, engagement, and overall well-being.
Our solutions span Benefits Administration Solutions, Human Resources ("HR") and Payroll Solutions, Health Savings Accounts Solutions and Learning Solutions. On behalf of global organizations and governments, we deliver mission-critical, technology-led HR services and solutions that improve business processes across the employee journey to maximize business performance, while increasing employee satisfaction, engagement, and overall well-being.
Prout earned his Bachelor's degree in business management and programming from Southern Illinois University, Carbondale. Mr. Wood has served as the Chief Financial Officer of Conduent since June 2021. He served in his previous role as the Company’s Corporate Controller from August 2020 until June 2021 and was designated as its Principal Accounting Officer effective December 2020.
Prout earned his Bachelor's degree in business management and programming from Southern Illinois University, Carbondale. Mr. Wood has served as the Chief Financial Officer of Conduent since June 2021. He served in his previous role as Conduent’s Corporate Controller from August 2020 until June 2021 and was designated as its Principal Accounting Officer effective December 2020.
Within our HR and Payroll Solutions, we generate revenue principally per client’s employee per period (month / year) pricing, with banding to address periodic variations in client employee headcount. Within our Learning Solutions, we generate revenue principally by transaction-based pricing per unit of production along with fixed monthly governance fees.
Within our HR and Payroll Solutions, we generate revenue principally per client’s employee per period (month / year) pricing, with tiers to address periodic variations in client employee headcount. Within our Learning Solutions, we generate revenue principally by transaction-based pricing per unit of production along with fixed monthly governance fees.
In 2022, in response to our continued commitment to quality and efficiency, our clients have renewed contracts with us and given us more business in adjacent service lines, and we’ve gained new clients. We measure success in “Growth” through revenue retention and new business signings, among other metrics.
In 2023, in response to our continued commitment to quality and efficiency, our clients have renewed contracts with us and given us more business in adjacent service lines, and we’ve gained new clients. We measure success in “Growth” through revenue retention and new business signings, among other metrics.
He was appointed Executive Vice President, Chief Revenue Officer in December 2020 and appointed Executive Vice President, Transportation Solutions in August 2022. Prior to joining Conduent, he served as Executive Vice President, Chief Sales Officer at York Risk Services from October 2017 to September 2019.
He was appointed Executive Vice President, Chief Revenue Officer in December 2020, appointed Executive Vice President, Transportation Solutions in August 2022 and again appointed to Executive Vice President, Chief Revenue Officer in December 2023. Prior to joining Conduent, he served as Executive Vice President, Chief Sales Officer at York Risk Services from October 2017 to September 2019.
Within our UI payment solution, we generate revenue based on interchange fees and spending on cards as a percentage of transactions. • We also offer a broad set of child support services predominately to State Disbursement Units (SDUs), including processing and distributing payments, child support payment cards, childcare credentialing, and case management, among others, to help states comply with federal standards.
Within our open-loop payments solution, we generate revenue based on interchange fees and spending on cards as a percentage of transactions. • We also offer a broad set of child support services predominately to State Disbursement Units ("SDUs"), including processing and distributing payments, child support payment cards, childcare credentialing, and case management, among others, to help states comply with federal standards.
Our eight Employee Impact Groups (EIGs) continue to play a vital role in creating an environment of belonging and inclusion through year-round activities that advance culture and professional development, create a sense of community, and impact business outcomes.
Our eight Employee Impact Groups ("EIGs") play a vital role in creating an environment of belonging and inclusion through year-round activities that advance culture and professional development, create a sense of community, and impact business outcomes.
In addition, we aim to achieve additional efficiencies through the following strategies: • Automation : We will continue to invest in embedding intelligent process automation into existing operations, including automated document management and customer experience.
In addition, we aim to achieve additional efficiencies through the following strategies: • Automation : We will continue to invest in embedding intelligent process automation and artificial intelligence into existing operations, including automated document management and customer experience.
Global delivery expertise: Our scale and global delivery capabilities enable us to deliver our proprietary technology and differentiated service offerings expertly to clients around the world.
Global delivery expertise: Our scale and global delivery capabilities enable us to deliver our proprietary technology and differentiated service offerings seamlessly to clients around the world.
Within our Benefits Solutions, we principally generate revenue based on the number of employees and retirees we support, as well as transactions generated by client life events such as qualified domestic relations orders, Consolidated Omnibus Budget Reconciliation Act (COBRA) and Affordable Care Act (ACA) administration, which are charged on a per transaction basis.
Depending on the solution, we generate revenue in a variety of ways. • Within our Benefits Solutions, we principally generate revenue based on the number of employees and retirees we support, as well as transactions generated by client life events such as qualified domestic relations orders, Consolidated Omnibus Budget Reconciliation Act ("COBRA") and Affordable Care Act ("ACA") administration, which are charged on a per transaction basis.
We estimate our addressable market size in the global business process services industry to be $200 billion in 2022, according to third-party industry reports. Many industry analysts and advisors place us as a leader across several segments in this large, diverse, and growing market.
We estimate our addressable market size in the global business process services industry to be $210 billion in 2023, according to third-party industry reports. Many industry analysts and advisors place us as a leader across several segments in this large, diverse, and growing market.
Government: Our Government segment provides government-centric business process services to U.S. federal, state, local and foreign governments for public assistance, health services, program administration, transaction processing and payment services. Our solutions in this segment help governments respond to changing rules for eligibility and increasing citizen expectations.
Government: Our Government segment provides government-centric business process services to U.S. federal, state, local and foreign governments for public assistance, healthcare programs and administration, transaction processing and payment services. Our solutions in this segment help governments respond to changing rules for eligibility and increasing citizen expectations.
Conduent’s healthcare capabilities have been recognized by ISG, HfS Research and Everest Group. • Transportation: Traffic congestion continues to increase due to urbanization and changing global demographics. As a result, optimized transportation systems are becoming critical to increase efficiency while maintaining strict safety requirements.
Conduent’s healthcare capabilities have been recognized by NelsonHall and Everest Group. • Transportation: Traffic congestion continues to increase due to urbanization and changing global demographics. As a result, optimized transportation systems are becoming critical to increase efficiency while maintaining strict safety requirements.
Our competitors include: • Large multinational service providers such as Accenture, Cognizant, TTEC and Teleperformance; • Traditional business process outsourcing companies such as Genpact and EXL Services; • Human resource, payroll processing and human capital management providers such as Alight and Willis Towers Watson; • Healthcare-focused IT and service solutions providers such as Gainwell, Optum and Maximus; • HSA administrators such as Health Equity; • U.S.
Our competitors include: • Large multinational service providers such as Accenture, Cognizant, TTEC and Teleperformance; • Traditional business process outsourcing companies such as Genpact, Wipro and EXL Services; • Human resource, payroll processing and human capital management providers such as Alight and Willis Towers Watson; • Healthcare-focused IT and service solutions providers such as Gainwell, Optum and Maximus; • U.S.
As of December 31, 2022, 47% of our employees were located in high-cost countries and 53% were located in low-cost countries.
As of December 31, 2023, 47% of our employees were located in high-cost countries and 53% were located in low-cost countries.
We are widely recognized by industry analysts as a leader in healthcare payer operations, serving 17 of the top 20 U.S. health plans and providing administrative and mission-critical program administration solutions for government healthcare programs in 46 states, the District of Columbia, and a federal program (U.S. Department of Labor), which includes nearly 119 million recipients supported.
We are widely recognized by industry analysts as a leader in healthcare payer operations, serving 9 of the top 10 U.S. health plans and providing administrative and mission-critical program administration solutions for government healthcare programs in 35 states, the District of Columbia, and a federal program (U.S. Department of Labor), which includes nearly 119 million recipients supported.
We continue to be recognized for our commitment to fostering a culture of belonging and respect for diversity, equity and inclusion. Our Strategic Focus Our goal is to be the technology-led business services partner of choice for businesses and governments globally.
We continue to be recognized for our commitment to fostering a culture of belonging and respect for diversity, equity and inclusion. Our Strategic Focus Our aim is to be the technology-led business solutions partner of choice for businesses and governments globally.
CNDT 2022 Annual Report 4 Table of Contents Growth : Our opportunity for growth stems from understanding our clients’ businesses and driving valuable outcomes for our clients to help them reduce costs, improve efficiencies and elevate customer experiences.
CNDT 2023 Annual Report 3 Table of Contents Growth : Our opportunity for growth stems from understanding our clients’ businesses and driving valuable outcomes for our clients to help them reduce costs, improve efficiencies and elevate customer experiences.
In 2022 our year-over-year Comparably scores held steady, with our overall culture score in the top 5% of similar sized companies, and love of team, challenging work, and flexibility to do remote work cited among the positives.
In 2023 our year-over-year Comparably scores held steady, with our overall culture score in the top 10% of similar sized companies, and love of team, challenging work, and flexibility to do remote work cited among the positives.
Prior to joining Conduent he worked for Bank of America, where he served as Chief Operating Officer for Consumer and Wealth Management, as part of the bank’s Global Business Services organization. Mr. King earned his Bachelor of Science degree in Economics at North Carolina State University and completed the Operations Leadership Program at the University of Michigan’s Stephen M.
Prior to joining Conduent he worked for Bank of America, where he served as Senior Vice President for Consumer and Wealth Management, as part of the bank’s Global Business Services organization. Mr. King earned his Bachelor of Science degree in Economics at North Carolina State University and completed the Operations Leadership Program at the University of Michigan’s Stephen M.
Wood is a Chartered Global Management Accountant with an MBA with distinction from Warwick Business School and a Bachelor of Science from the University of Birmingham in the United Kingdom. CNDT 2022 Annual Report 15 Table of Contents
Wood is a Chartered Global Management Accountant with an MBA with distinction from Warwick Business School and a Bachelor of Science from the University of Birmingham in the United Kingdom. CNDT 2023 Annual Report 14 Table of Contents
Our balanced investment approach falls into three broad categories: • Opportunities to optimize, where we have significant scale and where we believe that with process improvements, automation, and an investment into the current offerings, we can improve the end-user experience, reduce our cost of delivery, expand our margins, and further capture additional share. • Opportunities to enhance, where we have strong client relationships, a long history of expertise in that market, and legacy technology that needs to be refreshed or modernized. • Opportunities to expand, where we believe we can compete successfully, and we see the return on investment as more significant than the other businesses.
Our internal investments to support our business goals and client needs fall into three broad categories: • Opportunities to optimize, where we have significant scale and where we believe that with process improvements, automation, and an investment into the current offerings, we can improve the end-user experience, reduce our cost of delivery, expand our margins, and further capture additional share. • Opportunities to enhance, where we have strong client relationships, a long history of expertise in that market, and legacy technology that needs to be refreshed or modernized. • Opportunities to expand, where we believe we can compete successfully, and we see the return on investment as more significant than in other businesses.
As of December 31, 2022, we own approximately 607 U.S. patents and have 31 pending applications. Our patent portfolio evolves as new patents are awarded to us and as older patents expire. These patents expire at various dates, generally 20 years from their original filing dates.
As of December 31, 2023, we own approximately 631 U.S. patents and have 7 pending applications. Our patent portfolio evolves as new patents are awarded to us and as older patents expire. These patents expire at various dates, generally 20 years from their original filing dates.
Each day, our people and our technology-led solutions serve millions of end users on behalf of our clients. Of our global team, 41% is in North America with the remainder located primarily in our delivery centers in Asia Pacific, Latin America, the Caribbean, and Europe.
Each day, our people and our digital business solutions and services serve millions of end users on behalf of our clients. Of our global team, 41% is in North America with the remainder located primarily in our delivery centers in Asia Pacific, Latin America, the Caribbean, and Europe.
Differentiated technology-led suite of multi-industry solutions: Through dedicated people, process expertise and technology, such as analytics and automation, Conduent services and solutions create value for our clients by CNDT 2022 Annual Report 10 Table of Contents creating efficiencies, improving experiences, reducing costs and enabling revenue growth while better serving millions of end customers that depend on us.
Differentiated technology-led suite of multi-industry solutions: Through dedicated people, process expertise and technology, such as analytics and automation, Conduent solutions and services create value for our clients by creating efficiencies, improving experiences, reducing costs and enabling revenue growth while better serving millions of end customers that depend on us.
Our team’s talent and dedication has resulted in Conduent serving 46 states, a majority of the Fortune 100, and other leading companies, including: • 17 of the top 20 U.S. health insurers; • 9 of the top 10 pharma companies; • 4 of the top 5 automakers; and • 7 of the top 10 U.S. banks. • Offering Development : We continue to augment our portfolio of services and solutions with innovative technology capabilities, including cloud, data analytics, automation tools and machine learning capabilities to create differentiated, high-value solutions for our clients and to enable greater penetration of attractive market segments.
Our team’s talent and dedication has resulted in Conduent serving 47 states, many of the Fortune 100 companies, and other leading companies, including: • 9 of the top 10 U.S. health insurers; • 6 of the top 10 pharma companies; • 4 of the top 5 automakers; and • 6 of the top 10 U.S. banks. • Offering Development : We continue to augment our portfolio of services and solutions with innovative technology capabilities, including cloud, data analytics, automation tools, AI and machine learning capabilities to create differentiated, high-value solutions for our clients and to enable greater penetration of attractive market segments.
Within the Government Healthcare Solutions business, our revenue is primarily fixed fee or variable price based on a per call, per interaction or per member basis. • Government Service Solutions • With $106 billion disbursed annually, we are a leader in government payment disbursements for federally sponsored programs including Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, and Women, Infant and Children (WIC) as well as government-initiated cash disbursements such as child support and Unemployment Insurance (UI).
Within the Government CNDT 2023 Annual Report 7 Table of Contents Healthcare Solutions business, our revenue is primarily fixed fee or variable price based on a per call, per interaction or per member basis. • Government Service Solutions • With $99 billion disbursed annually, we are a leader in government payment disbursements for federally sponsored programs including Supplemental Nutrition Assistance Program ("SNAP"), formerly known as food stamps, and Women, Infant and Children ("WIC") as well as government-initiated cash disbursements such as child support and Unemployment Insurance ("UI").
Across the Commercial segment, we operate on our clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enable revenue growth for our clients and better experiences for their consumers and employees. Our Commercial segment is our largest segment, with segment revenue for 2022 of $1,992 million, representing 52% of our total revenues.
Across the Commercial segment, we operate on our clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enable revenue growth for our clients and better experiences for their consumers and employees. Our Commercial segment is our largest segment, with segment revenue for 2023 of $1,932 million, representing 51.9% of our total revenues.
Our close client relationships and successful client execution support our stable recurring revenue model and high renewal rates. Competition Although we encounter competition in all areas of our portfolio, we are a leader in many categories. We compete based on technology, performance, quality, reliability, reputation, price, and customer service and support.
Our close client relationships and successful client execution support our stable recurring revenue model and high renewal rates. CNDT 2023 Annual Report 9 Table of Contents Competition Although we encounter competition in all areas of our portfolio, we are a leader in many categories. We compete based on technology, performance, quality, reliability, reputation, price, and customer service and support.
As of December 31, 2022, we had approximately 62,000 associates in 25 countries working towards a common vision and purpose, with 41% located in North America and the remainder located primarily in Asia Pacific, Latin America and the Caribbean, and Europe.
