~~Adoption of ASC Topic 606, “Revenue from Contracts with Customers”~~



	Three Months Ended September 30, 2018										Nine Months Ended September 30, 2018
	Three Months Ended September 30, 2018										Nine Months Ended September 30, 2018
	FS		HC		P&R		CMT		Total		FS		HC		P&R		CMT		Total
	(in millions)
Revenues
Geography:
North America	$	1,033	$	1,084	$	609	$	381	$	3,107	$	3,133	$	3,167	$	1,766	$	1,083	$	9,149
United Kingdom	127		23		90		85		325		357		68		266		253		944
Continental Europe	170		69		109		50		398		497		191		327		138		1,153
Europe - Total	297		92		199		135		723		854		259		593		391		2,097
Rest of World	134		13		55		46		248		407		40		165		138		750
Total	$	1,464	$	1,189	$	863	$	562	$	4,078	$	4,394	$	3,466	$	2,524	$	1,612	$	11,996

Service line:
Consulting and technology services	$	902	$	645	$	512	$	292	$	2,351	$	2,658	$	1,896	$	1,492	$	859	$	6,905
Outsourcing services	562		544		351		270		1,727		1,736		1,570		1,032		753		5,091
Total	$	1,464	$	1,189	$	863	$	562	$	4,078	$	4,394	$	3,466	$	2,524	$	1,612	$	11,996

Type of contract:
Time and materials	$	954	$	464	$	374	$	354	$	2,146	$	2,842	$	1,364	$	1,122	$	995	$	6,323
Fixed-price	453		452		392		187		1,484		1,384		1,406		1,120		545		4,455
Transaction or volume-based	57		273		97		21		448		168		696		282		72		1,218
Total	$	1,464	$	1,189	$	863	$	562	$	4,078	$	4,394	$	3,466	$	2,524	$	1,612	$	11,996

On January 1, 2018, we adopted ASC Topic 606, “Revenue from Contracts with Customers,” or the New Revenue Standard, using the modified retrospective method applied to contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under the New Revenue Standard, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting policies. For contracts that were modified before the effective date, the Company aggregated the effect of all contract modifications prior to identifying performance obligations and allocating transaction price in accordance with the practical expedient ASC 606-10-65-1-(f)-4. Upon adoption of the New Revenue Standard on January 1, 2018, we recorded a net increase to opening retained earnings of approximately $121 million, after a tax impact of $37 million. The impact of adoption primarily relates to (1) changes in the method used to measure progress on our fixed-price application maintenance, consulting and business process services contracts, (2) the longer period of amortization for costs to fulfill a contract, (3) the timing of revenue recognition and allocation of purchase price on our software license contracts, (4) the reclassification of balances representing receivables, as defined by the New Revenue Standard, from Unbilled accounts receivable to Trade accounts receivable, net, (5) the reclassification of balances representing contract assets, as defined by the New Revenue Standard, from Unbilled accounts receivable to Other current assets, as well as (6) the income tax impact of the above items, as applicable.

The following tables compare the financial statement line items materially affected by the adoption of the New Revenue Standard as of and for the three and nine months ended September 30, 2018 to the pro-forma amounts had the previous guidance been in effect, or Pro-forma Amounts:

September 30, 2018
As Reported Pro-forma Amounts Impacts of the New Revenue Standard
(in millions)
Assets:
Trade accounts receivable, net^{(1), (2)}
$ 3,187
$ 3,073
$ 114
Unbilled accounts receivable^{(1), (3)}
—
432
(432 )
Other current assets^{(2), (3)}
777
457
320
Total current assets 2
Other noncurrent assets⁽⁴⁾
643
589
54
Total assets $ 56
Liabilities:
Deferred revenue⁽²⁾
$ 244
$ 417
$ (173 )
Total current liabilities (173 )
Deferred revenue, noncurrent⁽²⁾
72
106
(34 )
Deferred income tax liabilities, net⁽⁵⁾
157
100
57
Total liabilities (150 )
Stockholders’ equity:
Retained earnings 11,041
10,835
206
Total stockholders’ equity 206
Total liabilities and stockholders’ equity $ 56

Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018
As Reported Pro-forma Amounts Impacts of the New Revenue Standard As Reported Pro-forma Amounts Impacts of the New Revenue Standard
(in millions) (in millions)
Revenues⁽²⁾
$ 4,078
$ 4,045
$ 33
$ 11,996
$ 11,911
$ 85
Cost of revenues ⁽⁴⁾
2,480
2,484
(4 ) 7,298
7,317
(19 )
Selling, general and administrative expenses 734
734
—
2,250
2,250
—
Depreciation and amortization expense 119
119
—
340
340
—
Income from operations 745
708
37
2,108
2,004
104
Other income (expense), net (83 ) (84 ) 1
(126 ) (127 ) 1
Income before provision for income taxes⁽⁵⁾
662
624
38
1,982
1,877
105
Provision for income taxes (185 ) (178 ) (7 ) (530 ) (510 ) (20 )
Income (loss) from equity method investment —
—
—
1
1
—
Net income $ 477
$ 446
$ 31
$ 1,453
$ 1,368
$ 85
Basic earnings per share $ 0.82
$ 0.77
$ 0.05
$ 2.49
$ 2.34
$ 0.15
Diluted earnings per share $ 0.82
$ 0.77
$ 0.05
$ 2.48
$ 2.34
$ 0.14


~~(1)~~	~~Reflects the reclassification of balances representing receivables, as defined by the New Revenue Standard, from Unbilled accounts receivable to Trade accounts receivable, net.~~


~~(2)~~	Reflects the impact of changes in the method used to measure progress on our fixed-price application maintenance, consulting and business process services contracts and the timing of revenue recognition and allocation of purchase price on our software license contracts.


~~(3)~~	~~Reflects the reclassification of balances representing contract assets, as defined by the New Revenue Standard, from Unbilled accounts receivable to Other current assets.~~


~~(4)~~	~~Reflects the impact of a longer period of amortization for costs to fulfill a contract.~~


~~(5)~~	~~Reflects the income tax impact of the above items.~~

~~Revenue Recognition~~

We recognize revenues as we transfer control of deliverables (products, solutions and services) to our customers in an amount reflecting the consideration to which we expect to be entitled. To recognize revenues, we apply the following five step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenues when a performance obligation is satisfied. We account for a contract when it has approval and commitment from all parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience.

We may enter into arrangements that consist of multiple performance obligations. Such arrangements may include any combination of our deliverables. To the extent a contract includes multiple promised deliverables, we apply judgment to determine whether promised deliverables are capable of being distinct and are distinct in the context of the contract. If these criteria are not met, the promised deliverables are accounted for as a combined performance obligation. For arrangements with multiple distinct performance obligations, we allocate consideration among the performance obligations based on their relative standalone selling price. Standalone selling price is the price at which we would sell a promised good or service separately to the customer. When not directly observable, we typically estimate standalone selling price by using the expected cost plus a margin approach. We typically establish a standalone selling price range for our deliverables, which is reassessed on a periodic basis or when facts and circumstances change.

For performance obligations where control is transferred over time, revenues are recognized based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the deliverables to be provided. Revenues related to fixed-price contracts for application development and systems integration services, consulting or other technology services are recognized as the service is performed using the cost to cost method, under which the total value of revenues is recognized on the basis of the percentage that each contract’s total labor cost to date bears to the total expected labor costs. Revenues related to fixed-price application maintenance, testing and business process services are recognized based on our right to invoice for services performed for contracts in which the invoicing is representative of the value being delivered, in accordance with the practical expedient in ASC 606-10-55-18. If our invoicing is not consistent with value delivered, revenues are recognized as the service is performed based on the cost to cost method described above. The cost to cost method requires estimation of future costs, which is updated as the project progresses to reflect the latest available information; such estimates and changes in estimates involve the use of judgment. The cumulative impact of any revision in estimates is reflected in the financial reporting period in which the change in estimate becomes known and any anticipated losses on contracts are recognized immediately. Revenues related to fixed-price hosting and infrastructure services are recognized based on our right to invoice for services performed for contracts in which the invoicing is representative of the value being delivered, in accordance with the practical expedient in ASC 606-10-55-18. If our invoicing is not consistent with value delivered, revenues are recognized on a straight-line basis unless revenues are earned and obligations are fulfilled in a different pattern. The revenue recognition method applied to the types of contracts described above provides the most faithful depiction of performance towards satisfaction of our performance obligations; for example, the cost to cost method is used when the value of services provided to the customer is best represented by the costs expended to deliver those services.

