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Table of Contents |  |

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 10-Q
_______________
(Mark One)

☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2021
OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to
Commission File Number 001-37817
CONDUENT INCORPORATED
(Exact Name of Registrant as specified in its charter)

New York |  | 81-2983623
(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)
| 100 Campus Drive, | Suite 200, |  |
| Florham Park, | New Jersey |  | 07932
| (Address of principal executive offices) |  | (Zip Code)

(844) 663-2638
(Registrant’s telephone number, including area code)
_________________________________________________
Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common Stock, $0.01 par value | CNDT | NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☐ | Accelerated filer | ☒ | Non-accelerated filer | ☐ | Small reporting company | ☐ | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Class |  | Outstanding at July 31, 2021
Common Stock, | $0.01 par value |  | 212,651,045

|  | CNDT Q2 2021 Form 10-Q

Table of Contents |  |

FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (Form 10-Q) and any exhibits to this Form 10-Q may contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. The words “anticipate,” “believe,” “estimate,” “expect,” "plan," “intend,” “will,” “aim,” “should,” “could,” “forecast,” “target,” “may,” "continue to," "if,” “growing,” “projected,” “potential,” “likely,” and similar expressions, as they relate to us, are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. In addition, all statements regarding the anticipated effects of the novel coronavirus, or COVID-19, pandemic and the responses thereto, including the pandemic’s impact on general economic and market conditions, as well as on our business, customers, and markets, results of operations and financial condition and anticipated actions to be taken by management to sustain our business during the economic uncertainty caused by the pandemic and related governmental and business actions, as well as other statements that are not strictly historical in nature, are forward looking. These statements reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those expressed or implied herein as anticipated, believed, estimated, expected or intended or using other similar expressions.
In accordance with the provisions of the Litigation Reform Act, we are making investors aware that such forward-looking statements, because they relate to future events, are by their very nature subject to many important factors and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements contained in this Form 10-Q, any exhibits to this Form 10-Q and other public statements we make. Our actual results may vary materially from those expressed or implied in our forward-looking statements. These forward-looking statements are also subject to the significant continuing impact of the COVID-19 pandemic on our business, operations, financial results and financial condition, which is dependent on developments which are highly uncertain and cannot be predicted.
Important factors and uncertainties that could cause our actual results to differ materially from those in our forward-looking statements include, but are not limited to: the significant continuing effects of the ongoing COVID-19 pandemic on our business, operations, financial results and financial condition, which is dependent on developments which are highly uncertain and cannot be predicted; government appropriations and termination rights contained in our government contracts; our ability to renew commercial and government contracts, including contracts awarded through competitive bidding processes; our ability to recover capital and other investments in connection with our contracts; our reliance on third-party providers; our ability to deliver on our contractual obligations properly and on time; changes in interest in outsourced business process services; risk and impact of geopolitical events, natural disasters and other factors (such as pandemics, including coronavirus) in a particular country or region on our workforce, customers and vendors; claims of infringement of third-party intellectual property rights; our ability to estimate the scope of work or the costs of performance in our contracts; the loss of key senior management and our ability to attract and retain necessary technical personnel and qualified subcontractors; increases in the cost of telephone and data services or significant interruptions in such services; our failure to develop new service offerings and protect our intellectual property rights; our ability to modernize our information technology infrastructure and consolidate data centers; the failure to comply with laws relating to individually identifiable information and personal health information; the failure to comply with laws relating to processing certain financial transactions, including payment card transactions and debit or credit card transactions; breaches of our information systems or security systems or any service interruptions; our ability to comply with data security standards; changes in tax and other laws and regulations; risk and impact of potential goodwill and other asset impairments; our significant indebtedness; our ability to obtain adequate pricing for our services and to improve our cost structure; our ability to collect our receivables, including those for unbilled services; a decline in revenues from, or a loss of, or a reduction in business from or failure of significant clients; fluctuations in our non-recurring revenue; our failure to maintain a satisfactory credit rating; our ability to receive dividends or other payments from our subsidiaries; developments in various contingent liabilities that are not reflected on our balance sheet, including those arising as a result of being involved in a variety of claims, lawsuits, investigations and proceedings; conditions abroad, including local economics, political environments, fluctuating foreign currencies and shifting regulatory schemes; changes in government regulation and economic, strategic, political and social conditions; changes in the volatility of our stock price and the risk of litigation following a decline in the price of our stock; the impact of the ongoing COVID-19 pandemic; and other factors that are set forth in the “Risk Factors” section, the “Legal Proceedings” section, the “Management's Discussion and Analysis of Financial Condition and Results of Operations” section and other sections of this Quarterly Report on Form 10-Q as well as in our 2020 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) and any subsequent Quarterly Report on Form 10-Q and Current Report on Form 8-K. Any forward-looking statements made by us in this Quarterly Report on Form 10-Q speak only as of the date on which they are made. We are under no obligation to, and expressly disclaim any obligation to, update or alter our forward-looking statements, whether as a result of new information, subsequent events or otherwise.

|  | CNDT Q2 2021 Form 10-Q

1

Table of Contents |  |

CONDUENT INCORPORATED
FORM 10-Q
June 30, 2021
TABLE OF CONTENTS

| Page
Part I — Financial Information |
Item 1. | Financial Statements (Unaudited) | 3
| Condensed Consolidated Statements of Income (Loss) | 3
| Condensed Consolidated Statements of Comprehensive Income (Loss) | 4
| Condensed Consolidated Balance Sheets | 5
| Condensed Consolidated Statements of Cash Flows | 6
| Condensed Consolidated Statements of Shareholders' Equity | 7
| Notes to the Condensed Consolidated Financial Statements | 8
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24
| Capital Resources and Liquidity | 33
| Market Risk Management | 34
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 34
Item 4. | Controls and Procedures | 34
Part II — Other Information |
Item 1. | Legal Proceedings | 35
Item 1A. | Risk Factors | 35
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 35
Item 6. | Exhibits | 36
Signatures | 37

For additional information about Conduent Incorporated and access to our Annual Reports to Shareholders and SEC filings, free of charge, please visit our website at https://investor.conduent.com/. Any information on or linked from the website is not incorporated by reference into this Form 10-Q.

|  | CNDT Q2 2021 Form 10-Q

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PART I — FINANCIAL INFORMATION
ITEM 1 — FINANCIAL STATEMENTS (UNAUDITED)
CONDUENT INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED)

|  | Three Months Ended June 30, |  | Six Months Ended June 30,
(in millions, except per share data) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Revenue |  | $ | 1,026 |  |  | $ | 1,016 |  |  | $ | 2,054 |  |  | $ | 2,067 |
Operating Costs and Expenses |  |  |  |  |  |  |  |
Cost of services (excluding depreciation and amortization) |  | 772 |  |  | 795 |  |  | 1,559 |  |  | 1,627 |
Selling, general and administrative (excluding depreciation and amortization) |  | 125 |  |  | 111 |  |  | 251 |  |  | 227 |
Research and development (excluding depreciation and amortization) |  | 1 |  |  | — |  |  | 1 |  |  | 1 |
Depreciation and amortization |  | 86 |  |  | 115 |  |  | 181 |  |  | 232 |
Restructuring and related costs |  | 8 |  |  | 29 |  |  | 21 |  |  | 36 |
Interest expense |  | 13 |  |  | 15 |  |  | 26 |  |  | 32 |
(Gain) loss on divestitures and transaction costs |  | (1) |  |  | 2 |  |  | 1 |  |  | 6 |
Litigation costs |  | 1 |  |  | 14 |  |  | 2 |  |  | 20 |
Loss on extinguishment of debt |  | 2 |  |  | — |  |  | 2 |  |  | — |
Other (income) expenses, net |  | — |  |  | (1) |  |  | — |  |  | 1 |
Total Operating Costs and Expenses |  | 1,007 |  |  | 1,080 |  |  | 2,044 |  |  | 2,182 |
Income (Loss) Before Income Taxes |  | 19 |  |  | (64) |  |  | 10 |  |  | (115) |
Income tax expense (benefit) |  | 7 |  |  | (13) |  |  | 9 |  |  | (15) |
Net Income (Loss) |  | $ | 12 |  |  | $ | (51) |  |  | $ | 1 |  |  | $ | (100) |
Net Earnings (Loss) per Share: |  |  |  |  |  |  |  |
Basic |  | $ | 0.05 |  |  | $ | (0.25) |  |  | $ | (0.02) |  |  | $ | (0.50) |
Diluted |  | $ | 0.04 |  |  | $ | (0.25) |  |  | $ | (0.02) |  |  | $ | (0.50) |

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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CONDUENT INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

|  | Three Months Ended June 30, |  | Six Months Ended June 30,
(in millions) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Net Income (Loss) |  | $ | 12 |  |  | $ | (51) |  |  | $ | 1 |  |  | $ | (100) |
Other Comprehensive Income (Loss), Net(1) |  |  |  |  |  |  |  |
Currency translation adjustments, net |  | 4 |  |  | 2 |  |  | (7) |  |  | (26) |
Unrecognized gains (losses), net |  | — |  |  | 2 |  |  | (1) |  |  | (1) |
Changes in benefit plans, net |  | (1) |  |  | — |  |  | (1) |  |  | 1 |
Other Comprehensive Income (Loss), Net |  | 3 |  |  | 4 |  |  | (9) |  |  | (26) |
Comprehensive Income (Loss), Net |  | $ | 15 |  |  | $ | (47) |  |  | $ | (8) |  |  | $ | (126) |

__________
(1)All amounts are net of tax. Tax effects were immaterial.
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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CONDUENT INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions, except share data in thousands) |  | June 30, 2021 |  | December 31, 2020
Assets |  |  |  |
Cash and cash equivalents |  | $ | 397 |  |  | $ | 450 |
Accounts receivable, net |  | 664 |  |  | 670 |
Contract assets |  | 159 |  |  | 151 |
Other current assets |  | 267 |  |  | 306 |
Total current assets |  | 1,487 |  |  | 1,577 |
Land, buildings and equipment, net |  | 281 |  |  | 305 |
Operating lease right-of-use assets |  | 246 |  |  | 246 |
Intangible assets, net |  | 116 |  |  | 187 |
Goodwill |  | 1,519 |  |  | 1,528 |
Other long-term assets |  | 474 |  |  | 413 |
Total Assets |  | $ | 4,123 |  |  | $ | 4,256 |
Liabilities and Equity |  |  |  |
Current portion of long-term debt |  | $ | 89 |  |  | $ | 90 |
Accounts payable |  | 161 |  |  | 182 |
Accrued compensation and benefits costs |  | 234 |  |  | 237 |
Unearned income |  | 124 |  |  | 133 |
Other current liabilities |  | 446 |  |  | 450 |
Total current liabilities |  | 1,054 |  |  | 1,092 |
Long-term debt |  | 1,340 |  |  | 1,420 |
Deferred taxes |  | 90 |  |  | 97 |
Operating lease liabilities |  | 199 |  |  | 207 |
Other long-term liabilities |  | 113 |  |  | 108 |
Total Liabilities |  | 2,796 |  |  | 2,924 |
Contingencies (See Note 11) |  |  |  |
Series A convertible preferred stock |  | 142 |  |  | 142 |
Common stock |  | 2 |  |  | 2 |
Additional paid-in capital |  | 3,907 |  |  | 3,899 |
Retained earnings (deficit) |  | (2,317) |  |  | (2,313) |
Accumulated other comprehensive loss |  | (407) |  |  | (398) |
Total Equity |  | 1,185 |  |  | 1,190 |
Total Liabilities and Equity |  | $ | 4,123 |  |  | $ | 4,256 |
Shares of common stock issued and outstanding |  | 212,556 |  |  | 212,074 |
Shares of series A convertible preferred stock issued and outstanding |  | 120 |  |  | 120 |