As of December 31, 2023, we had approximately 59,000 associates in 26 countries working towards a common vision and purpose, with 41% located in North America and the remainder located primarily in Asia Pacific, Latin America and the Caribbean, and Europe.
CNDT 2022 Annual Report 13 Table of Contents The SEC maintains an internet address (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The content on any website referred to in this Form 10-K is not incorporated by reference in this Form 10-K unless expressly noted.
The SEC maintains an internet address (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The content on any website referred to in this Form 10-K is not incorporated by reference in this Form 10-K unless expressly noted.
Name Age Present Position Year Appointed to Present Position Conduent Officer Since Clifford Skelton* 67 President and Chief Executive Officer 2019 2019 Louis Keyes 55 Executive Vice President, Transportation Solutions 2022 2020 Mark King 57 Executive Vice President, Government Solutions 2022 2022 Randall King 57 Executive Vice President, Commercial Solutions 2022 2022 Michael Krawitz 53 Executive Vice President, General Counsel and Secretary 2019 2019 Mark Prout 59 Executive Vice President, Chief Information Officer 2019 2020 Stephen Wood 56 Executive Vice President & Chief Financial Officer 2021 2020 _____________________________ * Member of Conduent Board of Directors Each of the officers named above has been an officer or an executive of Conduent or its subsidiaries for less than five years.
Name Age Present Position Year Appointed to Present Position Conduent Officer Since Clifford Skelton* 68 President and Chief Executive Officer 2019 2019 Louis Keyes 56 Executive Vice President, Chief Revenue Officer 2023 2020 Randall King 58 Executive Vice President, Commercial Solutions 2022 2022 Michael Krawitz 54 Executive Vice President, General Counsel and Secretary 2019 2019 Mark Prout 60 Executive Vice President, Chief Information Officer 2019 2020 Stephen Wood 57 Executive Vice President, Chief Financial Officer 2021 2020 _____________________________ * Member of Conduent Board of Directors Each of the officers named above has been an officer or an executive of Conduent or its subsidiaries for less than five years.
Prior to joining Conduent, between 2005 and 2019, Mr. Prout served as Chief Technology Officer and held several IT leadership positions at Fiserv. Prior to Fiserv, he served as CIO of Cendian Corporation. Mr. Prout has also held various leadership positions at United Parcel Service. Mr.
He was appointed Executive Vice President, Chief Information Officer in September 2019. Prior to joining Conduent, between 2005 and 2019, Mr. Prout served as Chief Technology Officer and held several IT leadership positions at Fiserv. Prior to Fiserv, he served as CIO of Cendian Corporation. Mr. Prout has also held various leadership positions at United Parcel Service. Mr.
People and Culture Headcount The skills, expertise, and experience of our talented and diverse global workforce allow us to deliver mission-critical services and solutions that drive exceptional client outcomes.
CNDT 2023 Annual Report 10 Table of Contents People and Culture Headcount The skills, expertise, and experience of our talented and diverse global workforce allow us to deliver mission-critical services and solutions that drive exceptional client outcomes.
We deliver mission-critical public safety, mobility and digital payment solutions that streamline operations, increase revenue and reduce congestion while creating safe, seamless travel experiences for consumers and positively impacting the environment. Transportation segment revenue for 2022 was $709 million, representing 18% of our total revenues.
We deliver mission-critical public safety, mobility and digital payment solutions that streamline operations, increase revenue and reduce congestion while creating safe, seamless travel experiences for consumers while reducing impact on the environment. Transportation segment revenue for 2023 was $696 million, representing 18.7% of our total revenues.
As part of our focus on D&I awareness and education, in 2022, we delivered extensive training on "inclusive leadership" and hosted panel discussions with members of our Board of Directors on a range of D&I topics.
As part of our focus on DE&I awareness and education in 2023, we delivered extensive training on "inclusive leadership" and hosted panel discussions with our leadership team members on a range of DE&I topics.
Our Government segment revenue for 2022 was $1,150 million, representing 30% of our total revenues. Transportation: Our Transportation segment provides systems, support, and revenue-generating solutions to government transportation agency clients.
Our Government segment revenue for 2023 was $1,094 million, representing 29.4% of our total revenues. Transportation: Our Transportation segment provides systems, support, and revenue-generating solutions to government transportation agency clients.
We deliver electronic payments for government services in 36 states, 23 Electronic Benefit Transfer (EBT) programs, 13 EBT for WIC programs and 6 Electronic Child Care programs. In our SNAP payments solution, we generate revenue based on the number of cases or number of card holders.
We deliver electronic payments for government services in 37 states, including 24 Electronic Benefit Transfer ("EBT") programs, 13 EBT for WIC programs and 7 Electronic Child Care programs. In our closed-loop payments solution, we generate revenue based on the number of cases or number of card holders.
Skelton earned his Bachelor of Arts degree from the University of Southern California and Master of Public Administration from Harvard University's John F. Kennedy School of Government. Mr. Keyes joined Conduent as Global Head of Sales in September 2019.
Skelton is a former Navy fighter pilot and served in the Navy for over 20 years. Mr. Skelton earned his Bachelor of Arts degree from the University of Southern California and Master of Public Administration from Harvard University's John F. Kennedy School of Government. Mr. Keyes joined Conduent as Global Head of Sales in September 2019.
Recurring revenue model supported by a loyal, diverse client base: We have a broad and diverse base of clients across geographies and industries, including 80% of the Fortune 100 companies, many Fortune 1000 companies, midsize businesses and governmental entities. Our clients are increasingly satisfied as evidenced by our NPS that has increased by 30 points over the past three years.
Recurring revenue model supported by a loyal, diverse client base: We have a broad and diverse base of clients across geographies and industries, including many Fortune 100 companies, midsize businesses and governmental entities. Our clients are increasingly satisfied as evidenced by our NPS that has increased by nearly 30 points since becoming Conduent in 2017.
Our technology-led business process solutions drive performance and value for both businesses and governments while providing an exceptional customer experience for their end users.
Our digital business process solutions and services drive performance and value for both businesses and governments while providing exceptional customer experiences for their end users.
We serve marquee clients across multiple sectors including financial services, health and life sciences, manufacturing and automotive, aerospace and defense, consumer goods, retail, technology and telecom, travel, transportation, and hospitality sectors.
We serve marquee clients across multiple sectors including financial services, health and life sciences, logistics, retail, technology and telecom, travel, and hospitality sectors.
In addition, we rely on maintaining source code confidentiality to assure our market competitiveness. With respect to externally sourced software, we rely on contracts assuring our continued access for our business usage. In the United States, we own 57 registered trademarks reflecting the many businesses we participate in.
With respect to externally sourced software, we rely on contracts assuring our continued access for our business usage. In the United States, we own 55 registered trademarks, with two pending, reflecting the many businesses we participate in.
Our pricing can also be based on achieving specific outcomes for services rendered. • Healthcare Claims and Administration Solutions • On behalf of the healthcare and casualty insurance industries, we deliver administration, clinical support, bill review and medical management solutions across the health ecosystem to reduce costs, increase compliance and enhance utilization, while improving health outcomes and experiences for members and patients.
CNDT 2023 Annual Report 6 Table of Contents • Healthcare Claims and Administration Solutions • On behalf of the healthcare and casualty insurance industries, we deliver administration, clinical support, bill review and medical management solutions across the health ecosystem to reduce costs, increase compliance and enhance utilization, while improving health outcomes and experiences for members and patients.
Skelton was the Group President and Chief Information Officer at Fiserv from April 2012 until March 2017. Mr. Skelton also held a variety of leadership roles at companies such as Ally Financial (formerly General Motors Acceptance Corporation) and Bank of America. Mr. Skelton is a former Navy fighter pilot and served in the Navy for over 20 years. Mr.
He served as President of Fiserv Output Solutions from March 2017 to June 2019. Prior to that, Mr. Skelton was the Group President and Chief Information Officer at Fiserv from April 2012 until March 2017. Mr. Skelton also held a variety of leadership roles at companies such as Ally Financial (formerly General Motors Acceptance Corporation) and Bank of America. Mr.
Krawitz began his career at Fried Frank and earned his Bachelor of Arts in Economics and in Government from Cornell University and his Juris Doctor from Harvard Law School. Mr. Prout joined Conduent as Head of Information Technology in June of 2019. He was appointed Executive Vice President, Chief Information Officer in September 2019.
Krawitz began his career at Fried Frank and earned his Bachelor of Arts in Economics and in Government from Cornell University and his Juris Doctor from Harvard Law School. CNDT 2023 Annual Report 13 Table of Contents Mr. Prout joined Conduent as Head of Information Technology in June of 2019.
CNDT 2022 Annual Report 11 Table of Contents Our business relies on software provided to an approximately equal extent, by both internal development and external sourcing to deliver our services. With respect to internally developed software, we claim copyright on all such software, registering works which may be accessible to third parties.
Our business relies on software provided, to an approximately equal extent, by both internal development and external sourcing to deliver our services. With respect to internally developed software, we claim copyright on all such software, registering works which may be accessible to third parties. In addition, we rely on maintaining source code confidentiality to assure our market competitiveness.
We process nearly 12 million tolling transactions every day while helping to reduce congestion and greenhouse emissions through all-electronic tolling and other technology solutions. Our government portfolio includes digital payments, child support payments, government healthcare solutions and eligibility and engagement solutions.
We process nearly 13 million tolling transactions every day while helping to reduce congestion and greenhouse emissions through all-electronic tolling and other technology solutions. Our government portfolio includes digital payments, child support payments, government healthcare and eligibility and enrollment solutions, helping to ensure efficient Medicaid healthcare claims processing and delivery of benefits to the most vulnerable populations.
Information about our Executive Officers The following is a list of the executive officers of Conduent as of February 22, 2023. Each officer is elected to hold office until the meeting of the Board of Directors held on the day of the next annual meeting of shareholders, subject to the provisions of our by-laws.
Each officer is elected to hold office until the meeting of the Board of Directors held on the day of the next annual meeting of shareholders, subject to the provisions of our by-laws.
Through our portfolio of technology-led services and solutions, we have reached significant scale in our interactions including: • Healthcare: U.S. healthcare spending is expected to remain largely unchanged as a percentage of GDP (19.6% and 19.7% of GDP in 2030 and 2020, respectively) and is projected to grow at an average rate of 5.1% per year between 2021-2030.
Through our portfolio of digital business solutions and services, we have reached significant scale in our interactions including: • Healthcare: U.S. healthcare spending is expected to increase slightly as a percentage of GDP (from 18.3% of GDP in 2021 to 19.6% in 2031) and is projected to grow at an average rate of 5.4% per year between 2022-2031.
Our solutions include vehicle passenger detection systems, electronic toll collection, automated license plate recognition and congestion management solutions. We generate revenue based on a combination of fixed fee and transaction-based pricing. The transaction-based component can be per account per month, per notice mailed, per active account, per violations fees received, or per image-based transaction.
Our solutions include vehicle passenger detection systems, electronic toll collection, automated license plate recognition and congestion management solutions. We generate revenue based on a combination of fixed fee and transaction-based pricing.
We generate revenue based on violations issued, payment processing transactions, collections activities or a fixed fee for our services. • Public Safety Solutions • Public safety is a priority in every community, especially as budgets shrink and populations grow. We provide data analytics, automated photo enforcement and other public safety solutions to make streets and communities safer.
Our curbside solutions include citation and permit administration, parking enforcement, and curbside demand management. We generate revenue based on violations issued, payment processing transactions, collections activities or through a fixed fee for our services. • Public Safety Solutions • Public safety is a priority in every community, especially as budgets shrink and populations grow.
In 2022, Conduent was recognized among Newsweek’s Top 100 Most Loved Workplaces. This recognition was based largely on direct feedback gathered from our associates indicating a strong "emotional connection" between associates and our Company. We also CNDT 2022 Annual Report 12 Table of Contents continuously monitor our rankings and feedback from current associates on review sites such as Comparably.
This recognition was based largely on direct feedback gathered from our associates indicating a strong "emotional connection" between associates and our Company. We also continuously monitor our rankings and feedback from current associates on review sites such as Comparably.
We generate revenue in a variety of ways within this business, including per item handled, time and CNDT 2022 Annual Report 7 Table of Contents materials, and per service such as postage, web portal hosting or data storage.
We generate revenue in a variety of ways within this business, including per item handled, time and materials, and per service such as postage, web portal hosting or data storage. Our pricing can also be based on achieving specific outcomes for services rendered.
These solutions help empower more than 11 million employees and span health, benefits, payroll, onboarding and learning administration, annual enrollment, wealth and retirement, HR, talent, and workforce management. Depending on the solution, we generate revenue in a variety of ways.
These solutions help empower millions of employees and span health, benefits, payroll, onboarding and learning administration, annual enrollment, wealth and retirement, HR, talent, and workforce management.
We are an award-winning innovator in parking management. • Business Operations Solutions: We provide high volume print and mail services, enrollment processing and personalized and targeted marketing and communications to large corporations and are a leading provider in this market with more than 3.6 billion documents captured, indexed and classified annually.
Electronic toll collection and public transit represent key growth drivers as governments at all levels increasingly focus on transportation infrastructure. • Business Operations Solutions: We provide high volume print and mail services, enrollment processing and personalized and targeted marketing and communications to large corporations and are a leading provider in this market with more than 5.4 billion documents captured, indexed and classified annually.
We continue to respond with agility to clients’ shifting needs and our Net Promoter Score (NPS) has increased by 30 points over the past three years. We measure success in Efficiency through associate retention and adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) margin, among other metrics. Quality : Our clients depend on stable, high-quality delivery of services.
We measure success in Efficiency through associate retention and adjusted earnings before interest, taxes, depreciation, and amortization ("Adjusted EBITDA") margin, among other metrics. Quality : Our clients depend on stable, high-quality service delivery.
ITEM 1. BUSINESS In this Form 10-K, unless the content otherwise dictates, "Conduent", the "Company", "we" or "our" mean Conduent Incorporated and its consolidated subsidiaries.
ITEM 1. BUSINESS In this Form 10-K, unless the content otherwise dictates, "Conduent", the "Company", "we" or "our" mean Conduent Incorporated and its consolidated subsidiaries. Our Business We deliver digital business solutions and services spanning the commercial, government and transportation spectrum – creating valuable outcomes for our clients and the millions of people who count on them.
Our Medicaid Suite is a modular SaaS solution for CNDT 2022 Annual Report 8 Table of Contents state Medicaid agencies to transform from a legacy Medicaid Management Information System (MMIS) to a digital, interoperable, and scalable Medicaid Enterprise System.
In 2023 alone, we processed 562 million claims. Our cloud-based Medicaid Suite is a modular software as a service ("SaaS") solution for state Medicaid agencies to transform from a legacy Medicaid Management Information System ("MMIS") to a digital, interoperable, and scalable Medicaid Enterprise System.
King earned his Bachelor of Arts in Economics at University of North Carolina at Greensboro. CNDT 2022 Annual Report 14 Table of Contents Mr. Randall King joined Conduent in May 2020 as Global Head, End User Experience. He was appointed Executive Vice President, Commercial Solutions in August 2022. Mr.