Revenues related to our non-hosted software license arrangements that do not require significant modification or customization of the underlying software are recognized when the software is delivered as control is transferred at a point in time. For software license arrangements that require significant functionality enhancements or modification of the software, revenues for the software license and related services are recognized as the services are performed in accordance with the methods described above. In software hosting arrangements, the rights provided to the customer, such as ownership of a license, contract termination provisions and the feasibility of the client to operate the software, are considered in determining whether the arrangement includes a license or a service. Sales and usage-based fees promised in exchange for licenses of intellectual property are not recognized as revenue until the uncertainty related to the variable amounts is resolved. Revenues related to software maintenance and support are generally recognized on a straight-line basis over the contract period.

Revenues related to our time-and-materials, transaction-based or volume-based contracts are recognized over the period the services are provided in a manner that corresponds with the value transferred to the customer to-date relative to the remaining services to be provided.

Revenues also include the reimbursement of out-of-pocket expenses. Our warranties generally provide a customer with assurance that the related deliverable will function as the parties intended because it complies with agreed-upon specifications and is therefore not considered an additional performance obligation in the contract.

From time to time, we may enter into arrangements with third party suppliers to resell products or services. In such cases, we evaluate whether we are the principal (i.e. report revenues on a gross basis) or agent (i.e. report revenues on a net basis). In doing so, we first evaluate whether we control the good or service before it is transferred to the customer. If we control the good or service before it is transferred to the customer, we are the principal; if not, we are the agent. Determining whether we control the good or service before it is transferred to the customer may require judgment.

Our contracts may be modified to add, remove or change existing performance obligations. The accounting for modifications to our contracts involves assessing whether the services added to an existing contract are distinct and whether the pricing is at the standalone selling price. Services added that are not distinct are accounted for on a cumulative catch up basis, while those that are distinct are accounted for prospectively, either as a separate contract if the additional services are priced at the standalone selling price, or as a termination of the existing contract and creation of a new contract if not priced at the standalone selling price. Services added to our application development and systems integration service contracts are typically not distinct, while services added to our other contracts, including application maintenance, testing and business process services contracts, are typically distinct.

Incentive revenues, volume discounts, or any other form of variable consideration is estimated using either the sum of probability weighted amounts in a range of possible consideration amounts (expected value), or the single most likely amount in a range of possible consideration amounts (most likely amount), depending on which method better predicts the amount of consideration to which we may be entitled. We include in the transaction price variable consideration only to the extent it is probable that a significant reversal of revenues recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price may involve judgment and are based largely on an assessment of our anticipated performance and all information that is reasonably available to us.

We assess the timing of the transfer of goods or services to the customer as compared to the timing of payments to determine whether a significant financing component exists. As a practical expedient, we do not assess the existence of a significant financing component when the difference between payment and transfer of deliverables is a year or less. If the difference in timing arises for reasons other than the provision of finance to either the customer or us, no financing component is deemed to exist. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our services, not to receive or provide financing from or to customers. We do not consider set up or transition fees paid upfront by our customers to represent a financing component, as such fees are required to encourage customer commitment to the project and protect us from early termination of the contract.

Costs to Fulfill

Recurring operating costs for contracts with customers are recognized as incurred. Certain eligible, nonrecurring costs incurred in the initial phases of our application maintenance, business process outsourcing and infrastructure services contracts (i.e. set-up or transition costs) are capitalized when such costs (1) relate directly to the contract, (2) generate or enhance resources of the Company that will be used in satisfying the performance obligation in the future, and (3) are expected to be recovered. These costs are expensed ratably over the estimated life of the customer relationship, including expected renewals. In determining the estimated life of the customer relationship, we evaluate the average contract term, on a portfolio basis by nature of the services to be provided, and apply judgment to evaluate the rate of technological and industry change. Capitalized amounts are monitored regularly for impairment. Impairment losses are recorded when projected remaining undiscounted operating cash flows are not sufficient to recover the carrying amount of the capitalized costs to fulfill.