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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CONDUENT INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

|  | Six Months Ended June 30,
(in millions) |  | 2021 |  | 2020
Cash Flows from Operating Activities: |  |  |  |
Net income (loss) |  | $ | 1 |  |  | $ | (100) |
Adjustments required to reconcile net income (loss) to cash flows from operating activities: |  |  |  |
Depreciation and amortization |  | 181 |  |  | 232 |
Contract inducement amortization |  | — |  |  | 1 |
Deferred income taxes |  | (6) |  |  | (29) |
(Gain) loss from investments |  | — |  |  | (2) |
Amortization of debt financing costs |  | 4 |  |  | 3 |
Loss on extinguishment of debt |  | 2 |  |  | — |
Loss on divestitures and sales of fixed assets, net |  | 1 |  |  | — |
Stock-based compensation |  | 9 |  |  | 9 |
Changes in operating assets and liabilities: |  |  |  |
Accounts receivable |  | 4 |  |  | (44) |
Other current and long-term assets |  | (48) |  |  | (41) |
Accounts payable and accrued compensation and benefits costs |  | (21) |  |  | (18) |
Restructuring liabilities |  | (2) |  |  | 6 |
Other current and long-term liabilities |  | (29) |  |  | (152) |
Net change in income tax assets and liabilities |  | 7 |  |  | 17 |
Net cash provided by (used in) operating activities |  | 103 |  |  | (118) |
Cash Flows from Investing Activities: |  |  |  |
Cost of additions to land, buildings and equipment |  | (39) |  |  | (30) |
Cost of additions to internal use software |  | (32) |  |  | (30) |
Proceeds from divestitures |  | 2 |  |  | 2 |
Net cash provided by (used in) investing activities |  | (69) |  |  | (58) |
Cash Flows from Financing Activities: |  |  |  |
Proceeds from revolving credit facility and other loans |  | — |  |  | 150 |
Payments on debt |  | (79) |  |  | (28) |
Premium on debt redemption |  | (2) |  |  | — |
Taxes paid for settlement of stock-based compensation |  | (1) |  |  | (3) |
Dividends paid on preferred stock |  | (5) |  |  | (5) |
Net cash provided by (used in) financing activities |  | (87) |  |  | 114 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |  | (2) |  |  | (6) |
Increase (decrease) in cash, cash equivalents and restricted cash |  | (55) |  |  | (68) |
Cash, Cash Equivalents and Restricted Cash at Beginning of Period |  | 458 |  |  | 505 |
Cash, Cash Equivalents and Restricted Cash at End of period(1) |  | $ | 403 |  |  | $ | 437 |

___________
(1)Includes $6 million and $9 million of restricted cash as of June 30, 2021 and 2020, respectively, that were included in Other current assets on their respective Condensed Consolidated Balance Sheets.
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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CONDUENT INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)

| Three Months Ended June 30, 2021
(in millions) | Common Stock |  | Additional Paid-in Capital |  | Retained Earnings (Deficit) |  | AOCL(1) |  | Shareholders' Equity
Balance at March 31, 2021 | $ | 2 |  |  | $ | 3,902 |  |  | $ | (2,326) |  |  | $ | (410) |  |  | $ | 1,168 |
Dividends - preferred stock, $20/share | — |  |  | — |  |  | (3) |  |  | — |  |  | (3) |
Stock incentive plans, net | — |  |  | 5 |  |  | — |  |  | — |  |  | 5 |
Comprehensive Income (Loss): |  |  |  |  |  |  |  |  |
Net Income (Loss) | — |  |  | — |  |  | 12 |  |  | — |  |  | 12 |
Other comprehensive income (loss), net | — |  |  | — |  |  | — |  |  | 3 |  |  | 3 |
Total Comprehensive Income (Loss), Net | — |  |  | — |  |  | 12 |  |  | 3 |  |  | 15 |
Balance at June 30, 2021 | $ | 2 |  |  | $ | 3,907 |  |  | $ | (2,317) |  |  | $ | (407) |  |  | $ | 1,185 |

| Three Months Ended June 30, 2020
(in millions) | Common Stock |  | Additional Paid-in Capital |  | Retained Earnings (Deficit) |  | AOCL(1) |  | Shareholders' Equity
Balance at March 31, 2020 | $ | 2 |  |  | $ | 3,891 |  |  | $ | (2,236) |  |  | $ | (437) |  |  | $ | 1,220 |
Dividends - preferred stock, $20/share | — |  |  | — |  |  | (3) |  |  | — |  |  | (3) |
Stock incentive plans, net | — |  |  | 5 |  |  | — |  |  | — |  |  | 5 |
Comprehensive Income (Loss): |  |  |  |  |  |  |  |  |
Comprehensive Income (Loss): | — |  |  | — |  |  | (51) |  |  | — |  |  | (51) |
Other comprehensive income (loss), net | — |  |  | — |  |  | — |  |  | 4 |  |  | 4 |
Total Comprehensive Income (Loss), Net | — |  |  | — |  |  | (51) |  |  | 4 |  |  | (47) |
Balance at June 30, 2020 | $ | 2 |  |  | $ | 3,896 |  |  | $ | (2,290) |  |  | $ | (433) |  |  | $ | 1,175 |

| Six Months Ended June 30, 2021
(in millions) | Common Stock |  | Additional Paid-in Capital |  | Retained Earnings (Deficit) |  | AOCL(1) |  | Shareholders' Equity
Balance at December 31, 2020 | $ | 2 |  |  | $ | 3,899 |  |  | $ | (2,313) |  |  | $ | (398) |  |  | $ | 1,190 |
Dividends - preferred stock, $40/share | — |  |  | — |  |  | (5) |  |  | — |  |  | (5) |
Stock incentive plans, net | — |  |  | 8 |  |  | — |  |  | — |  |  | 8 |
Comprehensive Income (Loss): |  |  |  |  |  |  |  |  |
Net Income (Loss) | — |  |  | — |  |  | 1 |  |  | — |  |  | 1 |
Other comprehensive income (loss), net | — |  |  | — |  |  | — |  |  | (9) |  |  | (9) |
Total Comprehensive Income (Loss), Net | — |  |  | — |  |  | 1 |  |  | (9) |  |  | (8) |
Balance at June 30, 2021 | $ | 2 |  |  | $ | 3,907 |  |  | $ | (2,317) |  |  | $ | (407) |  |  | $ | 1,185 |

| Six Months Ended June 30, 2020
(in millions) | Common Stock |  | Additional Paid-in Capital |  | Retained Earnings (Deficit) |  | AOCL(1) |  | Shareholders' Equity
Balance at December 31, 2019 | 2 |  |  | 3,890 |  |  | (2,185) |  |  | (407) |  |  | 1,300 |
Dividends - preferred stock, $40/share | — |  |  | — |  |  | (5) |  |  | — |  |  | (5) |
Stock incentive plans, net | — |  |  | 6 |  |  | — |  |  | — |  |  | 6 |
Comprehensive Income (Loss): |  |  |  |  |  |  |  |  |
Net Income (Loss) | — |  |  | — |  |  | (100) |  |  | — |  |  | (100) |
Other comprehensive income (loss), net | — |  |  | — |  |  | — |  |  | (26) |  |  | (26) |
Total Comprehensive Income (Loss), Net | — |  |  | — |  |  | (100) |  |  | (26) |  |  | (126) |
Balance at June 30, 2020 | $ | 2 |  |  | $ | 3,896 |  |  | $ | (2,290) |  |  | $ | (433) |  |  | $ | 1,175 |

___________
(1)AOCL - Accumulated other comprehensive loss. Refer to Note 10 – Accumulated Other Comprehensive Loss for the components of AOCL.
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

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CONDUENT INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1 – Basis of Presentation
References herein to “we,” “us,” “our,” the “Company” and “Conduent” refer to Conduent Incorporated and its consolidated subsidiaries unless the context suggests otherwise.
Description of Business
As one of the largest business process services companies in the world, Conduent delivers mission-critical services and solutions on behalf of businesses and governments – creating exceptional outcomes for its clients and the millions of people who count on them. Through people, process, expertise in transaction-intensive processing and technology such as analytics and automation, Conduent's services and solutions create value by improving efficiencies, reducing costs and enabling revenue growth. A majority of Fortune 100 companies and over 500 government entities depend on Conduent every day to manage their business processes and essential interactions with their end-users. The Company's portfolio includes industry-focused solutions in attractive growth markets such as healthcare and transportation, as well as solutions that serve multiple industries such as transaction processing, customer care, human resource solutions and payment services.
Basis of Presentation
The unaudited interim Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) on a basis consistent with reporting interim financial information in accordance with instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The year-end Condensed Consolidated Balance Sheet was derived from the audited Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020. Certain reclassifications have been made to prior year information to conform to current year presentation. Intercompany balances and transactions have been eliminated. In the opinion of management, all adjustments necessary for a fair statement of the financial position, results of operations and cash flows have been made. These adjustments consist of normal recurring items. The interim results of operations are not necessarily indicative of the results of the full year. These financial statements should be read in conjunction with the Company’s Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
Use of Estimates
Preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Actual results could differ materially from these estimates. On an ongoing basis, the Company evaluates its estimates, including those related to fair values of financial instruments, goodwill and intangible assets, income taxes and contingent liabilities, among others. The Company bases its estimates on assumptions, both historical and forward looking, that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.
As of June 30, 2021, the impact of the COVID-19 pandemic, the mitigating impact of the rollout of a vaccine for it and emerging cases of new variants of the virus continue to unfold. As a result, many of the Company's estimates and assumptions continue to require increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, the Company's estimates may change materially in the future.

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Note 2 – Recent Accounting Pronouncements
The Company's significant accounting policies are described in Note 1–Basis of Presentation and Summary of Significant Accounting Policies in the Company's Annual Report on Form 10-K for the year ended December 31, 2020. Summarized below are the applicable accounting pronouncements adopted or to be adopted subsequent to December 31, 2020.
New Accounting Standards Adopted
I ncome Taxes: In December 2019, the Financial Accounting Standards Board (FASB) issued final guidance that simplified the accounting for income taxes by eliminating some exceptions to the general approach in Accounting Standards Codification (ASC) 740, Income Taxes. This final guidance was effective for fiscal years beginning January 1, 2021. The Company adopted the final income taxes guidance as of January 1, 2021. The adoption did not have any material impact on the Company's Condensed Consolidated Financial Statements.
New Accounting Standards To Be Adopted
Reference Rate Reform: In March 2020, the FASB issued updated guidance relating to the accounting for the discontinuation of the London Inter-bank Offered Rate (LIBOR), referred to as reference rate reform. This guidance provides optional practical expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. T his guidance is applicable to contract modifications that replace a reference LIBOR rate affected by reference rate reform. The amendments may be applied through December 31, 2022. The Company is currently evaluating the impact of this guidance on its Condensed Consolidated Financial Statements.