King joined Conduent in May 2020 as Global Head, End User Experience. He was appointed Executive Vice President, Commercial Solutions in August 2022. Mr. King has responsibility for our commercial solutions portfolio.
Department of Labor), which includes nearly 119 million recipients supported. Our services include a range of innovative solutions such as Medicaid management, provider services, Medicaid business intelligence, pharmacy benefits management, eligibility and enrollment support, customer contact services, application processing, premium billing, and case management solutions.
Government Our Government solutions and services include Government Healthcare Solutions and Government Service Solutions that streamline delivery of government benefits and programs to constituents and families in need. • Government Healthcare Solutions • We provide mission-critical program administration solutions for government healthcare programs with a range of innovative solutions such as Medicaid management, provider services, Medicaid business intelligence, pharmacy benefits management, eligibility and enrollment support, customer contact services, application processing, premium billing, and case management solutions.
Our learning platforms are widely utilized with about 2.7 million learning assets completed in 2022 and have great learning effectiveness scores for satisfaction, skill improvement and application of learning on the job. We also ensure that our associates complete regulatory and compliance training on topics required based on their role and geography.
Furthermore, we launched a new, blended learning and development program for people managers in 2023. Our learning platforms are widely utilized with about 2 million learning assets completed in 2023 and have great learning effectiveness scores for satisfaction, skill improvement and on the job practical application.
Eighty percent of Fortune 100 companies and over 600 government and transportation agencies depend on us each day as their trusted partner to manage their business processes and end-user interactions. As a pioneer in global business process outsourcing, we deliver deep and transformative expertise across a wide range of industries globally in both the commercial and public sectors.
As a pioneer in global business process outsourcing, we deliver deep expertise across a wide range of industries globally in both the commercial and public sectors.
Our three reportable segments, Commercial, Government and Transportation, house most of our associates with approximately 45,000, 6,000 and 4,000 associates, respectively. Conduent Diversity & Inclusion (D&I) We draw strength from the diversity of our global workforce, and we believe that creating an inclusive culture where all associates can bring their authentic selves to work creates value for all our stakeholders.
Our three reportable segments, Commercial, Government and Transportation, house most of our associates with approximately 42,000, 5,000 and 4,000 associates, respectively. Conduent Diversity, Equity & Inclusion ("DE&I") At Conduent, we work to build a culture where individuality is noticed and valued, and associates feel like they belong and can bring their authentic selves to work.
Our photo enforcement systems include red light, fixed and mobile speed, school bus, work zone, school zone, bus lane, high occupancy and other enforcement systems.
We provide data analytics, automated photo enforcement and other public safety solutions to make streets CNDT 2023 Annual Report 8 Table of Contents and communities safer. Our photo enforcement systems include red light, fixed and mobile speed, school bus, work zone, school zone, bus lane, high occupancy and other enforcement systems.
To capitalize on growth opportunities, we remain focused on several key strategies: • Sales Performance Optimization : We continue to optimize sales training, processes and account management to strengthen client and prospect relationships. We have also invested in a growth acceleration team focused on business development.
To capitalize on growth opportunities, we remain focused on several key strategies: • Sales Performance Optimization : We continue to optimize sales training, processes and account management to strengthen client and prospect relationships to gain more selling opportunities both with new clients as well as greater share of wallet with existing clients, expanding new logo sales significantly year over year including a large transportation win in Australia.
We have consistently improved our service level agreement (SLA) performance. We drive progress through continuous process improvement, and capitalizing on a range of staffing models, including flexible work from home and hybrid work, and by optimizing our geographic footprint.
We drive progress through continuous process improvement, and capitalizing on a range of staffing models, including flexible work from home and hybrid work, and by optimizing our geographic footprint. We continue to respond with agility to clients’ shifting needs and our Net Promoter Score ("NPS") has increased by nearly 30 points since becoming Conduent in 2017.
Our people, expertise and technology elevate experiences and outcomes every day across our commercial, government and transportation businesses, where we managed approximately 1.3 billion customer service interactions in 2022.
Our people, expertise and technology elevate experiences and outcomes every day. In 2023, we managed approximately 2.3 billion customer service interactions, captured and classified 5.4 billion documents, and supported millions of employees with HR services.
Associate Engagement We continuously gather associate feedback through multiple touchpoints throughout the year and leverage that feedback to both inform our talent strategy and enhance our associate experience. These touchpoints include both external recognition surveys as well as feedback gathered through internal pulse surveys, exit surveys, and our internal social platform used for open and transparent communications.
These touchpoints include both external recognition surveys as well as feedback gathered through internal pulse surveys, exit surveys, and our internal social platform used for open and transparent communications. In 2023, Conduent was recognized among Newsweek’s Top 100 Global Most Loved Workplaces.
As of February 22, 2023, apart from executive officers Mark King and Randall King, who are brothers, there are no family relationships among any of the executive officers named above and any of our directors. Mr.
As of February 21, 2024, there are no family relationships among any of the executive officers named above and any of our directors. Mr. Skelton was appointed Chief Operating Officer of Conduent in June 2019, Chief Executive Officer of Conduent in August 2019 and President of Conduent in May 2021.
Conduent manages 48% of the transactions of the top 10 U.S. tolling agencies. • Transit Solutions • For train, bus, subway, metro and other transit travelers, we help make journeys more personalized and convenient while increasing capacity and profitability for authorities and agencies.
The transaction-based component can be per account per month, per notice mailed, per active account, per violations fees received, or per image-based transaction. • Transit Solutions • For train, bus, subway, metro and other transit travelers, we help make journeys more personalized and convenient while increasing fare collection for authorities and agencies.
Removed
Our Business As a global technology-led business process solutions company, Conduent delivers mission-critical services and solutions on behalf of businesses and governments to create exceptional outcomes for our clients and the millions of people who count on them. Through people, process, expertise, analytics and automation, our services and solutions create value by elevating customer experiences, increasing efficiencies and reducing costs.
Added
The Company leverages cloud computing, artificial intelligence ("AI"), machine learning, automation and advanced analytics to deliver mission-critical business process solutions. Through a dedicated global team of associates, process expertise, and advanced technologies, Conduent’s solutions and services digitally transform its clients’ operations to enhance customer experiences, improve performance, increase efficiencies and reduce costs.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

46 edited+21 added−40 removed120 unchanged
Biggest changeOur success depends, in part, upon key managerial and technical personnel, including our ability to attract and retain additional qualified personnel, as well as qualified subcontractors. The loss of certain key personnel, such as our Chief Executive Officer (CEO), members of our executive team and other highly skilled employees, could materially adversely affect our results of operations and financial condition.
Biggest changeThe loss of key senior management or the failure to attract and retain necessary technical personnel and qualified subcontractors could materially adversely affect our results of operations and financial condition. Our success depends, in part, upon key managerial and technical personnel, including our ability to attract and retain additional qualified personnel, as well as qualified subcontractors.
If any of these, or any other factors, disrupt a country or region where we have a significant workforce (such as the U.S., India or the Philippines) or customers (such as the U.S. or Europe), or vendors, our business could be materially adversely affected.
If any of these factors disrupt a country or region where we have a significant workforce (such as the U.S., India or the Philippines) or customers (such as the U.S. or Europe), or vendors, our business could be materially adversely affected.
We also receive, process, transmit and store substantial volumes of information relating to identifiable individuals, both in our role as a service provider and as an employer, and we are subject to numerous laws, rules and regulations in the United States (both federal and state) and foreign jurisdictions designed to protect both individually identifiable information as well as personal health information.
We also receive, process, transmit and store substantial volumes of information relating to identifiable individuals, both in our role as a solution provider and as an employer, and we are subject to numerous laws, rules and regulations in the United States (both federal and state) and foreign jurisdictions designed to protect both individually identifiable information as well as personal health information.
As a result, we are subject to numerous laws and regulations in the United States (both federal and state) and foreign laws and regulations designed to protect both individually identifiable information and personal health information, including the Health Insurance Portability and Accountability Act of 1996, as amended (HIPAA), and the regulations promulgated under HIPPA governing, among other things, the privacy, security and electronic transmission of individually identifiable health information, and the European Union General Data Protection Regulation (GDPR) (effective May 25, 2018), which imposes stringent data protection requirements and significant penalties for non-compliance and has had a significant impact on how we process and handle certain data.
As a result, we are subject to numerous laws and regulations in the United States (both federal and state) and foreign laws and regulations designed to protect both individually identifiable information and personal health information, including the Health Insurance Portability and Accountability Act of 1996, as amended ("HIPAA"), and the regulations promulgated under HIPPA governing, among other things, the privacy, security and electronic transmission of individually identifiable health information, and the European Union General Data Protection Regulation ("GDPR"), which imposes stringent data protection requirements and significant penalties for non-compliance and has had a significant impact on how we process and handle certain data.
Our employees and customers in a particular country or region in the world may be impacted as a result of a variety of diversions, including: geopolitical events and increasing geopolitical tensions, such as war, the threat of war, or terrorist activity; macroeconomic conditions; natural disasters or the effects of climate change (such as drought, flooding, wildfires, increased storm severity, and sea level rise); power shortages or outages, major public health issues, including pandemics (such as the coronavirus); and significant local, national or global events capturing the attention of a large part of the population.
Our employees and customers in a particular country or region in the world may be impacted as a result of a variety of diversions, including: geopolitical events and increasing geopolitical tensions, such as war, the threat of war, or terrorist activity; macroeconomic conditions, such as the level of inflation, economic activity and interest rates; natural disasters or the effects of climate change (such as drought, flooding, wildfires, increased storm severity, and sea level rise); power shortages or outages, major public health issues, including pandemics (such as the coronavirus); and significant local, national or global events capturing the attention of a large part of the population.
There is no obligation, however, for the vendors to renew their contracts with us, or to offer the same or lower rates in the future, and such contracts are subject to termination or modification for various reasons outside of our control.
There is no obligation for our vendors to renew their long term contracts with us, or to offer the same or lower rates in the future, and such contracts are subject to termination or modification for various reasons outside of our control.
As part of our business processing services, we also develop system software platforms necessary to support our customers’ needs, with significant ongoing investment in developing and operating customer-appropriate operating systems, databases and system software solutions.
As part of our business process solutions, we also develop system software platforms necessary to support our customers’ needs, with significant ongoing investment in developing and operating customer-appropriate operating systems, databases and system software solutions.
These may restrict our and our subsidiaries’ ability to take some or all of the following actions: • incur or guarantee additional indebtedness or sell disqualified or preferred stock; • pay dividends on, make distributions in respect of, repurchase or redeem capital stock; • make investments or acquisitions; • sell, transfer or otherwise dispose of certain assets; • create liens; • enter into sale/leaseback transactions; • enter into agreements restricting the ability to pay dividends or make other intercompany transfers; • consolidate, merge, sell or otherwise dispose of all or substantially all of our or our subsidiaries’ assets; • enter into transactions with affiliates; • prepay, repurchase or redeem certain kinds of indebtedness; • issue or sell stock of our subsidiaries; and/or • significantly change the nature of our business.
These may restrict our and our subsidiaries’ ability to take some or all of the following actions: • incur or guarantee additional indebtedness or sell disqualified or preferred stock; • pay dividends on, make distributions in respect of, repurchase or redeem capital stock; • make investments or acquisitions; CNDT 2023 Annual Report 23 Table of Contents • sell, transfer or otherwise dispose of certain assets; • create liens; • enter into sale/leaseback transactions; • enter into agreements restricting the ability to pay dividends or make other intercompany transfers; • consolidate, merge, sell or otherwise dispose of all or substantially all of our or our subsidiaries’ assets; • enter into transactions with affiliates; • prepay, repurchase or redeem certain kinds of indebtedness; • issue or sell stock of our subsidiaries; and/or • significantly change the nature of our business.
Changes to existing laws, the introduction of new laws in this area or our failure to comply with existing laws that are applicable to us may subject us to, among other things, additional costs or changes to our business practices, liability for monetary damages, fines and/or criminal prosecution, unfavorable publicity, restrictions on our ability to obtain and process information and allegations by our customers and clients that we have not performed our contractual obligations, any of which could materially adversely affect our results of operations and financial condition.
Changes to existing laws, the introduction of new laws in this area or our failure to comply with existing laws that are applicable to us may subject us to, among other things, additional costs or changes to our business practices, liability for monetary damages, fines and/or criminal prosecution, unfavorable publicity, CNDT 2023 Annual Report 19 Table of Contents restrictions on our ability to obtain and process information and allegations by our customers and clients that we have not performed our contractual obligations, any of which could materially adversely affect our results of operations and financial condition.
Any failure to comply fully or materially with PCI DSS, HITRUST and other applicable industry standards now or at any point in the future may provide customers the right to terminate contracts with us or to enforce provisions obligating us to reimburse them for any penalties or costs incurred by CNDT 2022 Annual Report 23 Table of Contents them as a result of our non-compliance, or subject us to other fines, penalties, damages or civil liability, each of which could have a material adverse effect on our business, financial condition and results of operations.
Any failure to comply fully or materially with PCI DSS, HITRUST and other applicable industry standards now or at any point in the future may provide customers the right to terminate contracts with us or to enforce provisions obligating us to reimburse them for any penalties or costs incurred by them as a result of our non-compliance, or subject us to other fines, penalties, damages or civil liability, each of which could have a material adverse effect on our business, financial condition and results of operations.
As a result of these and other business processing services, the integrity, security, accuracy and non-interruption of our systems and information technology and that of our third-party providers and our interfaces with our customers are extremely important to our business, operating results, growth, prospects and reputation.
As a result of these and other business process solutions, the integrity, security, accuracy and non-interruption of our systems and information technology and that of our third-party providers and our interfaces with our customers are extremely important to our business, operating results, growth, prospects and reputation.
Our results of operations and financial condition may be materially adversely affected by conditions abroad, including local economics, political environments, fluctuating foreign currencies and shifting regulatory schemes. Approximately 10.0% of our 2022 revenues was generated from operations outside the United States. In addition, we maintain significant operations outside the United States.
Our results of operations and financial condition may be materially adversely affected by conditions abroad, including local economics, political environments, fluctuating foreign currencies and shifting regulatory schemes. Approximately 11% of our 2023 revenues was generated from operations outside the United States. In addition, we maintain significant operations outside the United States.
If a client is not satisfied with the quality of work performed by us or a subcontractor, or with the type of services or solutions delivered, or if we or our subcontractors fail to perform in accordance with contract requirements, then we could incur additional costs to address the situation, the profitability of that work might be impaired and the client’s dissatisfaction with our services could damage our ability to obtain additional work from that client or obtain new work from other potential clients.
If a client is not satisfied with the quality of work performed by us or a subcontractor, or with the type of services or solutions delivered, or if we or our subcontractors CNDT 2023 Annual Report 16 Table of Contents fail to perform in accordance with contract requirements, then we could incur additional costs to address the situation, the profitability of that work might be impaired and the client’s dissatisfaction with our services could damage our ability to obtain additional work from that client or obtain new work from other potential clients.