The following table presents information related to the capitalized costs to fulfill, such as set-up or transition activities, for the nine months ended September 30, ~~2018~~2019. Costs to fulfill are recorded in "Other noncurrent assets" in our unaudited consolidated statements of financial ~~position.~~position and the amortization expense of costs to fulfill is included in "Cost of revenues" in our unaudited consolidated statement of operations. Costs to obtain contracts were immaterial for the ~~periods~~period disclosed.



	Costs to Fulfill
	(in millions)
Balance - December 31, 2018	$	400
Amortization expense	(58		)
Costs capitalized	143
Balance - September 30, 2019	$	485

Costs to Fulfill
(in millions)
Balance - January 1, 2018 $ 303
Amortization expense (50 )
Costs capitalized 132
Other (2 )
Balance - September 30, 2018 $ 383

~~Trade Accounts Receivable and~~ Contract Balances

We classify our right to consideration in exchange for deliverables as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional (i.e. only the passage of time is required before payment is due). For example, we recognize a receivable for revenues related to our time and materials and transaction or volume-based contracts when earned regardless of whether amounts have been billed. We present such receivables in Trade accounts receivable, net in our consolidated statements of financial position at their net estimated realizable value. We maintain an allowance for doubtful accounts to provide for the estimated amount of receivables that may not be collected. The allowance is based upon an assessment of customer creditworthiness, historical payment experience, the age of outstanding receivables and other applicable factors.

A contract asset is a right to consideration that is conditional upon factors other than the passage of time. Contract assets are presented in ~~Other~~"Other current ~~assets~~assets" in our unaudited consolidated statements of financial position and primarily relate to unbilled amounts on fixed-price contracts utilizing the cost to cost method of revenue recognition. The table below shows significant movements in contract assets:



	Contract Assets
	(in millions)
Balance - December 31, 2018	$	305
Revenues recognized during the period but not billed	340
Amounts reclassified to accounts receivable	(280		)
Balance - September 30, 2019	$	365

Contract Assets
(in millions)
Balance - January 1, 2018 $ 306
Revenues recognized during the period but not billed 290
Amounts reclassified to accounts receivable (273 )
Other (3 )
Balance - September 30, 2018 $ 320

Our contract liabilities, or deferred revenue, consist of advance payments and billings in excess of revenues recognized. We classify deferred revenue as current or noncurrent based on the timing of when we expect to recognize the revenues. The ~~noncurrent portion of deferred revenue is included in other noncurrent liabilities in our consolidated statements of financial position.~~

~~The~~ table below shows significant movements in the deferred revenue balances (current and noncurrent) for the period disclosed:



	Deferred Revenue
	(in millions)
Balance - December 31, 2018	$	348
Amounts billed but not recognized as revenues	217
Revenues recognized related to the opening balance of deferred revenue	(229		)
Balance - September 30, 2019	$	336

Deferred Revenue
(in millions)
Balance - January 1, 2018 $ 431
Amounts billed but not recognized as revenues 116
Revenues recognized related to the opening balance of deferred revenue (230 )
Other (1 )
Balance - September 30, 2018 $ 316

Our contract assets and liabilities are reported in a net position on a contract by contract basis at the end of each reporting period. The difference between the opening and closing balances of our contract assets and deferred revenues primarily results from the timing difference between our performance obligations and the customer’s payment. We receive payments from customers based on the terms established in our contracts, which vary by contract type.

Revenues recognized during the three and nine months ended September 30, ~~2018~~2019 for performance obligations satisfied or partially satisfied in previous periods were immaterial.

We have an ongoing contractual dispute with a Healthcare customer related to a large volume-based contract (“Customer Dispute”). The customer is contesting certain payment obligations, and the dispute impacts the consideration to which we are entitled under the contract. During the third quarter of 2019, as a result of recent developments, we reduced our estimate of the variable consideration related to this contract. Our estimate of the variable consideration involves judgment and is based on reasonably available information at the time our consolidated financial statements are prepared. However, negotiations with the customer are ongoing and the ultimate amount of consideration recognized in connection with the contract may be different from our estimate.

