COGNIZANT TECHNOLOGY SOLUTIONS CORP

Previous wording

In connection with the NextGen program, in the first quarter of 2024 we incurred $23 million of employee separation, facility exit and other costs. Since the inception of the program, we incurred $252 million in total costs. See Note 4 to our unaudited consolidated financial statements. We currently expect to incur costs of approximately $70 million for the full year 2024, which is expected to bring the total charges under the program to approximately $300 million. The estimates of the charges and expenditures that we expect to incur in connection with the NextGen program, and the timing thereof, are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual amounts may differ materially from estimates. In addition, we may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur in connection with the NextGen program.

Current wording

In connection with the NextGen program, in the second quarter of 2024 we incurred $29 million of employee separation, facility exit and other costs. Since the inception of the program, we incurred $281 million in total costs. See Note 4 to our unaudited consolidated financial statements. We currently expect to incur costs of approximately $95 million for the full year 2024, which is expected to bring the total charges under the program to approximately $325 million. The estimates of the charges and expenditures that we expect to incur in connection with the NextGen program, and the timing thereof, are subject to a number of assumptions, including local law requirements in various jurisdictions, and actual amounts may differ materially from estimates. In addition, we may incur other charges or cash expenditures not currently contemplated due to unanticipated events that may occur in connection with the NextGen program.

Previous wording

During the quarter ended March 31, 2024, revenues decreased by $52 million as compared to the quarter ended March 31, 2023, representing a decrease of 1.1%, or a decrease of 1.2% on a constant currency basis 2. Revenues were negatively impacted by weakness in our Financial Services and Health Sciences segments, partially offset by revenue growth in Communications, Media and Technology and Products and Resources segments. Our recently completed acquisitions contributed 70 basis points to revenue growth, primarily benefiting our Communications, Media and Technology and Products and Resources segments.

Current wording

During the quarter ended June 30, 2024, revenues decreased by $36 million as compared to the quarter ended June 30, 2023, representing a decrease of 0.7%, or a decrease of 0.5% on a constant currency 1 basis. Revenues were negatively impacted by weakness in our Products and Resources and Financial Services segments, partially offset by revenue growth in our Health Sciences and Communications, Media and Technology segments.

Previous wording

Our operating margin remained flat at 14.6% and Adjusted Operating Margin 2 increased to 15.1% for the quarter ended March 31, 2024 from operating margin and Adjusted Operating Margin of 14.6% each for the quarter ended March 31, 2023. Our 2024 GAAP and Adjusted Operating Margins were positively impacted by savings generated from our NextGen program and the benefit of the depreciation of the Indian rupee against the U.S. dollar, partially offset by increased compensation costs and the impact of the resale of third-party products in connection with our integrated offerings strategy. In addition, our 2024 GAAP operating margin was negatively impacted by the NextGen charges, as discussed in Note 4 to our unaudited consolidated financial statements, which were excluded from our Adjusted Operating Margin.

Current wording

Our operating margin increased to 14.6% and Adjusted Operating Margin 2 increased to 15.2% for the quarter ended June 30, 2024, from operating margin of 11.8% and Adjusted Operating Margin of 14.2% for the quarter ended June 30, 2023. The increase in our GAAP and Adjusted Operating Margins for the quarter ended June 30, 2024 as compared to the quarter ended June 30, 2023 was primarily driven by net savings generated from our NextGen program and the beneficial impact of foreign currency exchange rate movements, partially offset by the insurance recovery benefit of 60 basis points during the second quarter of 2023 related to a previously disclosed 2020 cyber incident and the impact of the resale of third-party products in connection with our integrated offerings strategy. In addition, our GAAP operating margins for the quarters ended June 30, 2024 and 2023, were negatively impacted by the NextGen charges, as discussed in Note 4 to our unaudited consolidated financial statements, which were excluded from our Adjusted Operating Margin.

Previous wording

As a global professional services company, we compete on the basis of the knowledge, experience, insights, skills and talent of our employees and the value they can provide to our clients. We closely monitor attrition trends focusing on the metric that we believe is most relevant to our business. This metric, which we refer to as Voluntary Attrition - Tech Services, includes all voluntary separations with the exception of employees in our Intuitive Operations and Automation practice. For the trailing twelve months ended March 31, 2024 our Voluntary Attrition - Tech Services was 13.1% as compared to 23.1% for the trailing twelve months ended March 31, 2023. We finished the first quarter of 2024 with approximately 344,400 employees as compared to 351,500 employees at the end of the first quarter of 2023.