Our customers include global commercial clients and government clients who depend upon our operational efficiency, non-interruption of service, and accuracy and security of information. We also use third-party providers such as subcontractors, software vendors, utility providers and network providers, upon whom we rely for our business processing services, to deliver uninterrupted, secure service.
Our customers include global commercial clients and government clients who depend upon our operational efficiency, non-interruption of service, and accuracy and security of information. We also use third-party providers such as subcontractors, software vendors, utility providers and network providers, upon whom we rely to support our business process solutions, to deliver uninterrupted, secure service.
In addition, a number of our facilities are located in jurisdictions outside of the United States where the provision of utility services, including electricity and water, may not be consistently reliable, and while there are backup systems in many of our operating facilities, an extended outage of utility or network services could materially adversely affect our results of operations and financial condition.
In addition, a number of our facilities are located in jurisdictions outside of the United States where the provision of utility services, including electricity and water, may not be consistently reliable, and an extended outage of utility or network services could materially adversely affect our results of operations and financial condition.
CNDT 2022 Annual Report 21 Table of Contents We are subject to laws of the United States and foreign jurisdictions relating to processing certain financial transactions, including payment card transactions and debit or credit card transactions, and failure to comply with those laws, whether or not inadvertent, could subject us to legal actions and materially adversely affect our results of operations and financial condition.
We are subject to laws of the United States and foreign jurisdictions relating to processing certain financial transactions, including payment card transactions and debit or credit card transactions, and failure to comply with those laws, whether or not inadvertent, could subject us to legal actions and materially adversely affect our results of operations and financial condition.
There is a risk, however, that our modernization efforts and data center consolidations could materially and adversely disrupt our operations and our service delivery to customers, could result in contractual penalties or damage claims from customers, could occur over a period longer than planned, and could require greater than CNDT 2022 Annual Report 19 Table of Contents expected investment and other internal and external resources.
There is a risk, however, that our modernization efforts and data center consolidations could materially and adversely disrupt our operations and our service delivery to customers, could result in contractual penalties or damage claims from customers, could occur over a period longer than planned, and could require greater than expected investment and other internal and external resources.
CNDT 2022 Annual Report 16 Table of Contents Our business may be adversely affected by geopolitical events and increasing geopolitical tensions, macroeconomic conditions, natural disasters and other factors that could directly impact certain of our employees, customers and vendors in countries or regions effected by such events and factors. We have a global workforce and global customers.
Our business may be adversely affected by geopolitical events and increasing geopolitical tensions, macroeconomic conditions, natural disasters and other factors that could directly impact certain of our employees, customers and vendors in countries or regions effected by such events and factors. We have a global workforce and global customers.
CNDT 2022 Annual Report 22 Table of Contents Because the techniques used to obtain unauthorized access are constantly changing and becoming increasingly more sophisticated and often are not recognized until launched against a target, we or our third-party service providers may be unable to anticipate these techniques or implement sufficient preventative measures.
Because the techniques used to obtain unauthorized access are constantly changing and becoming increasingly more sophisticated and often are not recognized until launched against a target, we or our third-party service providers may be unable to anticipate these techniques or implement sufficient preventative measures.
Increases in the cost of voice and data services or significant interruptions in such services could materially adversely affect our results of operations and financial condition. Our business is significantly dependent on voice and data services provided by various communication and data service providers around the world.
CNDT 2023 Annual Report 25 Table of Contents Increases in the cost of voice and data services or significant interruptions in such services could materially adversely affect our results of operations and financial condition. Our business is significantly dependent on voice and data services provided by various communication and data service providers around the world.
Furthermore, under this indebtedness we have pledged our assets as collateral as security for our repayment obligations. If we were unable to repay any amount of this indebtedness when due and payable, the lenders could proceed against the collateral that secures this CNDT 2022 Annual Report 25 Table of Contents indebtedness.
Furthermore, under this indebtedness we have pledged our assets as collateral as security for our repayment obligations. If we were unable to repay any amount of this indebtedness when due and payable, the lenders could proceed against the collateral that secures this indebtedness.
Another industry standard is the Health Information Trust Alliance (HITRUST) which applies to aspects of the healthcare industry in addition to other industries. We take steps to achieve compliance and/or certification for our systems. In the future we may not be able to maintain compliance with PCI DSS, HITRUST and other applicable industry standards.
Another industry standard is the Health Information Trust Alliance ("HITRUST") which applies to aspects of the healthcare industry in addition to other industries. In the future we may not be able to maintain compliance with PCI DSS, HITRUST and other applicable industry standards.
This makes the bidding process for new contracts much more difficult and requires us to adequately consider these requirements in the pricing of our services.
This makes the bidding process for new CNDT 2023 Annual Report 24 Table of Contents contracts much more difficult and requires us to adequately consider these requirements in the pricing of our services.
Many of our contracts with non-government clients may be terminated by the client, without cause, upon specified advance CNDT 2022 Annual Report 17 Table of Contents notice. Accordingly, clients who are not satisfied might seek to terminate existing contracts prior to their scheduled expiration date, which may result in our inability to fully recover our up-front investments.
Many of our contracts with non-government clients may be terminated by the client, without cause, upon specified advance notice. Accordingly, clients who are not satisfied might seek to terminate existing contracts prior to their scheduled expiration date, which may result in our inability to fully recover our up-front investments. In addition, clients could direct future business to our competitors.
Depending on competitive market factors, future prices we obtain for our services may decline from previous levels. If we are unable to obtain adequate pricing for our services, it could materially adversely affect our results of operations and financial condition. In addition, our contracts are increasingly requiring tighter timelines for implementation as well as more stringent service level metrics.
If we are unable to obtain adequate pricing for our services, it could materially adversely affect our results of operations and financial condition. In addition, our contracts are increasingly requiring tighter timelines for implementation as well as more stringent service level metrics.
While we maintain insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject to various exclusions as well as caps on amounts recoverable.
Our insurance does not cover all types and amounts of potential liabilities and is subject to various exclusions as well as caps on amounts recoverable.
While no additional impairments were identified in 2022, we may be required to record additional charges to earnings during the period in which any impairment of our goodwill or other intangible assets is determined which could adversely impact our results of operations. As of December 31, 2022, our goodwill balance was $955 million, which represented 26.7% of total consolidated assets.
We may be required to record additional charges to earnings during the period in which any impairment of our goodwill or other intangible assets is determined which could adversely impact our results of operations. As of December 31, 2023, our goodwill balance was $651 million, which represented 20.6% of total consolidated assets.
Expectations relating to environmental, social and governance considerations expose the Company to potential liabilities, increased costs, reputational harm, and other adverse effects on the Company’s business.
CNDT 2023 Annual Report 18 Table of Contents Expectations relating to environmental, social and governance considerations expose the Company to potential liabilities, increased costs, reputational harm, and other adverse effects on the Company’s business.
We have non-recurring revenue, which subjects us to a risk that our revenues and cash flows from operations may fluctuate from period to period. Revenue generated from our non-recurring services may fluctuate due to factors both within and outside of our control.
Economic and political conditions could affect our clients’ businesses and the markets they serve. We have non-recurring revenue, which subjects us to a risk that our revenues and cash flows from operations may fluctuate from period to period. Revenue generated from our non-recurring services may fluctuate due to factors both within and outside of our control.
These include, for example, the appropriate encryption of information. Despite such efforts, we are susceptible to breach of security systems which may result in unauthorized access to our facilities and those of our customers and/or the information we and our customers are trying to protect.
We are susceptible to breach of security systems which may result in unauthorized access to our facilities and those of our customers and/or the information we and our customers are trying to protect.
Hacking, malware, phishing, viruses and other “cyber-attacks” have become more prevalent, have occurred in our systems in the past, and may occur in our systems in the future.
Hacking, CNDT 2023 Annual Report 20 Table of Contents malware, phishing, viruses and other “cyber-attacks” have become more prevalent, have occurred in our systems in the past, and may occur in our systems in the future.
If our competitors protest or challenge an award made to us on a government contract, the costs to defend such an award may be significant and could involve subsequent litigation that could take years to resolve. Our ability to recover capital and other investments in connection with our contracts is subject to risk.
If our competitors protest or challenge an award made to us on a government contract, the costs to defend such an award may be significant and could involve subsequent litigation that could take years to resolve.
Our results of operations and financial condition could be materially adversely affected by legal and regulatory matters.
CNDT 2023 Annual Report 21 Table of Contents Our results of operations and financial condition could be materially adversely affected by legal and regulatory matters.
It may also take longer to realize the intended favorable benefits from an enhanced technology infrastructure than we expected, or that disruptions may continue to occur while we enhance this infrastructure. The process of consolidating our data center involves inherent risks and may cause disruptions to our operations.
It may also take longer to realize the intended favorable benefits from an enhanced technology infrastructure than we expected, or that disruptions may continue to occur while we enhance this infrastructure.
Although we endeavor to ensure that there is adequate backup and maintenance of these systems and centers, we have in the past experienced and in the future could experience service interruptions that could result in curtailed operations and loss of existing and potential customers, which could significantly reduce our revenues and profits in addition to significantly impairing our reputation.
Often these systems and data centers must be maintained worldwide and on a 24/7 basis. We have in the past experienced and in the future could experience service interruptions that could result in curtailed operations and loss of existing and potential customers, which could significantly reduce our revenues and profits in addition to significantly impairing our reputation.
In addition, clients could direct future business to our competitors. We could also trigger contractual credits to clients or a contractual default.
We could also trigger contractual credits to clients or a contractual default.
As a result, we embarked on a long-term project to modernize a significant portion of our information technology infrastructure with new systems and processes and to consolidate our data centers. This project also includes investments in our data centers and networks, enhancement, modernization and consolidation of our IT infrastructure and customer-facing technologies, enhanced cybersecurity and movement to cloud-based technology.
As a result, we embarked on a long-term project to modernize a significant portion of our information technology infrastructure with new systems and processes and to consolidate our data centers.
Notwithstanding the preventative and protective measures we have in place, it may not be possible for us to fully or timely know if or when such incidents arise, or the full business impact of any cybersecurity breach.
Our cyber practices and cybersecurity systems may prove to be inadequate and result in the disruption, failure, misappropriation or corruption of our network and information systems and it may not be possible for us to fully or timely know if or when such incidents arise, or the full business impact of any cybersecurity breach.
CNDT 2022 Annual Report 26 Table of Contents Our profitability is dependent upon our ability to obtain adequate pricing for our services and to improve our cost structure. Our success depends on our ability to obtain adequate pricing for our services that will provide a reasonable return to our shareholders.
Our profitability is dependent upon our ability to obtain adequate pricing for our services and to improve our cost structure. Our success depends on our ability to obtain adequate pricing for our services that will provide a reasonable return to our shareholders. Depending on competitive market factors, future prices we obtain for our services may decline from previous levels.
We are a leading provider of business processing services concentrated in transaction-intensive processing, analytics and automation. We act as a trusted business partner in both front-office and back-office platforms, providing interactions on a substantial scale with our customers and other third-parties.
As a leader in business process solutions, we leverage cloud computing, artificial intelligence, machine learning and advanced analytics. We act as a trusted business partner in both front-office and back-office platforms, providing interactions on a substantial scale with our customers and other third-parties.
Any inability to obtain voice or data services at favorable rates could materially adversely affect our results of operations and financial condition. Where possible, we have entered into long-term contracts with various providers to mitigate short-term rate increases and fluctuations.
Accordingly, any disruption of these services could materially adversely affect our results of operations and financial condition. Any inability to obtain voice or data services at favorable rates could materially adversely affect our results of operations and financial condition.
CNDT 2022 Annual Report 24 Table of Contents Our significant indebtedness could materially adversely affect our results of operations and financial condition. We have and will continue to have a significant amount of debt and other obligations. Our substantial debt and other obligations could have important consequences.
Refer to Note 8 – Goodwill and Intangible Assets, Net to our Consolidated Financial Statements for additional information about our goodwill impairments. Our significant indebtedness could materially adversely affect our results of operations and financial condition. We have and will continue to have a significant amount of debt and other obligations.
We do not hedge the translation effect of international revenues and expenses, which are denominated in currencies other than our U.S. parent functional currency, within our Consolidated Financial Statements. If we are unable to effectively hedge these risks, our results of operations and financial condition could be materially adversely affected.
If we are unable to effectively hedge these risks, our results of operations and financial condition could be materially adversely affected.
Many of these contracts are extremely complex and require the investment of significant resources in order to prepare accurate bids and proposals.
Additionally, we derive significant revenue from contracts awarded through competitive bidding processes, including renewals, which can impose substantial costs on us, and may limit the Company’s ability to negotiate certain contractual terms and conditions. Many of these contracts are extremely complex and require the investment of significant resources in order to prepare accurate bids and proposals.
CNDT 2022 Annual Report 18 Table of Contents The loss of key senior management or the failure to attract and retain necessary technical personnel and qualified subcontractors could materially adversely affect our results of operations and financial condition.
The loss of certain key personnel, such as CNDT 2023 Annual Report 17 Table of Contents our Chief Executive Officer ("CEO"), members of our executive team and other highly skilled employees, could materially adversely affect our results of operations and financial condition.
To date, while we do not believe Russia’s military action in Ukraine and governmental actions in response thereto have had a material impact on our business, financial position or operations, we continue to monitor the situation closely.
To date, while we do not believe our business, financial position or operations have been materially impacted by these factors, we continue to monitor world events closely.
Removed
We derive significant revenue and profit from commercial and government contracts awarded through competitive bidding processes, including renewals, which can impose substantial costs on us, and we will not achieve revenue and profit objectives if we fail to accurately and effectively bid on such projects.
Added
The markets in which we operate are highly competitive, and we might not be able to compete effectively. We operate in a global marketplace in which competition in all areas of our portfolio is vigorous.
Removed
As an example of a geopolitical event, in February 2022, Russian forces launched significant military action against Ukraine, which has resulted in conflict and disruptions in the region.
Added
Some of our competitors possess greater financial, marketing and sales resources, and larger geographic scope in certain parts of the world than we do, which, in turn, provides them with additional leverage in the competition for contracts.
Removed
We generally hedge foreign currency denominated assets, liabilities and anticipated transactions primarily through the use of currency derivative contracts. The use of derivative contracts is intended to mitigate or reduce transactional level volatility in the results of foreign operations but does not eliminate volatility.
Added
In certain niche, regional or metropolitan markets, we face smaller competitors with specialized capabilities who may be able to provide competing services with greater economic efficiency. Some of our competitors have more significant operations than we do in lower cost countries that can serve as a platform from which to provide services worldwide on terms that may be more favorable.
Removed
In addition, we incur significant expenditures for the development and construction of system software platforms needed to support our clients’ needs.
Added
Increased competition often results in corresponding pressure on prices and terms. There can be no assurance that we will succeed in providing competitively priced services at levels of service and quality that will enable us to maintain and grow our market share.
Removed
Our failure to fully understand client requirements or implement the appropriate operating systems or databases or solutions which enable the use of other supporting software may delay the project and result in cost overruns or potential impairment of the related software platforms, which could materially adversely affect our results of operations and financial condition.
Added
CNDT 2023 Annual Report 15 Table of Contents Our ability to recover capital and other investments in connection with our contracts is subject to risk.