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Note 3 – Revenue
Disaggregation of Revenue
The following table provides information about disaggregated revenue by major service offering, the timing of revenue recognition and a reconciliation of the disaggregated revenue by reportable segment. Refer to Note 4 – Segment Reporting for additional information on the Company's reportable segments.

|  | Three Months Ended June 30, |  | Six Months Ended June 30,
(in millions) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Commercial Industries: |  |  |  |  |  |  |  |
Customer experience management |  | $ | 146 |  |  | $ | 157 |  |  | $ | 307 |  |  | $ | 325 |
Business operations solutions |  | 137 |  |  | 133 |  |  | 279 |  |  | 286 |
Commercial healthcare solutions |  | 109 |  |  | 103 |  |  | 220 |  |  | 216 |
Human resource and learning services |  | 111 |  |  | 127 |  |  | 223 |  |  | 265 |
Total Commercial Industries |  | 503 |  |  | 520 |  |  | 1,029 |  |  | 1,092 |
Government Services: |  |  |  |  |  |  |  |
Government healthcare solutions |  | 140 |  |  | 154 |  |  | 289 |  |  | 306 |
Government services solutions |  | 198 |  |  | 177 |  |  | 367 |  |  | 315 |
Total Government Services |  | 338 |  |  | 331 |  |  | 656 |  |  | 621 |
Transportation: |  |  |  |  |  |  |  |
Roadway charging & management services |  | 75 |  |  | 71 |  |  | 158 |  |  | 149 |
Transit solutions |  | 70 |  |  | 61 |  |  | 134 |  |  | 128 |
Curbside management solutions |  | 20 |  |  | 14 |  |  | 38 |  |  | 36 |
Public safety solutions |  | 18 |  |  | 17 |  |  | 35 |  |  | 37 |
Commercial vehicles |  | 2 |  |  | 2 |  |  | 4 |  |  | 4 |
Total Transportation |  | 185 |  |  | 165 |  |  | 369 |  |  | 354 |
Total Consolidated Revenue |  | $ | 1,026 |  |  | $ | 1,016 |  |  | $ | 2,054 |  |  | $ | 2,067 |
Timing of Revenue Recognition: |  |  |  |  |  |  |  |
Point in time |  | $ | 25 |  |  | $ | 32 |  |  | $ | 57 |  |  | $ | 62 |
Over time |  | 1,001 |  |  | 984 |  |  | 1,997 |  |  | 2,005 |
Total Revenue |  | $ | 1,026 |  |  | $ | 1,016 |  |  | $ | 2,054 |  |  | $ | 2,067 |

Contract Balances
The Company receives payments from customers based upon contractual billing schedules. Accounts receivable are recorded when the right to consideration becomes unconditional. Contract assets are the Company’s rights to consideration for services provided when the right is conditioned on something other than passage of time (for example, meeting a milestone for the right to bill under the cost-to-cost measure of progress). Contract assets are transferred to Accounts receivable, net when the rights to consideration become unconditional. Unearned income includes payments received in advance of performance under the contract, which are realized when the associated revenue is recognized under the contract.

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The following table provides information about the balances of the Company's contract assets, unearned income and receivables from contracts with customers:

(in millions) |  | June 30, 2021 |  | December 31, 2020
Contract Assets (Unearned Income) |  |  |  |
Current contract assets |  | $ | 159 |  |  | $ | 151 |
Long-term contract assets(1) |  | 9 |  |  | 13 |
Current unearned income |  | (124) |  |  | (133) |
Long-term unearned income(2) |  | (40) |  |  | (29) |
Net Contract Assets (Unearned Income) |  | $ | 4 |  |  | $ | 2 |
Accounts receivable, net |  | $ | 664 |  |  | $ | 670 |

__________
(1)Presented in Other long-term assets in the Condensed Consolidated Balance Sheets.
(2)Presented in Other long-term liabilities in the Condensed Consolidated Balance Sheets.
Revenues of $30 million and $88 million were recognized during the three and six months ended June 30, 2021, respectively, related to the Company's unearned income at December 31, 2020. Revenues of $22 million and $64 million were recognized during the three and six months ended June 30, 2020, respectively, related to the Company's unearned income at December 31, 2019. The Company had no material asset impairment charges related to contract assets for the three and six months ended June 30, 2021 or 2020.
Transaction Price Allocated to the Remaining Performance Obligations
Estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied or partially satisfied at June 30, 2021 was approximately $1.3 billion. The Company expects to recognize approximately 76% of this revenue over the next two years and the remainder thereafter.
Note 4 – Segment Reporting
The Company's reportable segments correspond to how we organize and manage the business, as defined by the Company's Chief Executive Officer, who is also the Company's Chief Operating Decision Maker (CODM), and are aligned to the industries in which the Company's clients operate. The Company's segments involve the delivery of business process services and include service arrangements where it manages a customer's business activity or process.
The Company's financial performance is based on Segment Profit/(Loss) and Segment Adjusted Earnings Before Income Taxes, Depreciation and Amortization (EBITDA) for its three reportable segments (Commercial Industries, Government Services and Transportation), Other and Unallocated Costs. The Company's CODM does not evaluate operating segments using discrete asset information.
Commercial Industries: The Commercial Industries segment provides business process services and customized solutions to clients in a variety of industries. Across the Commercial Industries segment, the Company operates on its clients’ behalf to deliver mission-critical solutions and services to reduce costs, improve efficiencies and enable revenue growth for the Company's clients and their consumers and employees.
Government Services: The Government Services segment provides government-centric business process services to U.S. federal, state and local and foreign governments for public assistance program administration, transaction processing and payment services. The solutions in this segment help governments respond to changing rules for eligibility and increasing citizen expectations.

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Transportation: The Transportation segment provides systems and support, as well as revenue-generating services, to government clients. On behalf of government agencies and authorities in the transportation industry, the Company delivers mission-critical mobility and payment solutions that improve automation, interoperability and decision-making to streamline operations, increase revenue and reduce congestion while creating safer communities and seamless travel experiences for consumers.
Other includes the Company's Student Loan business, which the Company exited in the third quarter of 2018.
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 the reportable segments.
Selected financial information for the Company's reportable segments was as follows:

|  | Three Months Ended June 30,
(in millions) |  | Commercial Industries |  | Government Services |  | Transportation |  | Other |  | Unallocated Costs |  | Total
2021 |  |  |  |  |  |  |  |  |  |  |  |
Revenue |  | $ | 503 |  |  | $ | 338 |  |  | $ | 185 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,026 |
Segment profit (loss) |  | $ | 29 |  |  | $ | 110 |  |  | $ | 17 |  |  | $ | — |  |  | $ | (82) |  |  | $ | 74 |
Segment depreciation and amortization |  | $ | 25 |  |  | $ | 8 |  |  | $ | 8 |  |  | $ | — |  |  | $ | 13 |  |  | $ | 54 |
Adjusted EBITDA |  | $ | 54 |  |  | $ | 118 |  |  | $ | 25 |  |  | $ | — |  |  | $ | (69) |  |  | $ | 128 |
2020 |  |  |  |  |  |  |  |  |  |  |  |
Revenue |  | $ | 520 |  |  | $ | 331 |  |  | $ | 165 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,016 |
Segment profit (loss) |  | $ | 25 |  |  | $ | 90 |  |  | $ | 20 |  |  | $ | (1) |  |  | $ | (79) |  |  | $ | 55 |
Segment depreciation and amortization |  | $ | 27 |  |  | $ | 6 |  |  | $ | 9 |  |  | $ | — |  |  | $ | 13 |  |  | $ | 55 |
Adjusted EBITDA |  | $ | 52 |  |  | $ | 96 |  |  | $ | 29 |  |  | $ | (1) |  |  | $ | (66) |  |  | $ | 110 |

|  | Six Months Ended June 30,
(in millions) |  | Commercial Industries |  | Government Services |  | Transportation |  | Other |  | Unallocated Costs |  | Total
2021 |  |  |  |  |  |  |  |  |  |  |  |
Revenue |  | $ | 1,029 |  |  | $ | 656 |  |  | $ | 369 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,054 |
Segment profit (loss) |  | $ | 64 |  |  | $ | 197 |  |  | $ | 38 |  |  | $ | — |  |  | $ | (165) |  |  | $ | 134 |
Segment depreciation and amortization |  | $ | 52 |  |  | $ | 13 |  |  | $ | 17 |  |  | $ | — |  |  | $ | 27 |  |  | $ | 109 |
Adjusted EBITDA |  | $ | 116 |  |  | $ | 210 |  |  | $ | 55 |  |  | $ | — |  |  | $ | (138) |  |  | $ | 243 |
2020 |  |  |  |  |  |  |  |  |  |  |  |
Revenue |  | $ | 1,092 |  |  | $ | 621 |  |  | $ | 354 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,067 |
Segment profit (loss) |  | $ | 67 |  |  | $ | 160 |  |  | $ | 30 |  |  | $ | 3 |  |  | $ | (160) |  |  | $ | 100 |
Segment depreciation and amortization |  | $ | 55 |  |  | $ | 13 |  |  | $ | 18 |  |  | $ | — |  |  | $ | 27 |  |  | $ | 113 |
Adjusted EBITDA |  | $ | 122 |  |  | $ | 173 |  |  | $ | 48 |  |  | $ | (4) |  |  | $ | (133) |  |  | $ | 206 |

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(in millions) |  |  |  | Three Months Ended June 30, |  | Six Months Ended June 30,
Segment Profit (Loss) Reconciliation to Pre-tax Income (Loss) |  |  |  |  |  | 2021 |  | 2020 |  | 2021 |  | 2020
Income (Loss) Before Income Taxes |  |  |  |  |  | $ | 19 |  |  | $ | (64) |  |  | $ | 10 |  |  | $ | (115) |
Reconciling items: |  |  |  |  |  |  |  |  |  |  |  |
Amortization of acquired intangible assets |  |  |  |  |  | 32 |  |  | 60 |  |  | 72 |  |  | 120 |
Restructuring and related costs |  |  |  |  |  | 8 |  |  | 29 |  |  | 21 |  |  | 36 |
Interest expense |  |  |  |  |  | 13 |  |  | 15 |  |  | 26 |  |  | 32 |
(Gain) loss on divestitures and transaction costs |  |  |  |  |  | (1) |  |  | 2 |  |  | 1 |  |  | 6 |
Litigation costs |  |  |  |  |  | 1 |  |  | 14 |  |  | 2 |  |  | 20 |
Loss on extinguishment of debt |  |  |  |  |  | 2 |  |  | — |  |  | 2 |  |  | — |
Other (income) expenses, net |  |  |  |  |  | — |  |  | (1) |  |  | — |  |  | 1 |
Segment Pre-tax Income (Loss) |  |  |  |  |  | $ | 74 |  |  | $ | 55 |  |  | $ | 134 |  |  | $ | 100 |
Segment depreciation and amortization (including contract inducements) |  |  |  |  |  | $ | 54 |  |  | $ | 55 |  |  | $ | 109 |  |  | $ | 113 |
CA MMIS charge (credit) |  |  |  |  |  | — |  |  | — |  |  | — |  |  | (7) |
Adjusted EBITDA |  |  |  |  |  | $ | 128 |  |  | $ | 110 |  |  | $ | 243 |  |  | $ | 206 |

Refer to Note 3 – Revenue for additional information on disaggregated revenues of the reportable segments.
Note 5 – Restructuring Programs and Related Costs
The Company engages in a series of restructuring programs related to downsizing its employee base, exiting certain activities, outsourcing certain internal functions and engaging in other actions designed to reduce its cost structure and improve productivity. The implementation of the Company's operational efficiency improvement initiatives has reduced the Company's real estate footprint across all geographies and segments resulting in lease right-of-use asset impairments and other related costs. Also included in Restructuring and related costs are incremental, non-recurring costs related to the consolidation of the Company's data centers, which totaled $8 million and $6 million for the three months ended June 30, 2021 and 2020, respectively, and $15 million and $8 million for the six months ended June 30, 2021 and 2020, respectively. Management continues to evaluate the Company's businesses, and in the future, there may be additional provisions for new plan initiatives and/or changes in previously recorded estimates as payments are made, or actions are completed.
Costs associated with restructuring, including employee severance and lease termination costs, are generally recognized when it has been determined that a liability has been incurred, which is generally upon communication to the affected employees or exit from the leased facility. In those geographies where we have either a formal severance plan or a history of consistently providing severance benefits representing a substantive plan, we recognize employee severance costs when they are both probable and reasonably estimable. Asset impairment costs related to the reduction of our real estate footprint include impairment of operating lease right-of-use (ROU) assets and associated leasehold improvements.
A summary of the Company's restructuring program activity during the six months ended June 30, 2021 and 2020 is as follows:

(in millions) | Severance and Related Costs |  | Termination and Other Costs |  | Asset Impairments |  | Total
Accrued Balance at December 31, 2020 | $ | 3 |  |  | $ | 3 |  |  | $ | — |  |  | $ | 6 |
Provision | 2 |  |  | 16 |  |  | 4 |  |  | 22 |
Changes in estimates | — |  |  | (3) |  |  | — |  |  | (3) |
Total Net Current Period Charges(1) | 2 |  |  | 13 |  |  | 4 |  |  | 19 |
Charges against reserve and currency | (2) |  |  | (15) |  |  | (4) |  |  | (21) |
Accrued Balance at June 30, 2021 | $ | 3 |  |  | $ | 1 |  |  | $ | — |  |  | $ | 4 |

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(in millions) | Severance and Related Costs |  | Termination and Other Costs |  | Asset Impairments |  | Total
Accrued Balance at December 31, 2019 | $ | 15 |  |  | $ | 6 |  |  | $ | — |  |  | $ | 21 |
Provision | 10 |  |  | 10 |  |  | 11 |  |  | 31 |
Changes in estimates | — |  |  | 1 |  |  | — |  |  | 1 |
Total Net Current Period Charges(1) | 10 |  |  | 11 |  |  | 11 |  |  | 32 |
Charges against reserve and currency | (13) |  |  | (13) |  |  | (11) |  |  | (37) |
Accrued Balance at June 30, 2020 | $ | 12 |  |  | $ | 4 |  |  | $ | — |  |  | $ | 16 |

__________
(1)Represents amounts recognized within the Consolidated Statements of Income (Loss) for the years shown.
In addition, the Company recorded professional support costs associated with the implementation of certain strategic transformation programs of $1 million and $2 million for the three months ended June 30, 2021 and 2020, respectively, and $2 million and $4 million for the six months ended June 30, 2021 and 2020, respectively.
The following table summarizes the total amount of costs incurred in connection with these restructuring programs by reportable and non-reportable segment:

|  | Three Months Ended June 30, |  | Six Months Ended June 30,
(in millions) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Commercial Industries |  | $ | 2 |  |  | $ | 5 |  |  | $ | 2 |  |  | $ | 7 |
Government Services |  | — |  |  | 1 |  |  | — |  |  | 1 |
Transportation |  | — |  |  | 3 |  |  | — |  |  | 3 |
Unallocated Costs(1) |  | 5 |  |  | 18 |  |  | 17 |  |  | 21 |
Total Net Restructuring Charges |  | $ | 7 |  |  | $ | 27 |  |  | $ | 19 |  |  | $ | 32 |

__________
(1)Represents costs related to the consolidation of the Company's data centers, operating lease ROU assets impairment, termination and other costs not allocated to the segments.
Note 6 – Debt
Long-term debt was as follows:

(in millions) |  | June 30, 2021 |  | December 31, 2020
Term loan A due December 2022 |  | $ | 610 |  |  | $ | 654 |
Term loan B due December 2023 |  | 812 |  |  | 816 |
Senior notes due 2024 |  | — |  |  | 34 |
Finance lease obligations |  | 18 |  |  | 20 |
Other loans |  | 4 |  |  | 4 |
Principal debt balance |  | 1,444 |  |  | 1,528 |
Debt issuance costs and unamortized discounts |  | (15) |  |  | (18) |
Less: current maturities |  | (89) |  |  | (90) |
Total Long-term Debt |  | $ | 1,340 |  |  | $ | 1,420 |

As of June 30, 2021, the Company had no outstanding borrowings under its $750 million Senior Revolving Credit Facility (Revolver). However, the Company has utilized $7 million of the Revolver to issue letters of credit. The net Revolver available to be drawn upon as of June 30, 2021 was $743 million. On May 1, 2021, the Company redeemed all the previously outstanding $34 million 10.50% Senior Notes due 2024 and incurred $2 million of loss on extinguishment of debt.
At June 30, 2021 and December 31, 2020, the Company was in compliance with all debt covenants related to the borrowings in the table above.

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Note 7 – Financial Instruments
The Company is a global company that is exposed to foreign currency exchange rate fluctuations in the normal course of its business. As a part of the Company's foreign exchange risk management strategy, the Company uses derivative instruments, primarily forward contracts, to hedge the funding of foreign entities which have a non-dollar functional currency, thereby reducing volatility of earnings or protecting fair values of assets and liabilities.
At June 30, 2021 and December 31, 2020, the Company had outstanding forward exchange contracts with gross notional values of $143 million and $180 million, respectively. At June 30, 2021, approximately 71% of these contracts mature within three months, 11% in three to six months, 14% in six to twelve months and 4% in greater than twelve months. Most of these foreign currency derivative contracts are designated as cash flow hedges and did not have a material impact on the Company's balance sheet, income statement or cash flows for the periods presented.
Refer to Note 8 – Fair Value of Financial Assets and Liabilities for additional information regarding the fair value of the Company's foreign exchange forward contracts.
Note 8 – Fair Value of Financial Assets and Liabilities
Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP established a hierarchy framework to classify the fair value based on the observability of significant inputs to the measurement. The levels of the fair value hierarchy are as follows:
Level 1: Fair value is determined using an unadjusted quoted price in an active market for identical assets or liabilities.
Level 2: Fair value is estimated using inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly.
Level 3: Fair value is estimated using unobservable inputs that are significant to the fair value of the assets or liabilities.
Summary of Financial Assets and Liabilities Accounted for at Fair Value on a Recurring Basis
The following table represents assets and liabilities measured at fair value on a recurring basis. The basis for the measurement at fair value in all cases was Level 2.

(in millions) |  | June 30, 2021 |  | December 31, 2020
Assets: |  |  |  |
Foreign exchange contract - forward |  | $ | 1 |  |  | $ | 2 |
Total Assets |  | $ | 1 |  |  | $ | 2 |
Liabilities: |  |  |  |
Foreign exchange contracts - forward |  | $ | — |  |  | $ | — |
Total Liabilities |  | $ | — |  |  | $ | — |

Summary of Other Financial Assets and Liabilities
The estimated fair values of other financial assets and liabilities were as follows:

| June 30, 2021 |  | December 31, 2020
(in millions) | Carrying Amount |  | Fair Value |  | Carrying Amount |  | Fair Value
Liabilities: |  |  |  |  |  |  |
Long-term debt | $ | 1,340 |  |  | $ | 1,316 |  |  | $ | 1,420 |  |  | $ | 1,378 |

The fair value amounts for Cash and cash equivalents, Restricted cash, Accounts receivable, net and Short-term debt approximate carrying amounts due to the short-term maturities of these instruments.

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The fair value of Long-term debt was estimated based on the current rates offered to the Company for debt of similar maturities (Level 2).
Note 9 – Employee Benefit Plans
The Company has post-retirement savings and investment plans in several countries, including the U.S., U.K. and Canada. In many instances, employees participating in defined benefit pension plans that have been amended to freeze future service accruals were transitioned to an enhanced defined contribution plan. In these plans, employees are permitted to contribute a portion of their salaries and bonuses to the plans. Historically, the Company matched a portion of employee contributions. Beginning in 2019, the Company suspended its match to the 401(k) plan for all U.S. salaried employees and extended the suspension to all U.S. hourly employees in the second quarter of 2020. However, the Company match was reinstated for all U.S. employees in November of 2020.
The Company recognized an expense related to its defined contribution plans of $5 million and $0 million for the three months ended June 30, 2021 and 2020, respectively. The Company recognized an expense related to its defined contribution plans of $10 million and $1 million for the six months ended June 30, 2021 and 2020, respectively. The balance sheet and income statement impacts of any remaining defined benefit plans are immaterial for all periods presented in these Consolidated Condensed Financial Statements.
Note 10 – Accumulated Other Comprehensive Loss (AOCL)
Below are the balances and changes in AOCL(1):

(in millions) |  | Currency Translation Adjustments |  | Gains (Losses) on Cash Flow Hedges |  | Defined Benefit Pension Items |  | Total
Balance at December 31, 2020 |  | $ | (400) |  |  | $ | 3 |  |  | $ | (1) |  |  | $ | (398) |
Other comprehensive income (loss) |  | (7) |  |  | (1) |  |  | (1) |  |  | (9) |
Balance at June 30, 2021 |  | $ | (407) |  |  | $ | 2 |  |  | $ | (2) |  |  | $ | (407) |

(in millions) |  | Currency Translation Adjustments |  | Gains (Losses) on Cash Flow Hedges |  | Defined Benefit Pension Items |  | Total
Balance at December 31, 2019 |  | $ | (408) |  |  | $ | 3 |  |  | $ | (2) |  |  | $ | (407) |
Other comprehensive income (loss) |  | (26) |  |  | (1) |  |  | 1 |  |  | (26) |
Balance at June 30, 2020 |  | $ | (434) |  |  | $ | 2 |  |  | $ | (1) |  |  | $ | (433) |

__________
(1)All amounts are net of tax. Tax effects were immaterial.

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Note 11 – Contingencies and Litigation
As more fully discussed below, the Company is involved in a variety of claims, lawsuits, investigations and proceedings concerning a variety of matters, including: governmental entity contracting, servicing and procurement law; intellectual property law; employment law; commercial and contracts law; the Employee Retirement Income Security Act (ERISA); and other laws and regulations. The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. The Company assesses its potential liability by analyzing its litigation and regulatory matters using available information. The Company develops its view on estimated losses in consultation with outside counsel handling its defense in these matters, which involves an analysis of potential results, assuming a combination of litigation and settlement strategies. Should developments in any of these matters cause a change in the Company's determination as to an unfavorable outcome and result in the need to recognize a material accrual, or should any of these matters result in a final adverse judgment or be settled for significant amounts in excess of any accrual for such matter or matters, this could have a material adverse effect on the Company's results of operations, cash flows and financial position in the period or periods in which such change in determination, judgment or settlement occurs. The Company believes it has recorded adequate provisions for any such matters as of June 30, 2021. Litigation is inherently unpredictable, and it is not possible to predict the ultimate outcome of these matters and such outcome in any such matters could be in excess of any amounts accrued and could be material to the Company's results of operations, cash flows or financial position in any reporting period.
Additionally, guarantees, indemnifications and claims arise during the ordinary course of business from relationships with suppliers, customers and non-consolidated affiliates when the Company undertakes an obligation to guarantee the performance of others if specified triggering events occur. Nonperformance under a contract could trigger an obligation of the Company. These potential claims include actions based upon alleged exposures to products, real estate, intellectual property such as patents, environmental matters and other indemnifications. The ultimate effect on future financial results is not subject to reasonable estimation because considerable uncertainty exists as to the outcome of these claims. However, while the ultimate liabilities resulting from such claims may be significant to results of operations in the period recognized, management does not anticipate they will have a material adverse effect on the Company's condensed consolidated financial position or liquidity. As of June 30, 2021, the Company had accrued its estimate of liability incurred under its indemnification arrangements and guarantees.
Litigation Against the Company
Employees’ Retirement System of the Puerto Rico Electric Power Authority et al v. Conduent Inc. et al.: On March 8, 2019, a putative class action lawsuit alleging violations of certain federal securities laws in connection with our statements and alleged omissions regarding our financial guidance and business and operations was filed against us, our former Chief Executive Officer, and our former Chief Financial Officer in the United States District Court for the District of New Jersey. The complaint seeks certification of a class of all persons who purchased or otherwise acquired our securities from February 21, 2018 through November 6, 2018, and also seeks unspecified monetary damages, costs, and attorneys’ fees. We moved to dismiss the class action complaint in its entirety. In June 2020, the court denied the motion to dismiss and allowed the claims to proceed. We intend to defend the litigation vigorously. The Company maintains insurance that may cover any costs arising out of this litigation up to the insurance limits, and subject to meeting certain deductibles and to other terms and conditions thereof. The Company is not able to determine or predict the ultimate outcome of this proceeding or reasonably provide an estimate or range of estimate of the possible outcome or loss, if any, in excess of currently recorded reserves.