Current wording

As a global professional services company, we compete on the basis of the knowledge, experience, insights, skills and talent of our employees and the value they can provide to our clients. We closely monitor attrition trends focusing on the metric that we believe is most relevant to our business. This metric, which we refer to as Voluntary Attrition - Tech Services, includes all voluntary separations with the exception of employees in our Intuitive Operations and Automation practice. For the trailing twelve months ended June 30, 2024 our Voluntary Attrition - Tech Services was 13.6% as compared to 19.9% for the trailing twelve months ended June 30, 2023. We finished the second quarter of 2024 with approximately 336,300 employees as compared to 345,600 employees at the end of the second quarter of 2023.

Previous wording

We continue to expect the long-term focus of our clients to be on their digital transformation into software-driven, data-enabled, customer-centric and differentiated businesses. We believe clients will continue to contend with industry-specific changes driven by evolving digital technologies, uncertainty in the regulatory environment, industry consolidation and convergence as well as international trade policies and other macroeconomic and geopolitical factors, including the uncertainty related to the global economy, which has affected and may continue to affect their demand for our services.

Current wording

We continue to expect the long-term focus of our clients to be on their digital transformation into AI-ready, software-driven, data-enabled, customer-centric and differentiated businesses. We believe clients will continue to contend with industry-specific changes driven by evolving digital technologies, uncertainty in the regulatory environment, industry consolidation and convergence as well as international trade policies and other macroeconomic and geopolitical factors, including the uncertainty related to the global economy, which has affected and may continue to affect their demand for our services.

Previous wording

We increasingly use AI-based technologies, including GenAI, in our client offerings and our own internal operations. AI technologies and services are part of a highly competitive and rapidly evolving market. We plan to make significant investments in our AI capabilities to meet the needs of our clients and harness its value in a flexible, secure, scalable and responsible way. As AI-based technologies evolve, we expect that some services that we currently perform for our clients will be replaced by AI or forms of automation. This may lead to reduced demand for certain services or harm our ability to obtain favorable pricing or other terms for our services.

Current wording

We increasingly use AI-based technologies, including GenAI, in our client offerings and our own internal operations. AI technologies and services are part of a highly competitive and rapidly evolving market. We plan to make significant investments in our AI capabilities to meet the needs of our clients and harness its value in a flexible, secure, scalable and responsible way. As AI-based technologies evolve, we expect that some services that we currently perform for our clients will be replaced by AI or other forms of automation. This may lead to reduced demand for certain services or harm our ability to obtain favorable pricing or other terms for our services.

Previous wording

We currently expect to incur total costs of approximately $300 million in connection with the NextGen program, which started in the second quarter of 2023, with approximately $70 million of such costs anticipated in 2024. See "Executive Summary." In addition to the NextGen program, potential tax law and other regulatory changes, including possible U.S. corporate income tax reform and the Code on Social Security, 2020 in India, among other items, may impact our future results. We expect that the Code on Social Security, 2020, if enacted as currently written, could result in a material one-time increase to our post-employment liability for past service and would also modestly increase our costs for employment and post-employment benefits prospectively. In addition, in March 2024, India and Mauritius signed a Protocol to amend the India-Mauritius Income Tax Treaty. We are currently evaluating the potential impact of the amendment, which, depending on its final terms when entered into force, could increase our effective income tax rate, as CTS India is a subsidiary of our wholly-owned Mauritius entity.

Current wording

We currently expect to incur total costs of approximately $325 million in connection with the NextGen program, which started in the second quarter of 2023, with approximately $95 million of such costs anticipated in 2024. See "Executive Summary." In addition to the NextGen program, potential tax law and other regulatory changes, including possible U.S. corporate income tax reform and the Code on Social Security, 2020 in India, among other items, may impact our future results. We expect that the Code on Social Security, 2020, if enacted as currently written, could result in a material one-time increase to our post-employment liability for past service and would also modestly increase our costs for employment and post-employment benefits prospectively. In addition, in March 2024, India and Mauritius signed a Protocol to amend the India-Mauritius Income Tax Treaty. We are currently evaluating the potential impact of the amendment, which, depending on its final terms when entered into force, could increase our effective income tax rate, as CTS India is a subsidiary of our wholly-owned Mauritius entity.