Removed
This project is ongoing and we expect that these changes will provide greater strategic and operational flexibility and efficiency and better control of our systems and processes.
Added
We cannot guarantee that our stock repurchase program will be utilized to the full value approved or that it will enhance long-term stockholder value. Repurchases we consummate could increase the volatility of the price of our common stock and could have a negative impact on our available cash balance.
Removed
We are in the process of undertaking several data center migrations now and in the future and, during these data migrations, could potentially experience significant service outages.
Added
In May 2023, our Board of Directors authorized a three-year stock repurchase program for up to $75 million of our common stock. Under the repurchase program, repurchases can be made from time to time using open market transactions, and may include Rule 10b5-1 trading plans, all in accordance with the rules of the SEC and other applicable legal requirements.
Removed
Our business has been and will continue to be negatively impacted by the ongoing coronavirus pandemic.
Added
The specific timing, price and size of the purchases will depend on prevailing stock prices, general economic and market conditions, and other considerations consistent with our capital allocation strategy.
Removed
As a result of the COVID-19 pandemic, we have experienced and can be expected to continue to experience disruptions to our business, our operations, the delivery of our services and customer demand for our services and business offerings, including: • Work-from-home concerns: The COVID-19 pandemic has led to the shifting of substantial services being performed by us for our customers to work-from-home alternatives, which have created added burdens, risks and costs, including but not limited to: the added cost and uncertainty created by a significant change in our delivery model; delays and disruptions resulting from organizing and implementing work-from-home solutions; customer protocols not allowing, without express customer waiver or permission, work-from-home alternatives, due to sensitivity of customer data, inclusion of personally identifiable information, cybersecurity and data security concerns, and other factors; delays and disruptions in providing customer services which may adversely affect our reputation and may in the future result in failure to satisfy customer contract requirements and other noncompliance issues; challenges in and cost of equipping work-from-home solutions with appropriate technology equipment and software, with suitable security protections; potential for increased cybersecurity and other data security issues; compliance with legal, regulatory, industry and customer standards and specifications; and increased logistical issues resulting from unexpected shift in service delivery model.
Added
Stock repurchases could have an impact on our common stock trading prices, increase the volatility of the price of our common stock, or reduce our available cash balance such that we will be required to seek financing to support our operations.
Removed
As a result of these and other factors related to work-from-home solutions, we have experienced and can be expected to continue to experience delays and disruptions and an adverse impact on our business, operations, costs, satisfaction of customer requirements and operating results and financial condition. • Customer performance and demand: The COVID-19 pandemic has impacted and may be expected to continue to adversely impact customer demand for our services and business offerings.
Added
The repurchase program does not obligate us to acquire a particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at our discretion, which may result in a decrease in the trading prices of our common stock. Even if our share repurchase program is fully implemented, it may not enhance long-term stockholder value.
Removed
Many of our customers have experienced and will continue to experience substantial disruption in their own operations and the COVID-19 pandemic has also resulted in greater customer uncertainty in their short-term and longer-term needs.
Added
We have made and may continue to make divestitures, as well as acquisitions, investments and joint ventures, all of which involve numerous risks and uncertainties. We have divested and may in the future divest certain assets or businesses, including businesses that are no longer a part of our ongoing strategic plan.
Removed
In addition, under certain contracts we earn revenues based on the number of transactions processed, such as, for example, certain transportation and credit card processing arrangements where the number of transactions has decreased due to the COVID-19 pandemic.
Added
Divestitures require a significant investment of time and resources and involve significant risks and uncertainties, including: • inability to find potential buyers on favorable terms; • failure to effectively transfer liabilities, contracts, facilities and employees to buyers; • requirements that we retain or indemnify buyers against certain liabilities and obligations; • the possibility that we will become subject to third-party claims arising out of such divestiture; • challenges in identifying and separating the intellectual property, systems and data to be divested from the intellectual property, systems and data that we wish to retain; • inability to reduce fixed costs previously associated with the divested assets or business; • challenges in collecting the proceeds from any divestiture; • disruption of our ongoing business and distraction of management; • loss of key employees who leave us as a result of a divestiture; and • if customers or partners of the divested business do not receive the same level of service from the new owners, or the new owners do not handle the customer data with the same level of care, our other businesses may be adversely affected, to the extent that these customers or partners also purchase other products offered by us or otherwise conduct business with our retained business.
Removed
These and other pandemic-related factors have and will continue to adversely impact revenues, sales, new business opportunities, pricing and our sales pipeline. • If we fail to satisfy a customer’s requirements or specifications, we could incur additional costs to address such dissatisfaction or on account of such deficiency as well as receive notice of termination.
Added
Divestitures may result in losses on disposal or continued financial involvement in the divested business, including through indemnification, guarantee or other financial arrangements, for a period of time following the transaction, which would adversely affect our financial results. Refer to Note 4 – Assets/Liabilities Held for Sale and Divestitures to our Consolidated Financial Statements for additional information about our divestitures.
Removed
The COVID-19 pandemic has had and can be expected to continue to have an impact on compliance and non-interruption of service under certain customer contractual requirements, and certain customer relationships can be expected to be adversely impacted, in addition to our incurring added costs in response to any deficiency. • We rely on third parties to provide technology, other services and products we need to operate our business.
Added
CNDT 2023 Annual Report 22 Table of Contents Additionally, we may selectively pursue strategic acquisitions, investments and joint ventures. We also may enter into relationships with other businesses to expand our products or our ability to provide services.
Removed
Delays or interruption in the operations of third parties on which we rely may result in disruptions in our own operations and fulfillment of our customers’ requirements. We continue to monitor the latest developments regarding the pandemic.
Added
Acquisitions, investments and joint ventures similarly pose a number of risks and potential disruptions that could adversely affect our reputation, operations or financial results, including: expansion into new markets and business ventures; the diversion of management’s attention to the acquisition and integration of acquired operations and personnel; being bound by acquired customer or vendor contracts with unfavorable terms; and potential adverse effects on a company’s operating results for various reasons, including, but not limited to, the following items: the inability to achieve financial targets; the inability to achieve certain integration expectations, operating goals, and synergies; costs incurred to exit current or acquired contracts or restructuring activities; costs incurred to service acquisition debt, if any; and the amortization or impairment of acquired intangible assets.
Removed
We are unable to predict the extent of any continued impact of the pandemic on our business, operations, and financial condition due to the uncertainty of future developments.
Added
Our substantial debt and other obligations could have important consequences.
Removed
Any future impacts will depend on, among other things, the further spread and duration of COVID-19, including the impact of variants and resurgences, the requirements to take action to help limit the spread of the illness, the availability, widespread distribution, and acceptance of vaccines and treatments for COVID-19 and the economic impacts of the pandemic, including recession and inflationary pressures.
Added
Where possible, we have entered into long term contracts with various providers to have price certainty and avoid short term rate increases and fluctuations.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe aggressively managed our surplus properties through lease terminations, subleases and consolidation of properties. As a result, approximately 0.5 million square feet of the surplus property portfolio were resolved during the year ended December 31, 2022.
Biggest changeBecause of the interrelation of our business segments, each of the segments uses substantially all of these properties at least in part. During 2023, we aggressively pursued portfolio reduction opportunities through lease terminations, subleases and consolidation of properties. As a result, the surplus property portfolio was reduced by approximately 0.7 million square feet during the year ended December 31, 2023.
The size of our property portfolio as of December 31, 2022 was approximately 5.6 million square feet at an annual operating cost (lease costs and expenses) of approximately $138 million and was composed of 193 leased properties and 4 owned properties. We believe that our current facilities are suitable and adequate for our current businesses.
The size of our property portfolio as of December 31, 2023 was approximately 4.9 million square feet at an annual operating cost (lease costs and expenses) of approximately $135 million and was composed of 186 leased properties and 4 owned properties. We believe that our current facilities are suitable and adequate for our current businesses.
Additional leased and owned properties may become surplus in the future as we continue to optimize our workforce location strategy based on existing conditions and leverage enhanced work-from-home capabilities. We are obligated to maintain our leased surplus properties through required contractual lease periods and plan to dispose of or sublease these properties.
Additional leased and owned properties may become surplus in the future as we continue to optimize our workforce location strategy based on existing conditions and leverage enhanced work-from-home capabilities.
Removed
Because of the interrelation of our business segments, each of the segments uses substantially all of these properties at least in part. We had 0.5 million square feet of our leased properties that became surplus in 2022 due to the implementation of our efficiency initiatives to consolidate our real estate footprint.
Added
Although we are obligated to maintain our leased surplus properties through required contractual lease periods, we continue to examine opportunities to dispose of or sublease these properties and further align our business units in an effort to best optimize the portfolio. CNDT 2023 Annual Report 28 Table of Contents ITEM 3.
Added
LEGAL PROCEEDINGS The information set forth under Note 16 – Contingencies and Litigation to the Consolidated Financial Statements in Part II, Item 8 is incorporated herein by reference.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSales of Unregistered Securities During the Quarter Ended December 31, 2022 None CNDT 2022 Annual Report 30 Table of Contents Securities Authorized for Issuance Under Existing Equity Compensation Plans Information about securities authorized for issuance under existing equity compensation plans is incorporated by reference from Item 12—Securities Authorized for Issuance Under Existing Equity Compensation Plans.
Biggest changeSecurities Authorized for Issuance Under Existing Equity Compensation Plans Information about securities authorized for issuance under existing equity compensation plans is incorporated by reference from Item 12—Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Conduent Common Stock Dividends We did not pay any dividends on our common stock in 2022. We intend to retain future earnings for use in the operation of our business and to fund future growth. We do not anticipate paying any dividends on our common stock for the foreseeable future.
Conduent Common Stock Dividends We did not pay any dividends on our common stock in 2023. We intend to retain future earnings for use in the operation of our business and to fund future growth. We do not anticipate paying any dividends on our common stock for the foreseeable future.
In December 2019, Conduent changed the listing of its publicly traded common stock from the New York Stock Exchange to the Nasdaq, where it remains listed under the ticker "CNDT". Common Shareholders of Record There w ere 14,639 shareholders o f record as of January 31, 2023.
In December 2019, Conduent changed the listing of its publicly traded common stock from the New York Stock Exchange to the Nasdaq, where it remains listed under the ticker "CNDT". Common Shareholders of Record There w ere 13,038 shareholders o f record as of January 31, 2024.
Removed
Performance Graph Historically, we have presented the S&P Software and Services Index as our published industry index. Effective March 2023, our Company's industry classification will change and we have selected the S&P 500 Data Processing and Outsourced Services index as a more appropriate index.
Added
Performance Graph CNDT 2023 Annual Report 30 Table of Contents Purchases of Equity Securities by the Issuer and Affiliated Purchasers Share repurchase activity during the three months ended December 31, 2023 was as follows: Period Total Number of Shares Purchased (1) Average Price Paid Per Share (2) Total Number of Shares Purchased as a Part of Publicly Announced Plan Approximate Dollar Value of Shares that May Yet Be Purchased Under Plan (in millions) October 1-31, 2023 1,085,481 $ 3.27 1,085,481 $ 64 November 1-30, 2023 3,872,447 2.75 3,872,447 54 December 1-31, 2023 1,656,682 3.40 1,656,682 48 Total 6,614,610 $ 3.00 6,614,610 $ 48 (1) On May 16, 2023, the Board of Directors authorized a three-year share repurchase program, granting approval for the Company to repurchase up to $75 million of its common stock from time to time as market and business conditions warrant, including through open market purchases or Rule 10b5-1 trading plans.
Removed
For this fiscal year only, we are presenting both indices in the graph above for comparative purposes to prior fiscal year graphs.
Added
(2) Average share price includes transaction commissions. The timing and number of shares repurchased depended on a variety of factors, including price, capital availability, legal requirements and economic and market conditions.
Added
This share repurchase program does not obligate the Company to acquire a specific number of shares and the program may be modified, suspended or discontinued at any time at the Company’s discretion without prior notice.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCNDT 2022 Annual Report 37 Table of Contents Segment Performance Review (in millions) Commercial Government Transportation Other Unallocated Costs Total Year Ended Dec 31, 2022 Divestitures Other Total Revenue $ 1,992 $ 1,150 $ 709 $ 7 $ — $ — $ 3,858 Segment profit (Loss) $ 124 $ 294 $ 49 $ 2 $ — $ (293) $ 176 Adjusted EBITDA $ 226 $ 331 $ 84 $ 2 $ — $ (247) $ 396 % of Total Revenue 51.6 % 29.8 % 18.4 % 0.2 % — % — % 100.0 % Adjusted EBITDA Margin 11.3 % 28.8 % 11.8 % 28.6 % — % — % 10.3 % Year Ended Dec 31, 2021 Total Revenue $ 2,017 $ 1,307 $ 746 $ 70 $ — $ — $ 4,140 Segment profit (Loss) $ 95 $ 409 $ 72 $ 32 $ 1 $ (372) $ 237 Adjusted EBITDA $ 193 $ 437 $ 106 $ 39 $ 1 $ (289) $ 487 % of Total Revenue 48.7 % 31.6 % 18.0 % 1.7 % — % — % 100.0 % Adjusted EBITDA Margin 9.6 % 33.4 % 14.2 % 55.7 % — % — % 11.8 % (in millions) Year Ended December 31, Segment Profit (Loss) Reconciliation to Pre-tax Income (Loss) 2022 2021 2020 Income (Loss) Before Income Taxes $ (127) $ (25) $ (139) Reconciling items: Amortization of acquired intangible assets 13 135 239 Restructuring and related costs 39 45 67 Interest expense 84 55 60 Loss on extinguishment of debt — 15 — Goodwill impairment 358 — — (Gain) loss on divestitures and transaction costs, net (158) 3 17 Litigation settlements (recoveries), net (32) 3 20 Other (income) expenses, net (1) 6 1 Segment Pre-Tax Income (Loss) $ 176 $ 237 $ 265 Segment depreciation and amortization 220 218 222 CA MMIS charge (credit) — — (7) Abandonment of internal project — 32 — Other adjustments — — — Adjusted EBITDA $ 396 $ 487 $ 480 Commercial Segment Revenue Commercial revenue for 2022 decreased, compared to the prior year, due to the impact of our largest client normalizing to lower post pandemic call volumes, the merger of two of our clients resulting in lower volumes as well as unfavorable exchange rate movement, partially offset by higher interest rates positively impacting our BenefitWallet business, recognition of the revenue benefit associated with a minimum annual volume commitment contract with a large client and strong net new business ramp.
Biggest changeCNDT 2023 Annual Report 37 Table of Contents (in millions) Year Ended December 31, Segment Profit (Loss) Reconciliation to Pre-tax Income (Loss) and Adjusted EBITDA 2023 2022 2021 Income (Loss) Before Income Taxes $ (332) $ (127) $ (25) Reconciling items: Amortization of acquired intangible assets 7 13 135 Restructuring and related costs 62 39 45 Interest expense 111 84 55 Loss on extinguishment of debt — — 15 Goodwill impairment 287 358 — (Gain) loss on divestitures and transaction costs, net 10 (158) 3 Litigation settlements (recoveries), net (30) (32) 3 Other (income) expenses, net (3) (1) 6 Segment Pre-Tax Income (Loss) $ 112 $ 176 $ 237 Segment depreciation and amortization 260 220 218 Abandonment of internal project — — 32 Other adjustments (1) 6 — — Adjusted EBITDA $ 378 $ 396 $ 487 (1) Represents a termination for convenience fee related to the termination of a contract with a significant IT outsourcing provider, which is reported in Cost of Services on the Consolidated Statements of Income.