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Skyview Capital LLC and Continuum Global Solutions, LLC v. Conduent Business Services, LLC: On February 3, 2020, plaintiffs filed a lawsuit in the Superior Court of New York County, New York. The lawsuit relates to the sale of a portion of Conduent Business Service, LLC's (CBS) select standalone customer care call center business (Business) to plaintiffs, which sale closed in February 2019. Under the terms of the sale agreement, CBS received approximately $23 million of notes from plaintiffs (Notes). The lawsuit alleges various causes of action in connection with the acquisition, including: indemnification for breach of representation and warranty; indemnification for breach of contract; and fraud. Plaintiffs allege that their obligation to mitigate damages and their contractual right of set-off permits them to withhold and deduct from any amounts that are owed to CBS under the Notes, and plaintiffs seek a judgement that they have no obligation to pay the Notes. On August 20, 2020, Conduent filed a counterclaim against Skyview seeking the outstanding balance on the notes, the amounts owed for the Jamaica deferred closing, and other transition services agreement and late rent payment obligations. Conduent also moved to dismiss Skyview’s claims in 2020. In May 2021, the court denied the motion and allowed the claims to proceed. Conduent denies all of the plaintiffs' allegations, believes that it has strong defenses to all of plaintiffs’ claims and it intends to defend the litigation vigorously. The Company is not able to determine or predict the ultimate outcome of this proceeding or reasonably provide an estimate or range of estimate of the possible outcome or loss, if any, in excess of currently recorded reserves.
Dennis Nasrawi v. Buck Consultants et al.: On October 8, 2009, plaintiffs filed a lawsuit in the Superior Court of California, Stanislaus County, and on November 24, 2009, the case was removed to the U.S. Court for the Eastern District of California, Fresno Division. Plaintiffs allege actuarial negligence against Buck Consultants, LLC (Buck), which was a wholly-owned subsidiary of Conduent, for the use of faulty actuarial assumptions in connection with the 2007 actuarial valuation for the Stanislaus County Employees Retirement Association (StanCERA). Plaintiffs allege that the employer contribution rate adopted by StanCERA based on Buck’s valuation was insufficient to fund the benefits promised by the County. On July 13, 2012, the Court entered its ruling that the plaintiffs lacked standing to sue in a representative capacity on behalf of all plan participants. The Court also ruled that plaintiffs had adequately pleaded their claim that Buck allegedly aided and abetted StanCERA in breaching its fiduciary duty. Plaintiffs then filed their Fifth Amended Complaint and added StanCERA to the litigation. Buck and StanCERA filed demurrers to the amended complaint. On September 13, 2012, the Court sustained both demurrers with prejudice, completely dismissing the matter and barring plaintiffs from refiling their claims. Plaintiffs appealed, and ultimately the California Court of Appeals (Sixth District) reversed the trial court’s ruling and remanded the case back to the trial court as to Buck only, and only with respect to plaintiff's claim of aiding and abetting StanCERA in breaching its fiduciary duty. This case has been stayed pending the outcome of parallel litigation the plaintiffs are pursuing against StanCERA. The parallel litigation was tried before the bench in June 2018, and on January 24, 2019, the court found in favor of StanCERA, holding that it had not breached its fiduciary duty to plaintiffs. On April 26, 2019, plaintiffs in the parallel litigation filed an appeal. Nasrawi remains stayed until the parallel litigation is finally concluded. Absent the court finding that StanCERA breached its fiduciary duty, plaintiffs’ claim against Buck for aiding and abetting said breach would not appear viable. Buck will continue to aggressively defend these lawsuits. In August 2018, Conduent sold Buck; however, the Company retained this liability after the sale. The Company is not able to determine or predict the ultimate outcome of this proceeding or reasonably provide an estimate or range of estimate of the possible outcome or loss, if any, in excess of currently recorded reserves.

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Conduent Business Services, LLC v. Cognizant Business Services Corporation: On April 12, 2017, Conduent Business Service LLC (CBS) filed a lawsuit against Cognizant Business Services Corporation (Cognizant) in the Supreme Court of New York County, New York. The lawsuit relates to the Amended and Restated Master Outsourcing Services Agreement effective as of October 24, 2012, and the service delivery contracts and work orders thereunder, between CBS and Cognizant, as amended and supplemented (Contract). The Contract contains certain minimum purchase obligations by CBS through the date of expiration. The lawsuit alleges that Cognizant committed multiple breaches of the Contract, including Cognizant’s failure to properly perform its obligations as subcontractor to CBS under CBS’s contract with the New York Department of Health to provide Medicaid Management Information Systems. In the lawsuit, CBS seeks damages in excess of $150 million. During the first quarter of 2018, CBS provided notice to Cognizant that it was terminating the Contract for cause and recorded in the same period certain charges associated with the termination. CBS also alleges that it terminated the Contract for cause, because, among other things, Cognizant violated the Foreign Corrupt Practices Act. In its answer, Cognizant asserted two counterclaims for breach of contract seeking recovery of damages in excess of $47 million, which includes amounts alleged not paid to Cognizant under the Contract and an alleged $25 million termination fee. Cognizant's second amended counterclaim increased Cognizant's damages to $89 million. CBS will continue to vigorously defend itself against the counterclaims but the Company is not able to determine or predict the ultimate outcome of this proceeding or reasonably provide an estimate or range of estimate of the possible outcome or loss, if any, in excess of currently recorded reserves.
Other Matters
Since 2014, Xerox Education Services, Inc. (XES) has cooperated with several federal and state agencies regarding a variety of matters, including XES' self-disclosure to the U.S. Department of Education (Department) and the Consumer Financial Protection Bureau (CFPB) that some third-party student loans under outsourcing arrangements for various financial institutions required adjustments. With the exception of an inquiry the Illinois Attorney General's Office recently commenced, the Company has resolved the investigations the CFPB and several state agencies commenced and continues to work with the Department and the U.S. Department of Justice to resolve all outstanding issues, including a number of operational projects that XES discovered and disclosed since 2014. The Company cannot provide assurance that the CFPB, another regulator, a financial institution on behalf of which the Company serviced third-party student loans, or another party will not ultimately commence a legal action against XES in which fines, penalties or other liabilities are sought from XES. Nor is the Company able to predict the likely outcome of these matters, should any such matter be commenced, or reasonably provide an estimate or range of estimates of any loss in excess of currently recorded reserves. The Company could, in future periods, incur judgments or enter into settlements to resolve these potential matters for amounts in excess of current reserves and there could be a material adverse effect on the Company's results of operations, cash flows and financial position in the period in which such change in judgment or settlement occurs.
Other Contingencies
Certain contracts, primarily in the Company's Government Services and Transportation segments, require the Company to provide a surety bond or a letter of credit as a guarantee of performance. As of June 30, 2021, the Company had $620 million of outstanding surety bonds used to secure its performance of contractual obligations with its clients and $95 million of outstanding letters of credit issued to secure the Company's performance of contractual obligations to its clients as well as other corporate obligations. In general, the Company would only be liable for the amount of these guarantees in the event of default in the Company's performance of its obligations under each contract. The Company believes it has sufficient capacity in the surety markets and liquidity from its cash flow and its various credit arrangements (including its Revolver) to allow it to respond to future requests for proposals that require such credit support.

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Note 12 – Preferred Stock
Series A Preferred Stock
In December 2016, the Company issued 120,000 shares of Series A convertible perpetual preferred stock with an aggregate liquidation preference of $120 million and an initial fair value of $142 million. The convertible preferred stock earns quarterly cash dividends at a rate of 8% per year ($9.6 million per year). Each share of convertible preferred stock is convertible at any time, at the option of the holder, into 44.9438 shares of common stock for a total of 5,393,000 shares (reflecting an initial conversion price of approximately $22.25 per share of common stock), subject to customary anti-dilution adjustments.

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Note 13 – Earnings (Loss) per Share
The Company did not declare any common stock dividends in the periods presented.
The following table sets forth the computation of basic and diluted earnings (loss) per share of common stock:

|  | Three Months Ended June 30, |  | Six Months Ended June 30,
(in millions, except per share data in whole dollars and shares in thousands) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Net Income (Loss) |  | $ | 12 |  |  | $ | (51) |  |  | $ | 1 |  |  | $ | (100) |
Dividend - Preferred Stock |  | (3) |  |  | (3) |  |  | (5) |  |  | (5) |
Adjusted Net Income (Loss) Available to Common Shareholders |  | $ | 9 |  |  | $ | (54) |  |  | $ | (4) |  |  | $ | (105) |
Weighted Average Common Shares Outstanding - Basic |  | 212,450 |  |  | 209,129 |  |  | 212,344 |  |  | 210,261 |
Common Shares Issuable With Respect To: |  |  |  |  |  |  |  |
Restricted Stock And Performance Units / Shares |  | 7,715 |  |  | — |  |  | — |  |  | — |
Weighted Average Common Shares Outstanding - Diluted |  | 220,165 |  |  | 209,129 |  |  | 212,344 |  |  | 210,261 |
Net Earnings (Loss) per Share: |  |  |  |  |  |  |  |
Basic |  | $ | 0.05 |  |  | $ | (0.25) |  |  | $ | (0.02) |  |  | $ | (0.50) |
Diluted |  | $ | 0.04 |  |  | $ | (0.25) |  |  | $ | (0.02) |  |  | $ | (0.50) |
The following securities were not included in the computation of diluted earnings per share as they were either contingently issuable shares or shares that if included would have been anti-dilutive (shares in thousands):
Restricted stock and performance shares/units |  | 2,762 |  |  | 16,444 |  |  | 13,783 |  |  | 16,444 |
Convertible preferred stock |  | 5,393 |  |  | 5,393 |  |  | 5,393 |  |  | 5,393 |
Total Anti-Dilutive and Contingently Issuable Securities |  | 8,155 |  |  | 21,837 |  |  | 19,176 |  |  | 21,837 |

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Note 14 – Supplementary Financial Information
The components of Other assets and Other liabilities were as follows:

(in millions) |  | June 30, 2021 |  | December 31, 2020
Other Current Assets |  |  |  |
Prepaid expenses |  | $ | 99 |  |  | $ | 73 |
Income taxes receivable |  | 45 |  |  | 48 |
Value-added tax (VAT) receivable |  | 17 |  |  | 21 |
Restricted cash |  | 6 |  |  | 8 |
Current portion of capitalized cloud computing implementation costs, net |  | 8 |  |  | 8 |
Other |  | 92 |  |  | 148 |
Total Other Current Assets |  | $ | 267 |  |  | $ | 306 |
Other Current Liabilities |  |  |  |
Accrued liabilities |  | $ | 238 |  |  | $ | 229 |
Litigation related accruals |  | 64 |  |  | 73 |
Current operating lease liabilities |  | 72 |  |  | 81 |
Restructuring liabilities |  | 4 |  |  | 1 |
Income tax payable |  | 21 |  |  | 16 |
Other taxes payable |  | 14 |  |  | 16 |
Other |  | 33 |  |  | 34 |
Total Other Current Liabilities |  | $ | 446 |  |  | $ | 450 |
Other Long-term Assets |  |  |  |
Internal use software, net |  | $ | 173 |  |  | $ | 163 |
Deferred contract costs, net |  | 73 |  |  | 76 |
Product software, net |  | 84 |  |  | 72 |
Cloud computing implementation costs, net |  | 33 |  |  | 33 |
Other |  | 111 |  |  | 69 |
Total Other Long-term Assets |  | $ | 474 |  |  | $ | 413 |
Other Long-term Liabilities |  |  |  |
Deferred payroll tax related to the CARES Act(1) |  | $ | 24 |  |  | $ | 24 |
Income tax liabilities |  | 15 |  |  | 15 |
Unearned income |  | 40 |  |  | 29 |
Restructuring liabilities |  | — |  |  | 5 |
Other |  | 34 |  |  | 35 |
Total Other Long-term Liabilities |  | $ | 113 |  |  | $ | 108 |

__________
(1)The CARES Act allowed for deferred payment of the employer-paid portion of social security taxes through the end of 2020, with 50% due on December 31, 2021 and the remainder due on December 31, 2022. The current portion of this liability is included in Accrued compensation and benefits costs.