Remaining Performance Obligations

~~ASC 606 requires that we disclose~~As of September 30, 2019, the aggregate amount of transaction price ~~that~~allocated to remaining performance obligations, was $1,778 million of which approximately 70% is ~~allocated~~expected to be recognized as revenue within 2 years. Disclosure is not required for performance obligations that ~~have not yet been satisfied as~~meet any of ~~September 30, 2018. This disclosure is not required for:~~the following criteria:


(1)	contracts with a duration of one year or less as determined under ~~ASC 606,~~the New Revenue Standard,


(2)	contracts for which we recognize revenues based on the right to invoice for services performed,


(3)	variable consideration allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation in accordance with ASC 606-10-25-14(b), for which the criteria in ASC 606-10-32-40 have been met, or


(4)	variable consideration in the form of a sales-based or usage based royalty promised in exchange for a license of intellectual property.

Many of our performance obligations meet one or more of these ~~exemptions. As of September 30, 2018,~~exemptions and therefore are not included in the ~~aggregate amount of transaction price allocated to~~ remaining performance ~~obligations, other than those meeting the exclusion criteria above, was $2,014 million, of which approximately 70% is expected to be recognized as revenues within 2 years.~~

~~Disaggregation of Revenues~~

The table below presents disaggregated revenues from contracts with customers by customer location, service line and contract-type for each of our business segments. We believe this disaggregation best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by industry, market and other economic factors.

Three Months Ended
September 30, 2018
Financial Services Healthcare Products and Resources Communications, Media and Technology Total
(in millions)
Revenues
Geography:
North America $ 1,033
$ 1,084
$ 609
$ 381
$ 3,107
United Kingdom 127
23
90
85
325
Rest of Europe 170
69
109
50
398
Europe - Total 297
92
199
135
723
Rest of World 134
13
55
46
248
Total $ 1,464
$ 1,189
$ 863
$ 562
$ 4,078

Service line:
Consulting and technology services $ 902
$ 645
$ 512
$ 292
$ 2,351
Outsourcing services 562
544
351
270
1,727
Total $ 1,464
$ 1,189
$ 863
$ 562
$ 4,078

Type of contract:
Time and materials $ 954
$ 464
$ 374
$ 354
$ 2,146
Fixed-price 453
452
392
187
1,484
Transaction or volume-based 57
273
97
21
448
Total $ 1,464
$ 1,189
$ 863
$ 562
$ 4,078

Nine Months Ended
September 30, 2018
Financial Services Healthcare Products and Resources Communications, Media and Technology Total
(in millions)
Revenues
Geography:
North America $ 3,133
$ 3,167
$ 1,766
$ 1,083
$ 9,149
United Kingdom 357
68
266
253
944
Rest of Europe 497
191
327
138
1,153
Europe - Total 854
259
593
391
2,097
Rest of World 407
40
165
138
750
Total $ 4,394
$ 3,466
$ 2,524
$ 1,612
$ 11,996

Service line:
Consulting and technology services $ 2,658
$ 1,896
$ 1,492
$ 859
$ 6,905
Outsourcing services 1,736
1,570
1,032
753
5,091
Total $ 4,394
$ 3,466
$ 2,524
$ 1,612
$ 11,996

Type of contract:
Time and materials $ 2,842
$ 1,364
$ 1,122
$ 995
$ 6,323
Fixed-price 1,384
1,406
1,120
545
4,455
Transaction or volume-based 168
696
282
72
1,218
Total $ 4,394
$ 3,466
$ 2,524
$ 1,612
$ 11,996

obligation amounts disclosed above.