This ACV metric has increased sequentially each quarter in 2022, totaling $724 million in 2022, an increase of 16.8% versus 2021 excluding the impact of Government stimulus payments. • Strategic Growth Efforts – During the latter part of 2022, we dedicated a small number of senior associates with the mission to accelerate future revenue growth by selling existing solutions into new and adjacent markets and geographies.
This ACV metric increased sequentially each quarter in 2022, totaling $724 million in 2022, an increase of 16.8% versus 2021 excluding the impact of Government stimulus payments. • Strategic Growth Efforts – During the latter part of 2022, we dedicated a small number of senior associates with the mission to accelerate future revenue growth by selling existing solutions into new and adjacent markets and geographies.
We also have a $550 million Revolving Credit Facility for our various cash needs, of which none has been utilized for borrowings and $2 million has been utilized for letters of credit as of December 31, 2022. On February 11, 2022, we repaid the then-outstanding borrowing under the Revolving Credit Facility of $100 million.
We also have a $550 million Revolving Credit Facility for our various cash needs, of which none has been utilized for borrowings and $2 million has been utilized for letters of credit as of December 31, 2023. On February 11, 2022, we repaid the then-outstanding borrowing under the Revolving Credit Facility of $100 million.
The solutions in this segment help governments respond to changing rules for eligibility and increasing citizen expectations. • Transportation – Our Transportation segment provides systems, support, and revenue-generating solutions to government transportation agency clients.
Our solutions in this segment help governments respond to changing rules for eligibility and increasing citizen expectations. • Transportation – Our Transportation segment provides systems, support, and revenue-generating solutions to government transportation agency clients.
Metrics Signings Signings are defined as estimated future revenues from contracts signed during the period, including renewals of existing contracts. TCV is the estimated total contractual revenue related to signed contracts. TCV signings is defined as estimated future revenues from contracts signed during the period, including renewals of existing contracts.
Signings Signings are defined as estimated future revenues from contracts signed during the period, including renewals of existing contracts. TCV is the estimated total contractual revenue related to signed contracts. TCV signings is defined as estimated future revenues from contracts signed during the period, including renewals of existing contracts.
This MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying notes in this Form 10-K for the year ended December 31, 2022. This MD&A provides additional information about our operations, current developments, financial condition, cash flows and results of operations.
This MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying notes in this Form 10-K for the year ended December 31, 2023. This MD&A provides additional information about our operations, current developments, financial condition, cash flows and results of operations.
The 2022 rate was negative and lower than the U.S. statutory rate of 21% due to pre-tax book loss and an increase in taxes due to the geographic mix of income, and non-deductible expenses primarily driven by book and tax basis differences in the Midas divestiture goodwill and the Commercial reporting unit goodwill impairment.
The 2022 rate was negative and lower than the U.S. statutory rate of 21%, primarily due to pre-tax book loss, an increase in taxes due to the geographic mix of income and non-deductible expenses, primarily driven by book and tax basis difference in the Midas divestiture goodwill and the Commercial reporting unit goodwill impairment.
Financial Information The section below provides a comparative discussion of our consolidated results of operations for the year ended December 31, 2022 and 2021. See Item 7. MD&A–Financial Information in our Annual Report on Form 10-K for the year ended December 31, 2021, for a comparative discussion of our consolidated results of operations between 2021 and 2020.
Financial Information The section below provides a comparative discussion of our consolidated results of operations for the year ended December 31, 2023 and 2022. See Item 7. MD&A–Financial Information in our Annual Report on Form 10-K for the year ended December 31, 2022, for a comparative discussion of our consolidated results of operations between 2022 and 2021.
These operational improvements together with the significant progress being made in closing out major litigation cases, position us well with a solid foundation to embark on the next chapter of our journey.
These operational improvements together with the significant progress being made in closing out major litigation cases, positioned us well with a solid foundation to embark on the next chapter of our journey.
MD&A - Operations Review of Segments in our Annual Report on Form 10-K for the year ended December 31, 2021 for a comparative discussion of our consolidated results of operations by segment between 2021 and 2020.
MD&A - Operations Review of Segments in our Annual Report on Form 10-K for the year ended December 31, 2022 for a comparative discussion of our consolidated results of operations by segment between 2022 and 2021.
If there is a significant unusual or one-time item recognized in our operating results, the taxes attributable to that item would be separately calculated and recorded at the same time as the unusual or one-time item.
In the event there is a significant unusual or one-time item recognized in our operating results, the taxes attributable to that item would be separately calculated and recorded at the same time as the unusual or one-time item.
The discussion of 2021 results and related year-over-year comparisons as of and for the years ended December 31, 2021 and 2020 are found in Item 7 of Part II of our Form 10-K for the year ended December 31, 2021.
The discussion of 2022 results and related year-over-year comparisons as of and for the years ended December 31, 2022 and 2021 are found in Item 7 of Part II of our Form 10-K for the year ended December 31, 2022.
Across the Commercial segment, we operate on our clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enable revenue growth for our clients and their consumers and employees. • Government – Our Government segment provides government-centric business process services to U.S. federal, state and local and foreign governments for public assistance, health services, program administration, transaction processing and payment services.
Across the Commercial segment, we operate on our clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enable revenue growth for our clients and their consumers and employees. • Government – Our Government segment provides government-centric business process services to U.S. federal, state and local and foreign governments for public assistance, healthcare programs and administration, transaction processing and payment services.
Material Cash Requirements from Contractual Obligations We believe our balances of cash and cash equivalents, which totaled $582 million as of December 31, 2022, along with cash generated by operations and amounts available for borrowing under our Revolving Credit Facility, will be sufficient to satisfy our cash requirements over the next 12 months and beyond.
Material Cash Requirements from Contractual Obligations We believe our balances of cash and cash equivalents, which totaled $498 million as of December 31, 2023, along with cash generated by operations and amounts available for borrowing under our Revolving Credit Facility, will be sufficient to satisfy our cash requirements over the next 12 months and beyond.
The year-over-year comparisons in this MD&A are as of and for the years ended December 31, 2022 and 2021, unless stated otherwise.
The year-over-year comparisons in this MD&A are as of and for the years ended December 31, 2023 and 2022, unless stated otherwise.
During the fourth quarter, we concluded our long-range planning processes which included a full evaluation of our portfolio of solutions and identified incremental opportunities to streamline the portfolio. • New Business Signings – In 2022 we introduced a new primary signings metric Annual Contract Value (ACV), which provides more focus on the near-term revenue generation of new business signings as compared to the traditional view of Total Contract Value (TCV).
During the fourth quarter of 2022, we concluded our long-range planning processes which included a full evaluation of our portfolio of solutions and identified incremental opportunities to streamline the portfolio. • New Business Signings – In 2022 we introduced a new primary signings metric Annual Contract Value ("ACV" as defined in Metrics section below), which provides more focus on the near-term revenue generation of new business signings as compared to the traditional view of TCV.
The results of this action are becoming visible, for example, by the collaboration with a major bank to launch a Digital Payments Hub delivering faster, easier, and more secure payments. • Operational Service Levels – We continue to make significant improvements with our operational and technology service levels, and while we will always believe there is room for improvement in these areas, we have reached a standard consistent with the markets that we operate in.
The results of this action started to become visible, for example, by the collaboration with a major bank to launch a Digital Payments Hub delivering faster, easier, and more secure payments. • Operational Service Levels – We continued to make significant improvements with our operational and technology service levels, and while we will always believe there is room for improvement in these areas, we have reached a standard consistent with the markets that we operate in.
Gross deferred tax assets of $239 million and $265 million had valuation allowances of $102 million and $82 million at December 31, 2022 and 2021, respectively. We are subject to ongoing tax examinations and assessments in various jurisdictions. Accordingly, we may incur additional tax expense based upon our assessment of the more-likely-than-not outcomes of such matters.
Gross deferred tax assets of $253 million and $239 million had valuation allowances of $100 million and $102 million at December 31, 2023 and 2022, respectively. We are subject to ongoing tax examinations and assessments in various jurisdictions. Accordingly, we may incur additional tax expense based upon our assessment of the more-likely-than-not outcomes of such matters.
CNDT 2022 Annual Report 32 Table of Contents Significant 2022 Actions • Disposition and Portfolio Review – On February 8, 2022, we closed a transaction with Symplr Software, Inc. to sell our Midas suite of patient safety, quality and advanced analytics solutions (Midas business) for cash consideration of $322 million resulting in a pre-tax gain of $166 million.
Significant 2022 Actions • Disposition and Portfolio Review – On February 8, 2022, we closed a transaction with Symplr Software, Inc. to sell our Midas suite of patient safety, quality and advanced analytics solutions ("Midas business") for cash consideration of $322 million resulting in a pre-tax gain of $166 million.
As of December 31, 2022, total fixed lease payables were $271 million, of which $79 million was due within 12 months. Refer to Note 7 – Leases to the Consolidated Financial Statements for additional information. Estimated Purchase Commitments We have committed to purchasing certain materials and services to support our operations.
As of December 31, 2023, total fixed lease payables were $251 million, of which $69 million was due within 12 months. Refer to Note 7 – Leases to the Consolidated Financial Statements for additional information. Estimated Purchase Commitments We have committed to purchasing certain materials and services to support our operations.
Future interest payments associated with this debt, which has maturities through 2029, are forecast to be $543 million, of which $98 million is due within 12 months. Refer to Note 11 – Debt to the Consolidated Financial Statements for additional information. Leases In the normal course of business, we enter lease arrangements for certain equipment and facilities.
Future interest payments associated with this debt, which has maturities through 2029, are forecast to be $559 million, of which $103 million is due within 12 months. Refer to Note 11 – Debt to the Consolidated Financial Statements for additional information. Operating Leases In the ordinary course of business, we enter into operating lease arrangements for certain equipment and facilities.
Refer to Note 11 – Debt to the Consolidated Financial Statements for additional information. Goodwill Impairment The goodwill impairment for 2022 related to the write-down of the carrying value of the Commercial reporting unit. Refer to Note 8 – Goodwill and Intangible Assets, Net to the Consolidated Financial Statements for additional information.
The goodwill impairment for 2022 related to the write-down of the carrying value of the Commercial reporting unit. Refer to Note 8 – Goodwill and Intangible Assets, Net to the Consolidated Financial Statements for additional information on these impairments.
Renewal TCV for the year ended December 31, 2022 was $2,477 million, a decrease of 13% compared to the prior year due to timing on renewals; however the renewal rate for the year ended December 31, 2022 was consistent with the prior year. The amounts in the following table exclude the impact of divestitures.
Renewal TCV for the year ended December 31, 2023 was $2,341 million, a decrease of 5% compared to the prior year due to timing on renewals; however, the renewal rate for the year ended December 31, 2023 was consistent with the prior year. The amounts in the following table exclude the impact of divestitures.
Critical Accounting Estimates and Policies The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) requires us to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying Consolidated Financial Statements and notes thereto.
CNDT 2023 Annual Report 42 Table of Contents Critical Accounting Estimates and Policies The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires us to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying Consolidated Financial Statements and notes thereto.
Recent Accounting Changes See Note 1 – Basis of Presentation and Summary of Significant Accounting Policies for information on accounting standards adopted during the current year, as well as recently issued accounting standards not yet required to be adopted and the expected impact of the adoption of these accounting standards.
CNDT 2023 Annual Report 45 Table of Contents Recent Accounting Changes See Note 1 – Basis of Presentation and Summary of Significant Accounting Policies for information on accounting standards adopted during the current year, as well as recently issued accounting standards not yet required to be adopted and the expected impact of the adoption of these accounting standards.
CNDT 2022 Annual Report 42 Table of Contents Off-Balance Sheet Arrangements As of December 31, 2022, we do not believe we have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Off-Balance Sheet Arrangements As of December 31, 2023, we do not believe we have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Loss Contingencies We are currently involved in various claims and legal proceedings. At least quarterly, we review the status of each significant matter and assess its potential financial exposure considering all available information including, but not limited to, the impact of negotiations, settlements, rulings, advice of legal counsel and other updated information and events pertaining to a particular matter.
At least quarterly, we review the status of each significant matter and assess its potential financial exposure considering all available information including, but not limited to, the impact of negotiations, settlements, rulings, advice of legal counsel and other updated information and events pertaining to a particular matter.
Based on our quantitative assessments, we concluded that the fair value of our reporting units exceeded their respective carrying values and, accordingly, we did not record any goodwill impairment charge as a result of our annual quantitative impairment test of goodwill as of October 1, 2022.
CNDT 2023 Annual Report 44 Table of Contents Based on our quantitative assessments, we concluded that the fair value of our Government and Transportation reporting units exceeded their respective carrying values and, accordingly, we did not record any goodwill impairment charge as a result of our annual quantitative impairment test of goodwill as of October 1, 2023.
Goodwill is tested for impairment using a qualitative assessment and/or a quantitative assessment. In our quantitative assessment, we estimate the fair value of each reporting unit by weighting the results from the Income Approach (discounted cash flow methodology) and Market Approach.
Annual Goodwill Impairment Evaluation Our annual quantitative impairment test of goodwill was performed as of October 1, 2023. Goodwill is tested for impairment using a qualitative assessment and/or a quantitative assessment. In our quantitative assessment, we estimate the fair value of each reporting unit by weighting the results from the Income Approach (discounted cash flow methodology) and Market Approach.
(Gain) Loss on Divestitures and Transaction Costs The divestiture of the Midas business in the first quarter of 2022 resulted in a pre-tax gain of $166 million. Additionally, professional fees and other costs related to certain consummated and non-consummated transactions considered by us are included in this financial statement line item.
(Gain) Loss on Divestitures and Transaction Costs The divestiture of the Midas business in the first quarter of 2022 resulted in a pre-tax gain of $166 million. Additionally, this financial statement line item also includes professional fees and other costs associated with both consummated and non-consummated transactions considered by us.
Our reportable segments correspond to how we organize and manage the business and are aligned to the industries in which our clients operate. These three segments are: • Commercial – Our Commercial segment provides business process services and customized solutions to clients in a variety of commercial industries.
In 2023, approximately 11% of our revenue was generated outside the U.S. Our reportable segments correspond to how we organize and manage the business and are aligned to the industries in which our clients operate. These three segments are: • Commercial – Our Commercial segment provides business process services and customized solutions to clients in a variety of commercial industries.
The Midas business represented approximately $7 million, $70 million and $72 million of revenue in 2022, 2021 and 2020, respectively. Refer to Note 4 – Assets/Liabilities Held for Sale and Divestiture in the Consolidated Financial Statements for additional information.
The Midas business represented approximately $7 million, $70 million and $72 million of revenue in 2022, 2021 and 2020, respectively. Refer to Note 4 – Assets/Liabilities Held for Sale and Divestitures in the Consolidated Financial Statements for additional CNDT 2023 Annual Report 33 Table of Contents information.