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Note 15 – Related Party Transactions
In the normal course of business, the Company provides services to, and purchases from, certain related parties with the same shareholders. The services provided to these entities included those related to human resources, end-user support and other services and solutions. The purchases from these entities included office equipment and related services and supplies. In addition, we have a receivable related to certain income tax matters with our former parent company, Xerox Corporation. Revenue and purchases from these entities were included in Revenue and Costs of services / Selling, General and administrative, respectively, on the Company's Condensed Consolidated Statements of Income (Loss).
Transactions with related parties were as follows:

|  | Three Months Ended June 30, |  | Six Months Ended June 30,
(in millions) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Revenue from related parties |  | $ | 4 |  |  | $ | 7 |  |  | $ | 9 |  |  | $ | 13 |
Purchases from related parties |  | $ | 9 |  |  | $ | 6 |  |  | $ | 16 |  |  | $ | 16 |

The Company's receivable and payable balances with related party entities were not material as of June 30, 2021 and December 31, 2020.
Note 16 – Goodwill
The following table presents the changes in the carrying amount of goodwill, by reportable segment:

(in millions) |  | Commercial Industries |  | Government Services |  | Transportation |  | Total
Balance at December 31, 2020 |  | $ | 837 |  |  | $ | 623 |  |  | $ | 68 |  |  | $ | 1,528 |
Foreign currency translation |  | (4) |  |  | (3) |  |  | (2) |  |  | (9) |
Balance at June 30, 2021 |  | $ | 833 |  |  | $ | 620 |  |  | $ | 66 |  |  | $ | 1,519 |
Gross goodwill |  | $ | 2,386 |  |  | $ | 1,374 |  |  | $ | 646 |  |  | $ | 4,406 |
Accumulated impairment |  | (1,553) |  |  | (754) |  |  | (580) |  |  | (2,887) |
Balance at June 30, 2021 |  | $ | 833 |  |  | $ | 620 |  |  | $ | 66 |  |  | $ | 1,519 |

In the first and second quarters of 2021, the Company performed its ongoing assessment to consider whether events or circumstances had occurred that could more likely than not reduce the fair value of a reporting unit below its carrying value. After evaluating and weighing all relevant events and circumstances, the Company concluded that it is not more likely than not that the fair values of any of its reporting units were less than their carrying values. Consequently, the Company determined that it was not necessary to perform an interim impairment test for any of its reporting units.
To the extent the COVID-19 pandemic continues to disrupt the economic environment, such as a decline in the performance of the reporting units or loss of a significant contract or multiple significant contracts, the fair value of one or more of the reporting units could fall below their carrying value, resulting in a goodwill impairment charge.

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ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis (MD&A) is intended to help the reader understand the results of operations and financial condition of Conduent Incorporated and its consolidated subsidiaries. MD&A is provided as a supplement to, and should be read in conjunction with, our Condensed Consolidated Financial Statements and the accompanying Notes.
Overview
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.
Headquartered in Florham Park, New Jersey, we have a team of approximately 59,000 associates as of June 30, 2021, servicing customers from service centers in 23 countries.
Our reportable segments correspond to how we organize and manage the business and are aligned to the industries in which our clients operate.
We organize and manage our businesses through three reportable segments.
•Commercial Industries – Our Commercial Industries segment provides business process services and customized solutions to clients in a variety of industries. Across the Commercial Industries 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 Services – Our Government Services 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. Our solutions in this segment help governments respond to changing rules for eligibility and increasing citizen expectations.
•Transportation – Our Transportation segment provides systems and support, as well as revenue-generating services, to government clients. On behalf of government agencies and authorities in the transportation industry, we deliver mission-critical mobility and payment solutions that improve automation, interoperability and decision-making to streamline operations, increase revenue and reduce congestion while creating safer communities and seamless travel experiences for consumers.
Executive Summary
We continue to transform our business through an intense focus on growth, quality, and efficiency – utilizing a programmatic and project management approach. Beginning in the first quarter of 2020 and through the second quarter of 2021, we have expanded the focus of our project portfolio to include both efficiency and growth initiatives, aimed to position the company to pivot to revenue growth and margin expansion over time.
We intend to drive portfolio focus, operating discipline, sales and delivery excellence and innovation, complemented by tightly aligned investments to achieve this mission and purpose. Our strategy is designed to deliver value by delivering profitable growth, expanding operating margins and deploying a disciplined capital allocation strategy. During the three and six months ended June 30, 2021, our strategy is showing results, including the following:
•Revenue of $1,026 million and $2,054 million for the three and six months ended June 30, 2021, respectively, was an increase of 1.0% and a decrease of less than 1.0%, respectively, a significantly improved trend compared with the same periods last year.
•Positive net income of $12 million and $1 million for the three and six months ended June 30, 2021, respectively, as compared to net loss of $51 million and $100 million for the same periods in the prior year.
•Strong new business signings results:

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◦New business total contract value (TCV) signings of $775 million for the three months ended June 30, 2021, representing an increase of 24% compared to that of the prior year period.
◦Annual recurring revenue signings of $115 million for the three months ended June 30, 2021, an increase of 10% compared to that of the prior year period.
•The Company has shown year-over-year operational progress, including an improvement to technology platform uptime, improvements in associate satisfaction survey results and increases in performance incentives from customers.
•The Company redeemed the remainder of its previously outstanding $34 million Senior Notes.
COVID-19 Pandemic
Throughout the COVID-19 pandemic, we have continued to provide critical and best-in-class services to our customers and their end-users, while ensuring the health and safety of our greatest assets - our associates. To address the potential impact to our business over the near-term, our Business Continuity team established a proactive plan in the first quarter of 2020 that has continued into the second quarter of 2021, which includes:
•Supporting our associates with a number of specific initiatives, including making improvements to our policies to extend short-term disability, providing extra supplemental sick leave coverage and introducing a hardship leave policy.
•At the end of 2020, approximately 75% of our workforce had been shifted to work-from-home. In 2021, we have started a slow and measured approach to bringing associates back to Conduent offices, as appropriate. This is an ongoing phased process and is based on the specific COVID-19 conditions in certain geographies, as well as business requirements.
•Increased sanitation and social distancing for required on-site essential associates.
As the world increasingly becomes vaccinated, we will evolve our approach to various initiatives or take additional actions to meet the needs of our employees, customers and their end-users and the Company to continue to provide our mission-critical services and solutions.

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Financial Review of Operations

|  | Three Months Ended June 30, |  | 2021 vs. 2020
($ in millions) |  | 2021 |  | 2020 |  | $ Change |  | % Change
Revenue |  | $ | 1,026 |  |  | $ | 1,016 |  |  | $ | 10 |  |  | 1 | %
Operating Costs and Expenses |  |  |  |  |  |  |  |
Cost of services (excluding depreciation and amortization) |  | 772 |  |  | 795 |  |  | (23) |  |  | (3) | %
Selling, general and administrative (excluding depreciation and amortization) |  | 125 |  |  | 111 |  |  | 14 |  |  | 13 | %
Research and development (excluding depreciation and amortization) |  | 1 |  |  | — |  |  | 1 |  |  | n/m
Depreciation and amortization |  | 86 |  |  | 115 |  |  | (29) |  |  | (25) | %
Restructuring and related costs |  | 8 |  |  | 29 |  |  | (21) |  |  | (72) | %
Interest expense |  | 13 |  |  | 15 |  |  | (2) |  |  | (13) | %
(Gain) loss on divestitures and transaction costs |  | (1) |  |  | 2 |  |  | (3) |  |  | (150) | %
Litigation costs |  | 1 |  |  | 14 |  |  | (13) |  |  | (93) | %
Loss on extinguishment of debt |  | 2 |  |  | — |  |  | 2 |  |  | n/m
Other (income) expenses, net |  | — |  |  | (1) |  |  | 1 |  |  | (100) | %
Total Operating Costs and Expenses |  | 1,007 |  |  | 1,080 |  |  | (73) |  |  |
Income (Loss) Before Income Taxes |  | 19 |  |  | (64) |  |  | 83 |  |  |
Income tax expense (benefit) |  | 7 |  |  | (13) |  |  | 20 |  |  |
Net Income (Loss) |  | $ | 12 |  |  | $ | (51) |  |  | $ | 63 |  |  |

|  | Six Months Ended June 30, |  | 2021 vs. 2020
($ in millions) |  | 2021 |  | 2020 |  | $ Change |  | % Change
Revenue |  | $ | 2,054 |  |  | $ | 2,067 |  |  | $ | (13) |  |  | (1) | %
Operating Costs and Expenses |  |  |  |  |  |  |  |
Cost of services (excluding depreciation and amortization) |  | 1,559 |  |  | 1,627 |  |  | (68) |  |  | (4) | %
Selling, general and administrative (excluding depreciation and amortization) |  | 251 |  |  | 227 |  |  | 24 |  |  | 11 | %
Research and development (excluding depreciation and amortization) |  | 1 |  |  | 1 |  |  | — |  |  | — | %
Depreciation and amortization |  | 181 |  |  | 232 |  |  | (51) |  |  | (22) | %
Restructuring and related costs |  | 21 |  |  | 36 |  |  | (15) |  |  | (42) | %
Interest expense |  | 26 |  |  | 32 |  |  | (6) |  |  | (19) | %
(Gain) loss on divestitures and transaction costs |  | 1 |  |  | 6 |  |  | (5) |  |  | (83) | %
Litigation costs |  | 2 |  |  | 20 |  |  | (18) |  |  | (90) | %
Loss on extinguishment of debt |  | 2 |  |  | — |  |  | 2 |  |  | n/m
Other (income) expenses, net |  | — |  |  | 1 |  |  | (1) |  |  | (100) | %
Total Operating Costs and Expenses |  | 2,044 |  |  | 2,182 |  |  | (138) |  |  |
Income (Loss) Before Income Taxes |  | 10 |  |  | (115) |  |  | 125 |  |  |
Income tax expense (benefit) |  | 9 |  |  | (15) |  |  | 24 |  |  |
Net Income (Loss) |  | $ | 1 |  |  | $ | (100) |  |  | $ | 101 |  |  |