Previous wording

2 Adjusted Operating Margin and constant currency revenue growth are not measures of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” for more information and reconciliations to the most directly comparable GAAP financial measures, as applicable.

Current wording

2 Adjusted Operating Margin is not a measure of financial performance prepared in accordance with GAAP. See “Non-GAAP Financial Measures” for more information and reconciliations to the most directly comparable GAAP financial measures, as applicable.

Previous wording

During the quarter ended March 31, 2024, revenues decreased by $52 million as compared to the quarter ended March 31, 2023, representing a decrease of 1.1%, or a decrease of 1.2% on a constant currency basis 3. Our recently completed acquisitions contributed 70 basis points to the change in revenue.

Current wording

During the quarter ended June 30, 2024, revenues decreased by $36 million as compared to the quarter ended June 30, 2023, representing a decrease of 0.7%, or a decrease of 0.5% on a constant currency basis 3. Our recently completed acquisitions contributed 60 basis points to the change in revenue.

Previous wording

Revenues of $4,760 million across our business segments and geographies were as follows for the three months ended March 31, 2024:

Current wording

Revenues of $4,850 million across our business segments and geographies were as follows for the three months ended June 30, 2024:

Previous wording

•Revenue declines in our United Kingdom and Rest of World regions were primarily driven by weakness in the Financial Services segment.

Current wording

•Revenue declines in our Europe and Rest of World regions were primarily driven by weakness in the Financial Services and Products and Resources segments.

Previous wording

Restructuring charges consist of costs related to the NextGen program. Restructuring charges were $23 million or 0.5%, as a percentage of revenue for the three months ended March 31, 2024. For further detail on our restructuring charges see Note 4 to our unaudited consolidated financial statements.

Current wording

Restructuring charges consist of costs related to the NextGen program. Restructuring charges were $29 million, or 0.6% as a percentage of revenue, for the three months ended June 30, 2024, as compared to $117 million, or 2.4% as a percentage of revenue, for the three months ended June 30, 2023. For further detail on our restructuring charges see Note 4 to our unaudited consolidated financial statements.

Previous wording

Depreciation and amortization expense decreased by 0.8% and increased by 0.1%as a percentage of revenues, during the first quarter of 2024 as compared to the first quarter of 2023.

Current wording

Depreciation and amortization expense decreased by 2.3% and decreased by 0.1%as a percentage of revenues, during the second quarter of 2024 as compared to the second quarter of 2023.

Previous wording

A predominant portion of our costs in India are denominated in the Indian rupee, representing approximately 24% of our global operating costs duringthe three months ended March 31, 2024. These costs are subject to foreign currency exchange rate fluctuations, which have an impact on our results of operations. We enter into foreign exchange derivative contracts to hedge certain Indian rupee denominated payments in India. These hedges are intended to mitigate the volatility of the changes in the exchange rate between the U.S. dollar and the Indian rupee. Net of the impact of the hedges, the depreciation of the Indian rupee positively impacted our operating margin for the three months ended March 31, 2024 by 45 basis points as compared to the three months ended March 31, 2023.

Current wording

A predominant portion of our costs in India are denominated in the Indian rupee, representing approximately 24% of our global operating costs duringthe three months ended June 30, 2024. These costs are subject to foreign currency exchange rate fluctuations, which have an impact on our results of operations. We enter into foreign exchange derivative contracts to hedge certain Indian rupee denominated payments in India. These hedges are intended to mitigate the volatility of the changes in the exchange rate between the U.S. dollar and the Indian rupee. Net of the impact of the hedges, the depreciation of the Indian rupee positively impacted our operating margin for the three months ended June 30, 2024 by 47 basis points as compared to the three months ended June 30, 2023.

Previous wording

Excluding the impact of applicable designated cash flow hedges, the depreciation of the Indian rupee against the U.S. dollar positively impacted our operating margin by 20 basis points during the three months ended March 31, 2024. Each additional 1.0% change in exchange rate between the Indian rupee and the U.S. dollar will have the effect of moving our operating margin by 19 basis points (excluding the impact of the hedges). The settlement of our cash flow hedges had no impact on our operating margin during the three months ended March 31, 2024, compared to a negative impact of 25 basis points during the three months ended March 31, 2023.