CNDT 2022 Annual Report 41 Table of Contents Sales of Accounts Receivable The net impact from the sales of accounts receivable on net cash provided by (used in) operating activities for the years ended December 31, 2022, 2021 and 2020 was $54 million, $(10) million and $(22) million, respectively.
Sales of Accounts Receivable The net impact from the sales of accounts receivable on net cash provided by (used in) operating activities for the years ended December 31, 2023, 2022 and 2021 was $(4) million, $54 million and $(10) million, respectively.
The total of these commitments was $112 million as of December 31, 2022, of which $81 million is due within the next 12 months.
The total of these commitments was $312 million as of December 31, 2023, of which $104 million is due within the next 12 months.
CNDT 2022 Annual Report 35 Table of Contents Litigation Settlements (Recoveries), Net Litigation settlements (recoveries), net for 2022 primarily consisted of $24 million of insurance recoveries recorded in the first quarter of 2022 related to the previously disclosed State of Texas matter. Refer to Note 16 – Contingencies and Litigation to the Consolidated Financial Statements for additional information.
The amount for 2022 primarily consisted of $24 million of insurance recoveries recorded in the first quarter of 2022 related to the previously disclosed State of Texas matter. Refer to Note 16 – Contingencies and Litigation to the Consolidated Financial Statements for additional information on these matters.
If we used different assumptions for revenue growth rates, discount rates or long-term organic growth rates in these annual assessments, our calculated fair values of our reporting units could be higher or lower which could result in a goodwill impairment.
If we used different assumptions for discount rates or long-term organic growth rates in these annual assessments, our calculated fair values of our reporting units could be higher or lower which could result in a goodwill impairment. Income Taxes We are subject to income taxes in the United States and numerous foreign jurisdictions.
We deliver mission-critical public safety, mobility and digital payment solutions that streamline operations, increase revenue and reduce congestion while creating safe, seamless travel experiences for consumers and have a positive impact on the environment.
We deliver mission-critical public safety, mobility and digital payment CNDT 2023 Annual Report 32 Table of Contents solutions that streamline operations, increase revenue and reduce congestion while creating safe, seamless travel experiences for consumers while reducing impact on the environment.
Due to the inconsistency of when existing contracts end, quarterly and yearly comparisons are not a good measure of renewal performance. New business ACV is calculated as TCV divided by the contract term, in months, multiplied by 12 for an annual measure.
Due to the inconsistency of when existing contracts end, quarterly and yearly comparisons may not provide an accurate measure of renewal performance. The Annual Contract Value ("ACV") for new business is calculated by dividing the TCV by the contract term, in months, and then multiplying by 12 to obtain an annual measure.
At December 31, 2022, our material cash requirements include the following contractual and other obligations. Debt As of December 31, 2022, we had total outstanding debt with floating and fixed rates totaling $1,335 million, of which $35 million was due within 12 months.
At December 31, 2023, our material cash requirements include the following contractual and other obligations. CNDT 2023 Annual Report 41 Table of Contents Debt As of December 31, 2023, we had total outstanding debt, including Finance leases, with floating and fixed rates totaling $1,300 million, of which $34 million was due within 12 months.
We believe these assumptions are appropriate and reflect our forecasted long-term business model and consider our historical results as well as the current economic environment and markets that we serve.
We believe these assumptions are appropriate and reflect our forecasted long-term business model and consider our historical results as well as the current economic environment and markets that we serve. The most significant assumptions used in the goodwill analysis relate to discount rates and long-term organic growth rates.
The Net ARR Activity metric for the trailing twelve months for each of the prior five quarters was as follows: (in millions) December 31, 2022 $ 114 September 30, 2022 70 June 30, 2022 104 March 31, 2022 102 December 31, 2021 128 CNDT 2022 Annual Report 40 Table of Contents Capital Resources and Liquidity As of December 31, 2022 and 2021, total cash and cash equivalents were $582 million (of which approximately $111 million was cash in foreign locations) and $415 million (of which approximately $132 million was cash in foreign locations), respectively.
The Net ARR Activity metric for the trailing twelve months for each of the prior five quarters was as follows: (in millions) December 31, 2023 $ 62 September 30, 2023 103 June 30, 2023 137 March 31, 2023 108 December 31, 2022 114 Capital Resources and Liquidity As of December 31, 2023 and 2022, total cash and cash equivalents were $498 million (of which approximately $143 million was cash in foreign locations) and $582 million (of which approximately $111 million was cash in foreign locations), respectively.
(2) New business NRR measures the non-recurring revenue for any new business signing, including (i) signing value of any contract with term less than 12 months and (ii) signing value of project based revenue, not expected to continue long term. (3) Adjusted to remove Midas new business signings.
ARR represents the recurring services provided to a customer with the opportunity for renewal at the end of the contract term. (2) New business NRR measures the non-recurring revenue for any new business signing, including (i) signing value of any contract with term less than 12 months and (ii) signing value of project-based revenue, not expected to continue long term.
Other (Income) Expenses, Net Other (income) expenses, net for 2022 and 2021 primarily includes interest income on cash investments and foreign currency transaction losses (gains). 2021 also included an impairment loss on an equity investment. Income Taxes The 2022 effective tax rate was (43.9)%, compared to (9.7)% for 2021.
Other (Income) Expenses, Net Other (income) expenses, net for 2023 and 2022 primarily includes interest income on cash investments, accounts receivable factoring fees and foreign currency transaction losses (gains). Income Taxes The 2023 effective tax rate was 10.7%, compared to (43.9)% for 2022.
To the extent we believe the adoption of new accounting standards has had or will have a material impact on our consolidated results of operations, financial condition or liquidity, we also discuss the impact in the applicable section(s) of this MD&A. CNDT 2022 Annual Report 46 Table of Contents
To the extent we believe the adoption of new accounting standards has had or will have a material impact on our consolidated results of operations, financial condition or liquidity, we also discuss the impact in the applicable section(s) of this MD&A. Non-GAAP Financial Measures We reported our financial results in accordance with accounting principles generally accepted in the U.S. (U.S.
(2) Relates to approximate headcount reductions worldwide associated with Severance and related costs Refer to Note 9 – Restructuring Programs and Related Costs to the Consolidated Financial Statements for additional information regarding our restructuring programs. Interest Expense Interest expense represents interest on long-term debt and the amortization of debt issuance costs.
Refer to Note 9 – Restructuring Programs and Related Costs to the Consolidated Financial Statements for additional information regarding our restructuring programs. CNDT 2023 Annual Report 35 Table of Contents Interest Expense Interest expense represents interest on long-term debt and the amortization of debt issuance costs.
Year Ended December 31, 2022 vs. 2021 (in millions) 2022 (3) 2021 (3) $ Change % Change New business ACV $ 732 $ 726 $ 6 1 % New business TCV $ 1,887 $ 1,705 $ 182 11 % Renewals TCV 2,477 2,835 (358) (13) % Total Signings $ 4,364 $ 4,540 $ (176) (4) % New business annual recurring revenue (ARR) signings (1) $ 403 $ 402 $ 1 — % New business non-recurring revenue (NRR) signings (2) $ 444 $ 351 $ 93 26 % ___________ (1) New business ARR measures the revenue from recurring services provided to the client for any new business signing.
Year Ended December 31, 2023 vs. 2022 (in millions) 2023 2022 (3) $ Change % Change New business ACV $ 639 $ 732 $ (93) (13) % New business TCV $ 2,257 $ 1,887 $ 370 20 % Renewals TCV 2,341 2,477 (136) (5) % Total Signings $ 4,598 $ 4,364 $ 234 5 % New business annual recurring revenue (ARR) signings (1) $ 317 $ 403 $ (86) (21) % New business non-recurring revenue (NRR) signings (2) $ 593 $ 444 $ 149 34 % ___________ (1) New business ARR measures the revenue from recurring services provided to the client for any new business signing.
Unless otherwise noted, transactions and other factors significantly impacting our financial condition, results of operations and liquidity are discussed in order of magnitude. Our MD&A is presented in six sections: • Overview; • Financial Information and Analysis of Results of Operations; • Metrics; • Capital Resources and Liquidity; • Critical Accounting Estimates and Policies; and • Recent Accounting Changes.
Our MD&A is presented in seven sections: • Overview; • Financial Information and Analysis of Results of Operations; • Metrics; • Capital Resources and Liquidity; • Critical Accounting Estimates and Policies; • Recent Accounting Changes; and • Non-GAAP Financial Measures.
The 2021 rate was lower than the U.S. statutory rate of 21%, primarily due to the geographic mix of income, valuation allowances, non-deductible expenses and tax settlement adjustments, partially offset by tax credits.
The 2023 rate was lower than the U.S. statutory rate of 21% due to non-deductible expenses, primarily the non-deductible Commercial reporting unit goodwill impairment, geographic mix of income and return to provision adjustments, partially offset by tax benefits related to tax settlements and reversal of reserves.
Unrecognized tax benefits were $12 million, $23 million and $23 million at December 31, 2022, 2021 and 2020, respectively. CNDT 2022 Annual Report 45 Table of Contents Refer to Note 15 – Income Taxes to the Consolidated Financial Statements for additional information regarding deferred income taxes and unrecognized tax benefits.
Unrecognized tax benefits were $10 million, $12 million and $23 million at December 31, 2023, 2022 and 2021, respectively. Refer to Note 15 – Income Taxes to the Consolidated Financial Statements for additional information regarding deferred income taxes and unrecognized tax benefits. Loss Contingencies We are currently involved in various claims and legal proceedings.
For the year ended December 31, 2022, the Company signed $1,887 million of new business TCV, representing a 11% increase compared to the prior year.
CNDT 2023 Annual Report 39 Table of Contents For the year ended December 31, 2023, the Company signed $2,257 million of new business TCV, representing a 20% increase compared to the prior year.
Cash Flow Analysis The following summarizes our cash flows for the two years ended December 31, 2022, as reported in our Consolidated Statements of Cash Flows in the accompanying Consolidated Financial Statements: Year Ended December 31, Change (in millions) 2022 2021 2022 vs. 2021 Net cash provided by (used in) operating activities $ 144 $ 243 $ (99) Net cash provided by (used in) investing activities 173 (142) 315 Net cash provided by (used in) financing activities (131) (132) 1 Operating Activities The net decline in cash flow provided by operating activities of $99 million was primarily attributable to lower Adjusted EBITDA, increases in equipment to support new business in our Transportation segment, higher income tax payments and higher cash interest payments, partially offset by improved accounts receivable Days Sales Outstanding (DSO) and the insurance recovery related to the previously disclosed State of Texas matter.
Cash Flow Analysis The following summarizes our cash flows for the two years ended December 31, 2023, as reported in our Consolidated Statements of Cash Flows in the accompanying Consolidated Financial Statements: Year Ended December 31, Change (in millions) 2023 2022 2023 vs. 2022 Net cash provided by (used in) operating activities $ 89 $ 144 $ (55) Net cash provided by (used in) investing activities (93) 173 (266) Net cash provided by (used in) financing activities (81) (131) 50 Operating Activities The net decrease in cash flow provided by operating activities of $55 million was primarily related to the absence of the $38 million of insurance recoveries related to the State of Texas matter in 2022, higher net cash interest payments, the negative impact of the sales of accounts receivable as described below and higher restructuring payments, all partially offset by lower cash income taxes.
CNDT 2022 Annual Report 44 Table of Contents When performing our discounted cash flow analysis for each reporting unit, we incorporate the use of projected financial information and discount rates that are developed using market participant-based assumptions.
In addition, we are required to make certain assumptions and estimates regarding the current economic environment, industry factors and the future profitability of our businesses. When performing our discounted cash flow analysis for each reporting unit, we incorporate the use of projected financial information and discount rates that are developed using market participant-based assumptions.
The following are the components of our Restructuring and related costs: Year Ended December 31, (in millions, except headcount in whole numbers) 2022 2021 Severance and related costs $ 14 $ 8 Data center consolidation 10 23 Termination and asset impairment costs 13 10 Total Net Current Period Charges 37 41 Consulting and other costs (1) 2 4 Restructuring and Related Costs $ 39 $ 45 Reduction in headcount (2) 800 400 __________ (1) Represents professional support costs associated with certain strategic transformation programs.
The following are the components of our Restructuring and related costs: Year Ended December 31, (in millions, except headcount in whole numbers) 2023 2022 Severance and related costs $ 29 $ 14 Data center consolidation costs 9 10 Termination, insourcing and asset impairment costs (1) 24 13 Total Net Current Period Charges 62 37 Consulting and other costs (2) — 2 Restructuring and Related Costs $ 62 $ 39 Reduction in headcount (3) 700 800 __________ (1) 2023 costs represent costs incurred for disengagement from a significant IT outsourcing provider.
CNDT 2022 Annual Report 34 Table of Contents Selling, General and Administrative (SG&A) (excluding depreciation and amortization) SG&A for 2022 decreased 19%, compared to the prior year, driven by the recovery of $14 million of defense costs as part of the settlement with insurance carriers relating to the previously disclosed State of Texas matter, progress in our efficiency initiatives, most notably within shared technology infrastructure, as well as lower variable employee costs.
Selling, General and Administrative ("SG&A") (excluding depreciation and amortization) SG&A for 2023 increased 4%, compared to the prior year, primarily driven by the absence of the recovery of $14 million of defense costs as part of the settlement with insurance carriers relating to the previously disclosed State of Texas matter that occurred in 2022.
CNDT 2022 Annual Report 33 Table of Contents Macroeconomic and Geopolitical Uncertainty Given the nature of our business and our global operations, the effects of global macroeconomic and geopolitical uncertainty, including COVID-19 pandemic related factors (as discussed in more detail below) could have a materially adverse effect on our business, results of operations and financial condition.
Macroeconomic and Geopolitical Uncertainty Given the nature of our business and our global operations, the effects of global macroeconomic and geopolitical uncertainty could have a materially adverse effect on our business, results of operations and financial condition.
As of December 31, 2022, there was a total of $1,282 million of outstanding borrowings under our Term Loan A, Term Loan B and Senior Notes, of which $18 million was due within one year. Refer to Note 11 – Debt to the Consolidated Financial Statements for additional information regarding our debt.
CNDT 2023 Annual Report 40 Table of Contents As of December 31, 2023, there was a total of $1,263 million of outstanding borrowings under our Term Loan A, Term Loan B and Senior Notes, of which $18 million was due within one year.
Unallocated Costs includes IT infrastructure costs that are shared by multiple reportable segments, enterprise application costs and certain corporate overhead expenses not directly attributable or allocated to our reportable segments. The section below provides a comparative discussion of our financial performance by segment between the years ended December 31, 2022 and 2021. See Item 7.
Divestitures includes our Midas business, which was sold in the first quarter of 2022. Unallocated Costs includes IT infrastructure costs that are shared by multiple reportable segments, enterprise application costs and certain corporate overhead expenses not directly attributable or allocated to our reportable segments.
Investing Activities The increase in cash provided by investing activities of $315 million was primarily due to the proceeds from the divestiture of the Midas business, partially offset by slightly increased spending related to modernizing our infrastructure and productivity tools.