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Revenue
Revenue for the three months ended June 30, 2021 increased by 1%, compared to the prior year period, primarily due to lesser impacts of the COVID-19 pandemic across our Transportation and Commercial Industries segments, increased volumes in our Government Services Solutions offering within our Government Services segment, primarily increased payments activity because of Federal stimulus, and the ramp of new business. These increases were partially offset by lost business from prior years.
Revenue for the six months ended June 30, 2021 decreased by less than 1%, compared to the prior year period, primarily due to lost business from prior years and the effect of the COVID-19 pandemic across our Commercial Industries and our Transportation segments, which had only a minimal impact on the first quarter of 2020. These unfavorable impacts were partially offset by increased volumes in our Government Services Solutions service offering within our Government Services segment, primarily increased payments activity because of Federal stimulus, and the ramp of new business.
Cost of Services (excluding depreciation and amortization)
Cost of services for the three months ended June 30, 2021 decreased, compared to the prior year period, driven by lost business from prior years as well as increased operational efficiency, which led to reductions in information technology, labor and real estate costs.
Cost of services for the six months ended June 30, 2021 decreased, compared to the prior year period, driven by lost business from prior years and lower volumes as well as increased operational efficiency, which led to reductions in information technology, labor and real estate costs. Also contributing to the decline were lower costs to support volume loss resulting from the effect of the COVID-19 pandemic.
Selling, General and Administrative (SG&A) (excluding depreciation and amortization)
SG&A for the three and six months ended June 30, 2021 increased, compared to the prior year periods, driven by an increase in certain employee-related costs and growth in the sales organization and higher recruiting expenses.
Depreciation and Amortization
Depreciation and amortization for the three and six months ended June 30, 2021 decreased, compared to the prior year periods, primarily due to a portion of certain customer relationship intangible assets being fully amortized in the first quarter of 2021.
Restructuring and Related Costs
We engage in a series of restructuring programs related to optimizing our employee base, reducing our real estate
footprint, exiting certain activities, outsourcing certain internal functions, consolidating our data centers and engaging in other actions designed to reduce our cost structure and improve productivity. The following are the components of our Restructuring and related costs:

|  | Three Months Ended June 30, |  | Six Months Ended June 30,
(in millions) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Severance and related costs |  | $ | 2 |  |  | $ | 10 |  |  | $ | 2 |  |  | $ | 10 |
Data center consolidation |  | 8 |  |  | 6 |  |  | 15 |  |  | 8 |
Termination, asset impairment and other costs |  | (3) |  |  | 11 |  |  | 2 |  |  | 14 |
Total net current period charges |  | 7 |  |  | 27 |  |  | 19 |  |  | 32 |
Consulting and other costs(1) |  | 1 |  |  | 2 |  |  | 2 |  |  | 4 |
Restructuring and related costs |  | $ | 8 |  |  | $ | 29 |  |  | $ | 21 |  |  | $ | 36 |

___________
(1)Represents professional support costs associated with certain strategic transformation programs.

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Refer to Note 5 – Restructuring Programs and Related Costs to the Condensed 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. The decreases in Interest expense for the three and six months ended June 30, 2021, compared to the prior year periods, was driven primarily by lower interest rates, a lower Term Loan A principal balance and the May 1, 2021 repayment of the previously outstanding $34 million Senior Notes. Additionally, the three and six months ended June 30, 2020 included interest expense attributable to the drawdown on our Senior Revolving Credit Facility (Revolver) in March 2020, which was repaid in December 2020. Refer to Note 6 – Debt in the Condensed Consolidated Financial Statements for additional information.
(Gain) Loss on Divestitures and Transaction Costs
These costs consist of professional fees and other costs related to certain consummated and non-consummated transactions considered by the Company.
Litigation Costs
Net litigation costs for the three and six months ended June 30, 2021 primarily consist of reserves for various matters that are subject to litigation; the three and six months ended June 30, 2020 amount also included costs related to certain reimbursement matters with our former parent company, Xerox Corporation.
Refer to Note 11 – Contingencies and Litigation to the Condensed Consolidated Financial Statements for additional information.
Income Taxes
The effective tax rate for the three months ended June 30, 2021 was 38.2%, compared to 20.3% for the three months ended June 30, 2020. The June 30, 2021 rate was higher than the U.S. statutory rate of 21%, primarily due to geographic mix of income, other non-deductible permanent differences, valuation allowances and tax audit reserves, partially offset by tax credits. The June 30, 2020 rate was slightly lower than the U.S. statutory rate of 21%, primarily due to the geographic mix of income.
Excluding the impact of discrete tax adjustments, amortization of intangible assets and restructuring costs, the normalized effective tax rate for the three months ended June 30, 2021 was 25.7%. The normalized effective tax rate for the three months ended June 30, 2020 was 32.5%, predominately due to excluding the impact of amortization and restructuring costs. The normalized effective tax rate for the three months ended June 30, 2021 was lower than the three months ended June 30, 2020 rate predominantly due to earnings mix.
The effective tax rate for the six months ended June 30, 2021 was 94.3% compared with 13.0% for the six months ended June 30, 2020. The June 30, 2021 rate was higher than the U.S. statutory rate of 21% primarily due to geographic mix of income, other non-deductible permanent differences, valuation allowances, and tax audit reserve partially offset by tax credits. The June 30, 2020 rate was lower than the U.S. statutory rate of 21% primarily due to the geographic mix of income, valuation allowances, and tax charges recognized on the vesting of employee equity awards partially offset by tax credits.
Excluding the impact of discrete tax adjustments, amortization of intangible assets and restructuring, the normalized effective tax rate for the six months ended June 30, 2021 was 24.7%. The normalized effective tax rate for the six months ended June 30, 2020 was 32.8%, predominantly due to excluding the impact of valuation allowances, vesting of equity awards, charges for amortization of intangible assets and restructuring. The normalized effective tax rate for the six months ended June 30, 2021 was lower than the six months ended June 30, 2020 rate predominantly due to earnings mix.
The Company believes it is reasonably possible that unrecognized tax benefits of approximately $14 million will reverse within 12 months due to an anticipated audit settlement.

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Operations Review of Segment Revenue and Profit
Our financial performance is based on Segment Profit/(Loss) and Segment Adjusted EBITDA for the following three segments:
•Commercial Industries,
•Government Services, and
•Transportation.
Other includes our Student Loan business, which the Company exited in the third quarter of 2018.
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.
We continue to modernize a significant portion of our infrastructure with new systems and processes and consolidate our data centers as part of our transformation initiatives. There is a risk, however, that our modernization efforts and data center consolidations could materially and adversely disrupt our operations. In addition, the Company’s COVID-19 response has also resulted in diversion of management's time and delayed investments from strategic, transformational and technology initiatives which had been planned. See Part I, Item 1A – Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2020 for additional information.

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Results of financial performance by segment were:

|  | Three Months Ended June 30,
(in millions) |  | Commercial Industries |  | Government Services |  | Transportation |  | Other |  | Unallocated Costs |  | Total
2021 |  |  |  |  |  |  |  |  |  |  |  |
Revenue |  | $ | 503 |  |  | $ | 338 |  |  | $ | 185 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,026 |
Segment profit (loss) |  | $ | 29 |  |  | $ | 110 |  |  | $ | 17 |  |  | $ | — |  |  | $ | (82) |  |  | $ | 74 |
Segment depreciation and amortization |  | $ | 25 |  |  | $ | 8 |  |  | $ | 8 |  |  | $ | — |  |  | $ | 13 |  |  | $ | 54 |
Adjusted EBITDA |  | $ | 54 |  |  | $ | 118 |  |  | $ | 25 |  |  | $ | — |  |  | $ | (69) |  |  | $ | 128 |
% of Total Revenue |  | 49.0 | % |  | 33.0 | % |  | 18.0 | % |  | — | % |  | — | % |  | 100.0 | %
Adjusted EBITDA Margin |  | 10.7 | % |  | 34.9 | % |  | 13.5 | % |  | — | % |  | — | % |  | 12.5 | %
2020 |  |  |  |  |  |  |  |  |  |  |  |
Revenue |  | $ | 520 |  |  | $ | 331 |  |  | $ | 165 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,016 |
Segment profit (loss) |  | $ | 25 |  |  | $ | 90 |  |  | $ | 20 |  |  | $ | (1) |  |  | $ | (79) |  |  | $ | 55 |
Segment depreciation and amortization |  | $ | 27 |  |  | $ | 6 |  |  | $ | 9 |  |  | $ | — |  |  | $ | 13 |  |  | $ | 55 |
Adjusted EBITDA |  | $ | 52 |  |  | $ | 96 |  |  | $ | 29 |  |  | $ | (1) |  |  | $ | (66) |  |  | $ | 110 |
% of Total Revenue |  | 51.2 | % |  | 32.6 | % |  | 16.2 | % |  | — | % |  | — | % |  | 100.0 | %
Adjusted EBITDA Margin |  | 10.0 | % |  | 29.0 | % |  | 17.6 | % |  | — | % |  | — | % |  | 10.8 | %

|  | Six Months Ended June 30,
(in millions) |  | Commercial Industries |  | Government Services |  | Transportation |  | Other |  | Unallocated Costs |  | Total
2021 |  |  |  |  |  |  |  |  |  |  |  |
Revenue |  | $ | 1,029 |  |  | $ | 656 |  |  | $ | 369 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,054 |
Segment profit (loss) |  | $ | 64 |  |  | $ | 197 |  |  | $ | 38 |  |  | $ | — |  |  | $ | (165) |  |  | $ | 134 |
Segment depreciation and amortization |  | $ | 52 |  |  | $ | 13 |  |  | $ | 17 |  |  | $ | — |  |  | $ | 27 |  |  | $ | 109 |
Adjusted EBITDA |  | $ | 116 |  |  | $ | 210 |  |  | $ | 55 |  |  | $ | — |  |  | $ | (138) |  |  | $ | 243 |
% of Total Revenue |  | 50.1 | % |  | 31.9 | % |  | 18.0 | % |  | — | % |  | — | % |  | 100.0 | %
Adjusted EBITDA Margin |  | 11.3 | % |  | 32.0 | % |  | 14.9 | % |  | — | % |  | — | % |  | 11.8 | %
2020 |  |  |  |  |  |  |  |  |  |  |  |
Revenue |  | $ | 1,092 |  |  | $ | 621 |  |  | $ | 354 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,067 |
Segment profit (loss) |  | $ | 67 |  |  | $ | 160 |  |  | $ | 30 |  |  | $ | 3 |  |  | $ | (160) |  |  | $ | 100 |
Segment depreciation and amortization |  | $ | 55 |  |  | $ | 13 |  |  | $ | 18 |  |  | $ | — |  |  | $ | 27 |  |  | $ | 113 |
Adjusted EBITDA |  | $ | 122 |  |  | $ | 173 |  |  | $ | 48 |  |  | $ | (4) |  |  | $ | (133) |  |  | $ | 206 |
% of Total Revenue |  | 52.8 | % |  | 30.1 | % |  | 17.1 | % |  | — | % |  | — | % |  | 100.0 | %
Adjusted EBITDA Margin |  | 11.2 | % |  | 27.9 | % |  | 13.6 | % |  | — | % |  | — | % |  | 10.0 | %

Commercial Industries Segment
Revenue
Commercial Industries revenue for the three months ended June 30, 2021 decreased, compared to the prior year period, due to lost business from prior years, partially offset by higher volumes as the impacts from COVID-19 were lesser in the second quarter of 2021 as many regions began to loosen restrictions.