Note 43 — Business Combinations

During the nine months ended September 30, ~~2018,~~2019, we ~~completed two business combinations for total consideration of approximately $492 million, inclusive of contingent consideration. The acquisition of Bolder Healthcare Solutions,~~acquired 100% ownership in the following:

Mustache, a ~~privately-held U.S. provider of revenue cycle management solutions~~creative content agency based in the United States, which is expected to ~~the healthcare industry expands~~extend our healthcare consulting, technology and business process services portfolio and strengthens our position in digital healthcare technology and operations. The acquisition of Hedera Consulting, a privately-held company specializing in business advisory and data analytics services across a number of industries expands our consulting, business insight and digital transformation capabilities in ~~Belgium~~creating original and branded content for digital, broadcast and social mediums (acquired on January 15, 2019).

Meritsoft, a financial software company based in Ireland, which is expected to complement our service offerings to capital markets institutions (acquired on March 4, 2019).

Samlink, a developer of services and solutions for the ~~Netherlands.~~financial sector based in Finland, which is expected to strengthen our banking capabilities and expand our service capabilities in the Nordic region (acquired on April 1, 2019).

Zenith Technologies, a life sciences company based in Ireland, which is expected to extend our service capabilities for connected biopharmaceutical and medical device manufacturers (acquired on July 29, 2019).

These acquisitions were not material, either individually or in the aggregate, to our operations, financial position or operating cash flow. Accordingly, pro forma results have not been presented. These acquisitions were included in our unaudited consolidated financial statements as of the date on which the businesses were acquired. We have allocated the purchase price related to these transactions to tangible and intangible assets and liabilities, including non-deductible goodwill, based on their estimated fair values. We will finalize the purchase price allocation as soon as practicable within the measurement period, but in no event later than one year following the date of acquisition. The allocations of preliminary purchase price to the fair value of the aggregate assets acquired and liabilities assumed were as follows:



	Fair Value			Weighted Average Useful Life
	(in millions)
Cash	$	38
Current assets	79
Property, plant and equipment and other noncurrent assets	21
Non-deductible goodwill	234
Customer relationship intangible assets	138			9.7 years
Other intangible assets	39			6.9 years
Current liabilities	(59		)
Noncurrent liabilities	(40		)
Purchase price, inclusive of contingent consideration	$	450

Fair Value Weighted Average Useful Life
(in millions)
Cash $ 9

Current assets 37

Property, plant and equipment and other noncurrent assets 7

Non-deductible goodwill ⁽¹⁾
344

Customer relationship intangible assets 122
9.7 years
Other intangible assets 26
2.4 years
Current liabilities (14 )
Noncurrent liabilities (39 )
Purchase price $ 492

The allocation is preliminary and will be finalized as soon as practicable within the measurement period, but in no event later than one year following the date of acquisition.

~~(1)~~The acquisitions completed during the nine months ended September 30, 2019 were not material, individually or in the aggregate, to our operations or cash flow. Accordingly, pro forma results have not been presented. We have allocated the purchase price related to these transactions to tangible and intangible assets acquired and liabilities assumed, including non-deductible goodwill, based on their estimated fair values. Goodwill from these acquisitions has been allocated primarily to the Financial Services and Healthcare reportable segments. The primary items that generated goodwill are the value of the acquired assembled workforces and synergies between the acquired companies and us, neither of which qualify as an amortizable intangible asset.



Note 54 — Realignment Charges

~~In 2017, we began a~~Our realignment program is focused on improving our customer focus, our cost structure and the efficiency and effectiveness of our ~~business~~delivery while continuing to ~~accelerate the shift to digital services and solutions while improving the overall efficiency of our operations.~~drive revenue growth. As part of ~~this~~the realignment ~~for the three and nine months ended September 30, 2017,~~program, we incurred ~~$19 million~~costs associated with our CEO transition and ~~$69 million, respectively, in pre-tax charges. These charges included severance~~the departure of our President ("Executive Transition Costs"), employee separation costs, ~~primarily related to our voluntary separation program announced in May 2017, lease termination~~employee retention costs and ~~advisory~~third party realignment costs. Our third party realignment costs include professional fees ~~related to non-routine shareholder matters and charges~~ related to the development of our realignment program and return of capital programs. Further, during the three months ended September 30, 2018, we incurred $11 million in pre-tax severance costs as part of an involuntary separation program. Our realignment initiatives are intended to further improve our cost structure primarily by optimizing our resource pyramid.facility exit costs. The total costs related to the realignment are reported in "Selling, general and administrative expenses" in our unaudited consolidated statements of operations. We do not allocate realignment charges to individual segments in internal management reports used by the chief operating decision maker. Accordingly, such expenses are separately disclosed in our segment reporting as “unallocated costs”. See Note 15.