Current wording

Excluding the impact of applicable designated cash flow hedges, the depreciation of the Indian rupee against the U.S. dollar positively impacted our operating margin by 29 basis points during the three months ended June 30, 2024. Each additional 1.0% change in exchange rate between the Indian rupee and the U.S. dollar will have the effect of moving our operating margin by 19 basis points (excluding the impact of the hedges). The settlement of our cash flow hedges had a positive impact of 8 basis points on our operating margin during the three months ended June 30, 2024, compared to a negative impact of 10 basis points during the three months ended June 30, 2023.

Previous wording

The decrease in net income was primarily driven by a higher effective tax rate.

Current wording

The increase in net income was primarily driven by an increase in income from operations, partially offset by a higher effective tax rate.

Previous wording

We believe providing investors with an operating view consistent with how we manage the Company provides enhanced transparency into our operating results. For internal management reporting and budgeting purposes, we use various GAAP and non-GAAP financial measures for financial and operational decision-making, to evaluate period-to-period comparisons, to determine portions of the compensation for executive officers and for making comparisons of our operating results to those of our competitors. We believe that the presentation of non-GAAP financial measures, which exclude certain costs, read in conjunction with our reported GAAP results and reconciliations to the most comparable GAAP measure, as applicable, can provide useful supplemental information to our management and investors regarding financial and business trends relating to our financial condition and results of operations.

Current wording

non-GAAP financial measures for financial and operational decision-making, to evaluate period-to-period comparisons, to determine portions of the compensation for executive officers and for making comparisons of our operating results to those of our competitors. We believe that the presentation of non-GAAP financial measures, which exclude certain costs, read in conjunction with our reported GAAP results and reconciliations to the most comparable GAAP measure, as applicable, can provide useful supplemental information to our management and investors regarding financial and business trends relating to our financial condition and results of operations.

Previous wording

(3)Presented below are the tax impacts of our non-GAAP adjustment to pre-tax income:

Current wording

(3)Presented below are the tax impacts of our non-GAAP adjustments to pre-tax income:

Previous wording

•Reduced demand for discretionary work negatively impacted revenues across all segments. Clients in our Financial Services segment were particularly affected;

Current wording

•Reduced demand for discretionary work negatively impacted revenues across all segments. Clients in our Financial Services and Products and Resources segments were particularly affected;

Previous wording

•Recently completed acquisitions contributed 70 basis points of growth to the overall change in revenues, including 240 basis points of growth to our Communications, Media and Technology segment (primarily in Continental Europe) and 80 basis points of growth to our Products and Resources segment (primarily in North America);

Current wording

•Recently completed acquisitions contributed 70 basis points of growth to the overall change in revenues, including 190 basis points of growth to our Communications, Media and Technology segment (primarily in North America and Continental Europe) and 70 basis points of growth to our Products and Resources segment (primarily in North America);

Previous wording

•The resale of third-party products in the Health Sciences segment in North America, and the Communications, Media and Technology segment in Continental Europe, in connection with our integrated offerings strategy, contributed 110 basis points of growth to the overall change in revenue;

Current wording

•The resale of third-party products, primarily in the Health Sciences and Financial Services segments in North America, in connection with our integrated offerings strategy, contributed 110 basis points of growth to the overall change in revenue;

Previous wording

•Health Sciences revenues were negatively impacted by the renegotiation of a large contract with a payer client in 2023, which reduced the scope of services but improved the profitability of the contract;

Current wording

•Health Sciences revenues were positively impacted by pharmaceutical clients in our Europe region, which was offset by the negative impact of the renegotiation of a large contract with a payer client in 2023 in our North America region, which reduced the scope of services but improved the profitability of the contract;

Previous wording

•North America revenues in the Communications, Media and Technology segment were positively impacted by the ramp up of several recently won large deals;

Current wording

•North America revenues in the Communications, Media and Technology and Health Sciences segments were positively impacted by the ramp up of several recently won large deals;

Previous wording

Our cost of revenues consists primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, project-related immigration and travel for technical personnel, subcontracting and costs of third-party products and services relating to revenues. The increase, as a percentage of revenues, was due to higher compensation costs for delivery personnel and the impact of the resale of third-party products in connection with our integrated offerings strategy, partially offset by the benefit of the depreciation of the Indian rupee against the U.S. dollar.

Current wording

Our cost of revenues consists primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, project-related immigration and travel for technical personnel, subcontracting and costs of third-party products and services relating to revenues. The increase, as a percentage of revenues, was due to higher compensation costs for delivery personnel and the impact of the resale of third-party products in connection with our integrated offerings strategy, partially offset by the beneficial impact of foreign currency exchange rate movements.

