Company: CNDT
Filing Date: 2025-05-07
Form Type: 10-Q
Source: 0001677703-25-000076
Chunk: 99

Company: CONDUENT Inc
Filing Date: 2025-05-07
Form: 10-Q
Item: Part I, Item 8
Chunk 99
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 Divestitures and Transaction Costs

The completion of the first tranche of the BenefitWallet Transfer in the first quarter of 2024 resulted in a gain of $164 million for the three months ended March 31, 2024. Additionally, professional fees and other costs related to certain consummated and non-consummated transactions considered by the Company are included in this financial statement line item for all periods.

Litigation Settlements (Recoveries), Net

Litigation settlements (recoveries), net for the three months ended March 31, 2025 and 2024 were not material.

Income Taxes 

The effective tax rate for the three months ended March 31, 2025 was 9.0%, compared to 21.9% for the three months ended March 31, 2024. The March 31, 2025 rate was lower than the U.S. statutory rate of 21%, due primarily to geographic mix of income, valuation allowances recorded on net deferred tax assets and discrete tax items. The effective tax rate for the three months ended March 31, 2024 was higher than the U.S. statutory rate of 21% due primarily to incremental tax from geographic mix of income and state taxes partially offset by tax benefit from valuation allowance and audit settlement reserve releases. 

Excluding the impact of amortization, restructuring, divestiture, reserves for the Direct response costs - cyber event, valuation allowances and discrete tax items, the normalized effective tax rate for the three months ended March 31, 2025 was 23.9%. The normalized effective tax rate for the three months ended March 31, 2024 was 22.2%, due primarily to excluding the impact of the BenefitWallet Transfer, restructuring costs, amortization of intangible assets, litigation reserve, audit settlement reserve release, valuation allowance and other discrete tax items. The normalized effective tax rate for the three months ended March 31, 2025 was higher than the rate for the three months ended March 31, 2024 due primarily to the geographic mix of income.

CNDT Q1 2025 Form 10-Q24

In 2021, the Organization for Economic Cooperation and Development released model rules for a 15% global minimum tax, known as Pillar Two. This alternative minimum tax is treated as a period cost beginning in 2024 and does not have a material impact on the Company's financial results of operations for the current period. The Company continues to monitor legislative developments,