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Commercial Industries revenue for the six months ended June 30, 2021 decreased, compared to the prior year period, due to COVID-19 related volume declines in our Business Operations Solutions service offering and reduced revenue from our HSA offering "Benefit Wallet" (within our HRLS business) as a result of Federal Reserve initiated interest rate reductions, as well as lost business from prior years.
Segment Profit and Adjusted EBITDA
Increases in the Commercial Industries segment profit and adjusted EBITDA margin for the three months ended June 30, 2021, compared to the prior year period, were mainly driven by the result of progress in our efficiency initiatives and one-time contract exit costs in the second quarter of 2020.
Commercial Industries segment profit decreased and adjusted EBITDA margin increased for the six months ended June 30, 2021, compared to the prior year period, mainly driven by overall revenue declines, partially offset by the result of progress in our efficiency initiatives and one-time contract exit costs in the second quarter of 2020.
Government Services Segment
Revenue
Government Services revenue for the three months ended June 30, 2021 increased, compared to the prior year period, primarily driven by COVID-19 related volume increases. These increases were partially offset by lost business from prior years. The increased volumes from the COVID-19 pandemic were largely driven by the increases in the Supplemental Nutrition Assistance Program (SNAP) volumes and Pandemic SNAP volumes.
Government Services revenue for the six months ended June 30, 2021 increased, compared to the prior year period, primarily driven by COVID-19 related volume increases. These increases were partially offset by lost business from prior years. The increased volumes from the COVID-19 pandemic was largely driven by the increases in the Supplemental Nutrition Assistance Program (SNAP) volumes and Pandemic SNAP volumes, an increase in the number of citizens to which we distribute unemployment insurance benefits, and additional unemployment insurance benefit distributions as a result of Federal stimulus. Within the unemployment benefit business, we generate revenue based on the amount of spending by card holders.
Segment Profit and Adjusted EBITDA
Increases in the Government Services segment profit and adjusted EBITDA margin for the three and six months ended June 30, 2021, compared to the prior year period, were mainly driven by increased COVID-19 related volume increases at strong margins and expense reductions resulting from progress in our efficiency initiatives.
Transportation Segment
Revenue
Transportation revenue for the three and six months ended June 30, 2021 increased, compared to the prior year period, primarily driven by the impact of loosening of numerous COVID-19 related restrictions, particularly in the United States, and the ramp of new business, partially offset by lost business from prior years.
Segment Profit and Adjusted EBITDA
Transportation segment profit and adjusted EBITDA margin decreased for the three months ended June 30, 2021, compared to the prior year period, mainly driven by unfavorable revenue mix in the quarter and short term cost savings in the prior year. Transportation segment profit and adjusted EBITDA margin increased for the six months ended June 30, 2021, compared to the prior year period, mainly driven by progress in our efficiency initiatives and beneficial revenue mix.

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Other
Segment Profit (Loss) and Adjusted EBITDA
The segment profit in the 2020 period was primarily due to an adjustment to the then remaining California Medicaid Management Information System settlement liability of $7 million as a result of the contract expiring in March 2020. This benefit was excluded from adjusted EBITDA for segment reporting purposes due to its non-recurring nature.
Unallocated Costs
Unallocated Costs for the three and six months ended June 30, 2021 increased, compared to the prior year period. This was primarily driven by increases in certain employee costs, partially offset by progress in our efficiency initiatives.
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.
For the three months ended June 30, 2021, the Company signed $775 million of new business, representing a 24% increase compared to the prior year period. This increase was driven by the signing of large contracts in the Transportation and Governments segments. Renewal TCV for the three months ended June 30, 2021 was $825 million, a decrease of 10% compared to the prior year period, primarily as a result of fewer renewal opportunities in the quarter. The Company continues to scale the centralized Sales and Account Management functions to deliver on our growth objectives.
For the six months ended June 30, 2021, the Company signed $1,131 million of new business, representing a 19% increase compared to the prior year period. Renewal TCV for the six months ended June 30, 2021 was $1,098 million, a decrease of 23% compared to the prior year period, primarily as a result of fewer renewal opportunities in the quarter.

|  | Three Months Ended June 30, |  | 2021 vs. 2020
($ in millions) |  | 2021 |  | 2020 |  | $ Change |  | % Change
New business TCV |  | $ | 775 |  |  | $ | 623 |  |  | $ | 152 |  |  | 24 | %
Renewals TCV |  | 825 |  |  | 912 |  |  | (87) |  |  | (10) | %
Total Signings |  | $ | 1,600 |  |  | $ | 1,535 |  |  | $ | 65 |  |  | 4 | %
Annual recurring revenue signings(1) |  | $ | 115 |  |  | $ | 105 |  |  | $ | 10 |  |  | 10 | %
Non-recurring revenue signings(2) |  | $ | 152 |  |  | $ | 76 |  |  | $ | 76 |  |  | 100 | %

|  | Six Months Ended June 30, |  | 2021 vs. 2020
($ in millions) |  | 2021 |  | 2020 |  | $ Change |  | % Change
New business TCV |  | $ | 1,131 |  |  | $ | 947 |  |  | $ | 184 |  |  | 19 | %
Renewals TCV |  | 1,098 |  |  | 1,427 |  |  | (329) |  |  | (23) | %
Total Signings |  | $ | 2,229 |  |  | $ | 2,374 |  |  | $ | (145) |  |  | (6) | %
Annual recurring revenue signings(1) |  | $ | 210 |  |  | $ | 162 |  |  | $ | 48 |  |  | 30 | %
Non-recurring revenue signings(2) |  | $ | 279 |  |  | $ | 120 |  |  | $ | 159 |  |  | 133 | %

___________
(1)Recurring revenue signings are for new business contracts longer than one year.
(2)Non-recurring revenue signings are for contracts shorter than one year.

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The total new business pipeline at the end of June 30, 2021 and 2020 was $21.0 billion and $22.0 billion, respectively. Total new business pipeline is defined as total new business TCV pipeline of deals in all sell stages. This extends past the next twelve-month period to include total pipeline, excluding the impact of divested business as required.
Capital Resources and Liquidity
As of June 30, 2021 and December 31, 2020, total cash and cash equivalents were $397 million and $450 million, respectively. The Company also has a $750 million Revolver for its various cash needs, of which $7 million was used for letters of credit. The net amount available to be drawn upon under our Revolver as of June 30, 2021, was $743 million.
As of June 30, 2021, our total debt outstanding was $1.4 billion of which $89 million was due within one year. Refer to Note 6 – Debt in the Condensed Consolidated Financial Statements for additional debt information.
In order to provide financial flexibility and finance certain investments and projects, we may continue to utilize external financing arrangements. However, we believe that our cash on hand, projected cash flow from operations, sound balance sheet and revolving line of credit will continue to provide sufficient financial resources to meet our expected business obligations for at least the next twelve months.
Cash Flow Analysis
The following table summarizes our cash flows, as reported in our Condensed Consolidated Statement of Cash Flows in the accompanying Condensed Consolidated Financial Statements:

|  | Six Months Ended June 30, |  |
(in millions) |  | 2021 |  | 2020 |  | Better (Worse)
Net cash provided by (used in) operating activities |  | $ | 103 |  |  | $ | (118) |  |  | $ | 221 |
Net cash provided by (used in) investing activities |  | $ | (69) |  |  | $ | (58) |  |  | (11) |
Net cash provided by (used in) financing activities |  | $ | (87) |  |  | $ | 114 |  |  | (201) |

Operating activities
The net improvement in cash used in operating activities of $221 million, compared to the prior year period, was primarily related to the absence of the 2020 Texas Litigation payment of $118 million, improved collections of Accounts receivable and other working capital timing of $126 million, partly offset by higher cash used on product software and deferred contract costs for new business activities of $9 million and higher income tax net payments of $14 million.
Investing activities
The increase in cash used in investing activities of $11 million was primarily due to increased spending related to modernizing our infrastructure and productivity tools.
Financing activities
The increase in cash used in financing activities was primarily related to the absence of the March 2020 $150 million draw down from our $750 million revolving credit facility, which was subsequently repaid in December 2020. Additionally, we repaid the previously outstanding $34 million of Senior Notes on May 1, 2021 and made higher scheduled payments on Term loans of $18 million in 2021.

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Market Risk Management
We are exposed to market risk from changes in foreign currency exchange rates which could affect operating results, financial position and cash flows. We manage our exposure to these market risks through our regular operating and financing activities and, when appropriate, through the use of derivative financial instruments. We may utilize derivative financial instruments to hedge economic exposures, as well as to reduce earnings and cash flow volatility resulting from shifts in market rates. We also may hedge the cost to fund material non-dollar entities by buying currencies periodically in advance of the funding date. This is accounted for using derivative accounting.
Recent market and economic events, including the effects of the COVID-19 pandemic, have not caused us to materially modify nor change our financial risk management strategies with respect to our exposures to foreign currency risk. Refer to Note 7 – Financial Instruments in the Condensed Consolidated Financial Statements for additional discussion on our financial risk management.
ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information set forth under the “Market Risk Management” section in Item 2 of this Form 10-Q is hereby incorporated by reference in answer to this Item. During the reporting period, there have been no material changes to the quantitative and qualitative disclosures regarding our market risk set forth in our Annual Report on Form 10-K for the year ended December 31, 2020.
ITEM 4 — CONTROLS AND PROCEDURES
(a)Evaluation of Disclosure Controls and Procedures
The Company’s management evaluated, with the participation of our principal executive officer and principal financial officer, or persons performing similar functions, the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended ("Exchange Act"), as of the end of the period covered by this Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of the end of the period covered by this Form 10-Q, our disclosure controls and procedures were effective to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms relating to the Company, including our consolidated subsidiaries, and was accumulated and communicated to the Company’s management, including the principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
(b) Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION
ITEM 1 — LEGAL PROCEEDINGS
The information set forth under Note 11 – Contingencies and Litigation in the Condensed Consolidated Financial Statements of this Form 10-Q is incorporated herein by reference in answer to this Item.
ITEM 1A — RISK FACTORS
Reference is made to the Risk Factors set forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020. There have been no material changes to our risk factors as previously reported in our Annual Report on Form-10-K for the year ended December 31, 2020.
ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a)Sales of Unregistered Securities during the Quarter ended June 30, 2021
During the quarter ended June 30, 2021, the Company did not issue any securities in transactions that were not registered under the Securities Act of 1933, as amended.
(b)Issuer Purchases of Equity Securities during the Quarter ended June 30, 2021
None.

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ITEM 6 — EXHIBITS

3.1 |  | Restated Certificate of Incorporation of Registrant filed with the Department of the State of New York on December 31, 2016.
|  | Incorporated by reference to Exhibit 3.1 to Registrant's Current Report on Form 8-K dated December 23, 2016.
3.2 |  | Amended and Restated By-Laws of Registrant as amended through December 31, 2016.
|  | Incorporated by reference to Exhibit 3.2 to Registrants Current Report on Form 8-K dated December 23, 2016.
10.6(a)(ix) |  | Registrant’s 2021 Performance Incentive Plan.
|  | Incorporated by reference to Annex A to Registrant's Proxy Filing on Schedule 14 dated April 9, 2021.
10.6(a)(x) |  | Form of Restricted Stock Unit Award Agreement 2021 under the 2021 PIP.
10.6(a)(xi) |  | Form of Performance Stock Unit Award Agreement 2021 (Revenue Metric) under the 2021 PIP.
10.6(a)(xii) |  | Form of Performance Stock Unit Award Agreement 2021 (Share Hurdle Metric) under the 2021 PIP.
10.6(a)(xiii) |  | Form of Agreement For Non-Employee Directors under 2021 PIP.
10.6(h) |  | Letter Agreement dated May 5, 2021, between Registrant and Stephen Wood
|  | Incorporated by reference to Exhibit 10.1 to Registrant's Current Report on Form 8-K dated May 4, 2021.
31(a) |  | Certification of CEO pursuant to Rule 13a-14(a) or Rule 15d-14(a).
31(b) |  | Certification of CFO pursuant to Rule 13a-14(a) or Rule 15d-14(a).
32 |  | Certification of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS |  | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.CAL |  | Inline XBRL Taxonomy Extension Calculation Linkbase.
101.DEF |  | Inline XBRL Taxonomy Extension Definition Linkbase.
101.LAB |  | Inline XBRL Taxonomy Extension Label Linkbase.
101.PRE |  | Inline XBRL Taxonomy Extension Presentation Linkbase.
101.SCH |  | Inline XBRL Taxonomy Extension Schema Linkbase.
104 |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CONDUENT INCORPORATED (Registrant)
By: | /S/ STEPHEN WOOD
| Stephen Wood Chief Financial Officer (Principal Financial Officer)

Date: August 5, 2021

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