Investing Activities The decrease in cash provided by investing activities of $266 million was primarily due to the proceeds from the divestiture of the Midas business in the prior year. This was partially offset by planned decreased capital spending in the current year.
As of December 31, 2021, the Company determined that this business met the conditions above to be classified as held for sale. Refer to Note 4 – Assets/Liabilities Held for Sale and Divestiture to the Consolidated Financial Statements for additional information. Revenue Recognition Application of the accounting principles in U.S.
Refer to Note 4 – Assets/Liabilities Held for Sale and Divestitures to the Consolidated Financial Statements for additional information. Revenue Recognition Application of the accounting principles in U.S. GAAP related to the measurement and recognition of revenue requires us to make judgments and estimates.
In addition, 2021 amounts have been revised to exclude a large client we no longer consider in these metrics. The total new business pipeline at the end of December 31, 2022 and 2021 was $22.6 billion and $21.4 billion, respectively. Total new business pipeline is defined as total new business TCV pipeline of deals in all sell stages.
(3) Adjusted to remove Midas new business signings. The total new business pipeline at the end of December 31, 2023 and 2022 was $24.8 billion and $22.6 billion, respectively. Total new business pipeline is defined as total new business TCV pipeline of deals in all sell stages.
Excluding the impact of amortization, restructuring, the divestiture of the Midas business, insurance recoveries, goodwill impairment and discrete tax items, the normalized effective tax rate for 2022 was 34.3%. The 2021 rate was 26.6% excluding the impact of amortization, restructuring and discrete tax items.
Excluding the impact of the goodwill impairment, amortization of intangible assets, restructuring, litigation reserve releases and certain discrete tax items, the normalized effective tax rate for 2023 was 107.3%.
CNDT 2022 Annual Report 36 Table of Contents Operations Review of Segments Our financial performance is based on Segment Profit (Loss) and Segment Adjusted EBITDA for the following three segments: • Commercial, • Government, and • Transportation. Other includes our divestitures and our Student Loan business, which the Company exited in the third quarter of 2018.
We do not anticipate a material impact based on current guidance. CNDT 2023 Annual Report 36 Table of Contents Operations Review of Segments Our financial performance is based on Segment Profit (Loss) and Segment Adjusted Earnings before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") for the following three segments: • Commercial, • Government, and • Transportation.
Other Revenue, Segment Profit (Loss) and Adjusted EBITDA The decline in revenue, segment profit and Adjusted EBITDA for 2022 was primarily due to the sale of the Midas business. The current year includes slightly more than one month of activity versus the prior year, which includes a full twelve months of activity.
Divestitures Revenue, Segment Profit (Loss) and Adjusted EBITDA The decline in revenue, segment profit and Adjusted EBITDA for 2023 was primarily due to the sale of the Midas Suite of products in 2022. The prior year included activity through the date of disposition whereas there was no activity in the current year.
Government Segment Revenue Government revenue for 2022 decreased, compared to the prior year, primarily driven by significantly lower federal stimulus revenue, while increases in volume, price and new business substantially offset lost business from prior years.
Government Segment Revenue Government segment revenue for 2023 decreased, compared to the prior year, primarily driven by lost business from prior years, non-repeating federal stimulus revenue in the prior year and the impact of an out of period adjustment of $7 million in the first quarter of 2023.
GAAP related to the measurement and recognition of revenue requires us to make judgments and estimates. Complex arrangements with nonstandard terms and conditions may require significant contract interpretation to determine the appropriate accounting.
Complex arrangements with nonstandard terms and conditions may require significant contract interpretation to determine the appropriate accounting. Refer to Note 1 – Basis of Presentation and Summary of Significant Accounting Policies and Note 2 – Revenue to the Consolidated Financial Statements for additional information regarding our revenue recognition policies.
Refer to Note 1 – Basis of Presentation and Summary of Significant Accounting Policies and Note 2 – Revenue to the Consolidated Financial Statements for additional information regarding our revenue recognition policies. Goodwill Goodwill is not amortized but rather tested for impairment annually, or more frequently if an event or circumstance indicates that impairment may have been incurred.
CNDT 2023 Annual Report 43 Table of Contents Goodwill Goodwill is not amortized but rather tested for impairment annually, or more frequently if an event or circumstance indicates that impairment may have been incurred.
Year Ended December 31, 2022 vs. 2021 (in millions) 2022 2021 $ Change % Change Revenue $ 3,858 $ 4,140 $ (282) (7) % Operating Costs and Expenses Cost of services (excluding depreciation and amortization) 3,018 3,138 $ (120) (4) % Selling, general and administrative (excluding depreciation and amortization) 440 544 $ (104) (19) % Research and development (excluding depreciation and amortization) 7 4 3 75 % Depreciation and amortization 230 352 (122) (35) % Restructuring and related costs 39 45 (6) (13) % Interest expense 84 55 29 53 % Loss on extinguishment of debt — 15 (15) n/m Goodwill impairment 358 — 358 n/m (Gain) loss on divestitures and transaction costs, net (158) 3 (161) (5,367) % Litigation settlements (recoveries), net (32) 3 (35) (1,167) % Other (income) expenses, net (1) 6 (7) (117) % Total Operating Costs and Expenses 3,985 4,165 (180) Income (Loss) Before Income Taxes (127) (25) (102) Income tax expense (benefit) 55 3 52 Net Income (Loss) $ (182) $ (28) $ (154) Revenue Revenue for 2022 decreased 7%, compared to the prior year.
Year Ended December 31, 2023 vs. 2022 (in millions) 2023 2022 $ Change % Change Revenue $ 3,722 $ 3,858 $ (136) (4) % Operating Costs and Expenses Cost of services (excluding depreciation and amortization) 2,888 3,018 $ (130) (4) % Selling, general and administrative (excluding depreciation and amortization) 458 440 $ 18 4 % Research and development (excluding depreciation and amortization) 7 7 — — % Depreciation and amortization 264 230 34 15 % Restructuring and related costs 62 39 23 59 % Interest expense 111 84 27 32 % Goodwill impairment 287 358 (71) (20) % (Gain) loss on divestitures and transaction costs, net 10 (158) 168 (106) % Litigation settlements (recoveries), net (30) (32) 2 (6) % Other (income) expenses, net (3) (1) (2) 200 % Total Operating Costs and Expenses 4,054 3,985 69 Income (Loss) Before Income Taxes (332) (127) (205) Income tax expense (benefit) (36) 55 (91) Net Income (Loss) $ (296) $ (182) $ (114) CNDT 2023 Annual Report 34 Table of Contents Revenue Revenue for 2023 decreased 4%, compared to the prior year, primarily due to lost business from prior periods and non-repeating items in the prior year including recognition of the revenue benefit associated with an annual minimum volume commitment contract with a large client in our Commercial segment and federal stimulus revenue in our Government segment.
The most significant assumptions used in the goodwill analysis relate to revenue growth rates, discount rate and long-term organic growth rate for the Commercial reporting unit and discount rates and long-term organic growth rates for the Government and Transportation reporting units.
The fair values of the goodwill impairment charge were estimated based on a determination of the implied fair value of goodwill, leveraging the results from the Income Approach and Market Approach. The most significant assumptions used in the goodwill analysis relate to revenue growth rates, discount rate and long-term organic growth rate.
Unallocated Costs The decrease in segment loss is primarily due to a portion of the recovery of defense costs as part of the settlement with insurance carriers relating to the previously disclosed State of Texas and shareholder matters which was allocated to SG&A, progress with our efficiency initiatives and lower variable employee costs, as well as $32 million of costs related to the abandonment of an internal project recorded in the prior year.
Unallocated Costs Unallocated Costs for 2023 increased compared to the prior year primarily due to the prior year reflecting the recovery of $14 million of defense costs as part of the settlement with insurance carriers relating to the previously disclosed State of Texas matter, and expense credits in the prior year.
This is primarily due to lower federal stimulus revenue in the Government segment, lost business from prior years, the impact of the disposition of the Midas business, as well as negative foreign exchange translation impact, partially offset by higher interest rates positively impacting our BenefitWallet business, and the ramp of new business.
These were partially offset by higher interest rates positively impacting our BenefitWallet business and new business ramp in our Government segment.
Cost of Services (excluding depreciation and amortization) Cost of services for 2022 decreased 4%, compared to the prior year, mainly driven by lost business from prior years, the disposition of the Midas business, increased operational efficiency and favorable foreign exchange translation impact.
Cost of Services (excluding depreciation and amortization) Cost of services for 2023 decreased 4%, compared to the prior year, primarily driven by the impact of reduced revenue, increased operational efficiency and a $17 million reversal of liabilities due to the settlement of the Cognizant matter described in Note 16 – Contingencies and Litigation to the Consolidated Financial Statements.
Headquartered in Florham Park, New Jersey, we have a team of approximately 62,000 people as of December 31, 2022, servicing customers from service centers in 25 countries. In 2022, 10% of our revenue was generated outside the U.S.
Through a dedicated global team of associates, process expertise, and advanced technologies, our solutions and services digitally transform our clients’ operations to enhance customer experiences, improve performance, increase efficiencies and reduce costs. Headquartered in Florham Park, New Jersey, we have a team of approximately 59,000 people as of December 31, 2023, servicing customers from service centers in 26 countries.
Segment Profit and Adjusted EBITDA Decreases in the Government segment profit and adjusted EBITDA for 2022, compared to the prior year, were mainly driven by lower Federal stimulus revenue.
Commercial segment adjusted EBITDA and adjusted EBITDA margin for 2023 also increased compared to the prior year primarily driven by the segment profit drivers mentioned above, partially offset by the impact of reduced revenue and the non-repeating items in the prior year.
Transportation Segment Revenue Transportation revenue for 2022 decreased, compared to the prior year, driven by unfavorable exchange rate movement, particularly the Euro, slower implementation of new business contracts, and a one-time revenue benefit in the prior year period.
Transportation Segment Revenue Transportation revenue for 2023 decreased compared to the prior year, primarily driven by extended completion timelines on our larger implementations to meet client requirements, which affected the recognition timeframe for revenue, the completion of smaller projects in our Transit solutions service offering and lost business from prior years, partially offset by new business and favorable exchange rate movement, particularly the Euro.
Segment Profit and Adjusted EBITDA Transportation segment profit and adjusted EBITDA for 2022 decreased, compared to the prior year, driven by a one-time item benefiting the prior year period, the impact of net new and lost business, as well as the impact of unfavorable exchange rate movement.
Segment Profit and Adjusted EBITDA Government segment profit for 2023 decreased slightly compared to the prior year and was impacted by lost business, the high margin non-repeating federal stimulus revenue in the prior year and the out of period adjustment in the first quarter of 2023 as well as by higher depreciation driven by the deployment of our new modularized CMdS platform in our Government Healthcare Solutions business.
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Overview With revenues of $3.9 billion, we are a leading provider of business process services with expertise in transaction-intensive processing, analytics and automation. We serve as a trusted business partner in both the front office and back office, enabling personalized, seamless interactions on a massive scale that improve end-user experience.
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Unless otherwise noted, transactions and other factors significantly impacting our financial condition, results of operations and liquidity are discussed in order of magnitude.
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Significant 2021 Actions • Stabilizing Revenue – Revenue of $4,140 million for the year ended December 31, 2021 was a decline of 0.55%, a significantly improved trend compared with the prior year. • Strong Net Annual Recurring Revenue (ARR) Activity results – In the fourth quarter of 2020, we introduced the Net ARR Activity metric, a trailing twelve-month metric that measures the revenue from recurring services provided to a client inclusive of all new business annual recurring revenue, notification of lost clients and contractual impacts to price and volume.
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Overview We deliver digital business solutions and services spanning the commercial, government and transportation spectrum – creating valuable outcomes for our clients and the millions of people who count on them. We leverage cloud computing, artificial intelligence, machine learning, automation and advanced analytics to deliver mission-critical business process solutions.
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We have seen steady positive growth in this metric from $60 million in the fourth quarter of 2020 to $128 million in the fourth quarter of 2021, an increase of 113%.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDollars using the year-end exchange rates, was approximately $752 million at December 31, 2022. Interest Rate Risk Management The consolidated weighted-average interest rates related to our total debt for 2022 approximated 4.97% for 2021 Term A Loan due 2026, 6.42% for 2021 Term B Loan due 2028, 6.15% for 2021 Senior Notes due 2029 and 7.00% for finance lease obligations.
Biggest changeDollars using the year-end exchange rates, was approximately $789 million at December 31, 2023. Interest Rate Risk Management The consolidated weighted-average interest rates related to our total debt for 2023 approximated 8.58% for 2021 Term A Loan due 2026, 9.78% for 2021 Term B Loan due 2028, 6.20% for 2021 Senior Notes due 2029 and 9.03% for finance lease obligations.
Foreign Exchange Risk Management Assuming a 10% appreciation or depreciation in foreign currency exchange rates from the quoted foreign currency exchange rates at December 31, 2022, the potential change in the fair value of foreign currency-denominated assets and liabilities in each entity would not be significant because all material currency asset and liability exposures were economically hedged as of December 31, 2022.
Foreign Exchange Risk Management Assuming a 10% appreciation or depreciation in foreign currency exchange rates from the quoted foreign currency exchange rates at December 31, 2023, the potential change in the fair value of foreign currency-denominated assets and liabilities in each entity would not be significant because all material currency asset and liability exposures were economically hedged as of December 31, 2023.
A 10% appreciation or depreciation of the U.S. Dollar against all currencies from the quoted foreign currency exchange rates at December 31, 2022 would have an impact on our cumulative translation adjustment portion of equity of approximately $75 million. The net amount invested in foreign subsidiaries and affiliates, primarily in the U.K. and Europe, and translated into U.S.
A 10% appreciation or depreciation of the U.S. Dollar against all currencies from the quoted foreign currency exchange rates at December 31, 2023 would have an impact on our cumulative translation adjustment portion of equity of approximately $79 million. The net amount invested in foreign subsidiaries and affiliates, primarily in the U.K. and Europe, and translated into U.S.
The fair values of our fixed rate financial instruments are sensitive to changes in interest rates and at December 31, 2022, a 10% increase in market interest rates would decrease the fair values of such financial instruments by approximately $21 million.
The fair values of our fixed rate financial instruments are sensitive to changes in interest rates and at December 31, 2023, a 10% increase in market interest rates would decrease the fair values of such financial instruments by approximately $18 million.
As of December 31, 2022, we did not have any borrowings outstanding under our 2021 Revolving Credit Facility maturing 2026. As of December 31, 2022, $762 million of our total debt of $1,335 million carried variable interest rates.
As of December 31, 2023, we did not have any borrowings outstanding under our 2021 Revolving Credit Facility maturing 2026. As of December 31, 2023, $743 million of our total debt of $1,300 million carried variable interest rates.
A 10% decrease in market interest rates would increase the fair values of such financial instruments by approximately $22 million. CNDT 2022 Annual Report 47 Table of Contents
A 10% decrease in market interest rates would increase the fair values of such financial instruments by approximately $19 million. CNDT 2023 Annual Report 48 Table of Contents

Other CNDT 10-K year-over-year comparisons