Previous wording

SG&A expenses consist primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, immigration, travel, marketing, communications, management, finance, administrative and occupancy costs. The decrease, as a percentage of revenues, was primarily driven by savings generated from our NextGen program.

Current wording

SG&A expenses consist primarily of salaries, incentive-based compensation, stock-based compensation expense, employee benefits, immigration, travel, marketing, communications, management, finance, administrative and occupancy costs. The decrease, as a percentage of revenues, was primarily driven by the net savings generated from our NextGen program.

Previous wording

Our 2024 first quarter GAAP operating margin and Adjusted Operating Margin 5 were positively impacted by savings generated from our NextGen program and the benefit of the depreciation of the Indian rupee against the U.S. dollar, partially offset by increased compensation costs and the impact of the resale of third-party products in connection with our integrated offerings strategy. In addition, our 2024 GAAP operating margin was negatively impacted by the NextGen charges, as discussed in Note 4 to our unaudited consolidated financial statements, which were excluded from our Adjusted Operating Margin.

Current wording

The increase in our 2024 GAAP operating margin and Adjusted Operating Margin 8 was primarily driven by net savings generated from our NextGen program and the beneficial impact of foreign currency exchange rate movements, partially offset by increased compensation costs and the impact of the resale of third-party products in connection with our integrated offerings strategy. In addition, our 2023 and 2024 GAAP operating margins were negatively impacted by the NextGen charges, as discussed in Note 4 to our unaudited consolidated financial statements, which were excluded from our Adjusted Operating Margin.

Previous wording

In 2024, segment operating margins across all our segments were negatively impacted by increased compensation costs, partially offset by the benefit of the depreciation of the Indian rupee against the U.S. dollar and savings generated from our NextGen program. Segment operating profit in Health Sciences and Communications, Media and Technology segments was negatively impacted by resales of third-party products in connection with our integrated offerings strategy. Segment operating profit in the Communications, Media and Technology segment was further negatively impacted by higher costs typical to the initial phases of several recently won large deals in this segment.

Current wording

In 2024, segment operating margins across all our segments were positively impacted by savings generated from our NextGen program and the beneficial impact of foreign currency exchange rate movements, partially offset by increased compensation costs. Segment operating profit in the Health Sciences and Communications, Media and Technology segments was negatively impacted by resales of third-party products in connection with our integrated offerings strategy and higher costs typical to the initial phases of several recently won large deals in these segments.

Previous wording

The foreign currency exchange losses were attributed to the remeasurement of net monetary assets and liabilities denominated in currencies other than the functional currencies of our subsidiaries. The gains and losses on foreign exchange forward contracts not designated as hedging instruments related to the realized and unrealized gains and losses on cont racts entered into to offset our foreign currency exposures. As of March 31, 2024, the notional value of our undesignated hedges was$1,119 million. Interest income for the three months ended March 31, 2024 remained flat as compared to the same period in 2023. While our invested balances decreased during the three months ended March 31, 2024 due to the required payment related to the ITD dispute in January 2024 (see Note 8 to our unaudited consolidated financial statements), we benefited from higher interest rates compared to the three months ended March 31, 2023.

Current wording

The foreign currency exchange losses were attributed to the remeasurement of net monetary assets and liabilities denominated in currencies other than the functional currencies of our subsidiaries. The gains and losses on foreign exchange forward contracts not designated as hedging instruments related to the realized and unrealized gains and losses on cont racts entered into to offset our foreign currency exposures. Interest income for the six months ended June 30, 2024 remained flat as compared to the same period in 2023. While our invested balances decreased during the six months ended June 30, 2024 due to the required payment related to the ITD dispute in January 2024 (see Note 8 to our unaudited consolidated financial statements), we benefited from higher interest rates compared to the six months ended June 30, 2023.

Previous wording

The effective income tax rate in 2023 benefited from the effective settlement of the IRS examination for tax years 2017 and 2018.

Current wording

The effective income tax rate in both periods reflects the benefits of discrete items related to U.S. state income taxes. The effective income tax rate in 2023 additionally benefited from the effective settlement of the IRS examination for tax years 2017 and 2018.

Previous wording

In December 2021, the OECD adopted model rules for a global framework to impose a 15% global minimum tax referred to as Pillar Two with an effective date of January 1, 2024. Although Management continues to monitor additional guidance from the OECD and countries’ implementation of Pillar Two, based on current guidance, there was no material impact for the three months ended March 31, 2024 and we believe that our net income, cash flows, or financial condition will not be materially impacted in the future by Pillar Two.

Current wording

In December 2021, the OECD adopted model rules for a global framework to impose a 15% global minimum tax referred to as Pillar Two with an effective date of January 1, 2024. Although management continues to monitor additional guidance from the OECD and countries’ implementation of Pillar Two, based on current guidance, there was no material impact for the six months ended June 30, 2024 and we believe that our net income, cash flows, or financial condition will not be materially impacted in the future by Pillar Two.

Previous wording

Our cash generated from operations has historically been the primary source of liquidity to fund operations and investments to grow our business. As of March 31, 2024, we had cash, cash equivalents and short-term investments of $2,243 million and available capacity under our credit facilities of approximately $1.9 billion.

Current wording

Our cash generated from operations has historically been the primary source of liquidity to fund operations and investments to grow our business. As of June 30, 2024, we had cash, cash equivalents and short-term investments of $2,205 million and available capacity under our credit facility of approximately $1.9 billion.

Previous wording

The following table provides a summary of cash flows for the three months ended March 31:

Current wording

The following table provides a summary of cash flows for the six months ended June 30:

Previous wording

Thedecrease in cash provided by operating activities for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily driven by the $360 million payment made in relation to our dispute with the ITD in January 2024 (see Note 8 to our unaudited consolidated financial statements), lower collections of our trade accounts receivable and higher tax payments.

Current wording

Thedecrease in cash provided by operating activities for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily driven by the $360 million payment made in relation to our dispute with the ITD in January 2024 (see Note 8 to our unaudited consolidated financial statements) and lower collections of our trade accounts receivable, partially offset by lower other income tax payments.

Previous wording

We monitor turnover, aging and the collection of accounts receivable by client. Our DSO calculation includes receivables, net of allowance for doubtful accounts, and contract assets, reduced by the uncollected portion of deferred revenue. Our DSO was 78 days as of March 31, 2024, an increase of 1 day from 77 days as of December 31, 2023. Our DSO was 73 days as of March 31, 2023, a decrease of 1 day from 74 days as of December 31, 2022.

Current wording

We monitor turnover, aging and the collection of accounts receivable by client. Our DSO calculation includes receivables, net of allowance for doubtful accounts, and contract assets, reduced by the uncollected portion of deferred revenue. Our DSO was 80 days as of June 30, 2024, an increase of 3 days from 77 days as of December 31, 2023. Our DSO was 75 days as of June 30, 2023, an increase of 1 day from 74 days as of December 31, 2022.

Previous wording

The increase in cash used in investing activities for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily driven by lower net maturities of investments in 2024 as compared to 2023.

Current wording

The increase in cash used in investing activities for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily driven by lower net maturities of investments in 2024 as compared to 2023.

Previous wording

The decrease in cash used in financing activities for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily driven by lower repurchases of common stock.

Current wording

The decrease in cash used in financing activities for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily driven by lower repurchases of common stock, partially offset by higher term loan repayments in 2024.

Previous wording

evaluate our estimates. The most significant estimates relate to the recognition of revenue and profits, including the application of the cost-to-cost method of measuring progress to completion for certain fixed-price contracts, income taxes, business combinations and valuation of goodwill and other long-lived assets. We base our estimates on historical experience, current trends and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The actual amounts may differ from the estimates used in the preparation of the accompanying unaudited consolidated financial statements. For a discussion of our critical accounting estimates, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023. Our significant accounting policies are described in Note 1 to the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

Management’s discussion and analysis of our financial condition and results of operations is based on our unaudited consolidated financial statements that have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the amounts reported for assets and liabilities, including the recoverability of tangible and intangible assets, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. On an ongoing basis, we evaluate our estimates. The most significant estimates relate to the recognition of revenue and profits, including the application of the cost-to-cost method of measuring progress to completion for certain fixed-price contracts, income taxes, business combinations and valuation of goodwill and other long-lived assets. We base our estimates on historical experience, current trends and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The actual amounts may differ from the estimates used in the preparation of the accompanying unaudited consolidated financial statements. For a discussion of our critical accounting estimates, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023. Our significant accounting policies are described in Note 1 to the audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.