Realignment charges were as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
	(in millions)
Executive Transition Costs	$	—	$	—	$	22	$	—
Employee separation costs	33		11		60		11
Employee retention costs	18		—		18		—
Third party realignment costs	14		—		16		1
Total realignment costs	$	65	$	11	$	116	$	12

Three Months Ended
September 30, Nine Months Ended
September 30,
2018 2017 2018 2017
(in millions)
Employee separations $ 11
$ 14
$ 11
$ 53
Advisory fees —
5
—
15
Lease termination costs —
—
1
1
Total realignment costs $ 11
$ 19
$ 12
$ 69
Changes in our accrued employee separation costs, included in "Accrued expenses and other current liabilities" in our unaudited consolidated statement of financial position, are presented in the table below.



	(in millions)
Balance - December 31, 2018	$	—
Employee separation costs accrued	60
Payments made	32
Balance - September 30, 2019	$	28



Note 65 — Investments

Our investments were as follows:



	September 30, 2019		December 31, 2018
	(in millions)
Short-term investments:
Equity investment security	$	26	$	25
Available-for-sale investment securities	—		1,760
Held-to-maturity investment securities	224		1,065
Time deposits ⁽¹⁾	484		500
Total short-term investments	$	734	$	3,350



Long-term investments:
Equity and cost method investments	$	73	$	74
Held-to-maturity investment securities	6		6
Total long-term investments	$	79	$	80

September 30, 2018 December 31, 2017
(in millions)
Short-term investments:
Equity investment securities $ 25
$ 25
Available-for-sale investment securities 1,801
1,972
Held-to-maturity investment securities 1,133
745
Time deposits 465
⁽¹⁾
389
Total short-term investments $ 3,424
$ 3,131

Long-term investments: ��
Equity and cost method investments $ 75
$ 74
Held-to-maturity investment securities 18
161
Total long-term investments $ 93
$ 235


(1)	Includes ~~$405~~$419 million and $423 million in restricted time deposits as of September 30, ~~2018.~~2019 and December 31, 2018, respectively. See Note 9.

Equity Investment ~~Securities~~Security

Our equity investment ~~securities consist of~~security is a U.S. dollar denominated investment in a fixed income mutual fund. ~~Unrealized~~Realized and unrealized gains and losses were immaterial for the three and nine months ended September 30, ~~2018~~2019 and 2017 were immaterial. The value of the fixed income mutual fund is based on the net asset value, or NAV, of the fund, with appropriate consideration of the liquidity and any restrictions on disposition of our investment in the fund. There were no realized gains or losses on equity securities during the three and nine months ended September 30, 2018 and 2017.2018.

Available-for-Sale Investment Securities

~~Our~~2019

During the second quarter of 2019, all of our available-for-sale investment securities ~~consist~~either matured or were sold. Proceeds from sales of available-for-sale investment securities and the gross gains and losses that have been included in earnings as a result of those sales were as follows:



	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019
	(in millions)
Proceeds from sales of available-for-sale investment securities	$	—	$	1,712

Gross gains	$	—	$	6
Gross losses	—		(5		)
Net realized gains on sales of available-for-sale investment securities	$	—	$	1

2018

Our 2018 available-for-sale investment securities consisted of U.S. dollar denominated investments primarily in U.S. Treasury notes, U.S. government agency debt securities, municipal debt securities, non-U.S. government debt securities, U.S. and international corporate bonds, certificates of deposit, commercial paper, debt securities issued by supranational institutions, and asset-backed securities, including securities backed by auto loans, credit card receivables, and other receivables. ~~Our investment guidelines are to purchase securities which are investment grade at the time of acquisition. We monitor the credit ratings of the securities in our portfolio on an ongoing basis.~~

~~The amortized cost, gross unrealized gains and losses and fair value of available-for-sale investment securities at September 30, 2018 were as follows:~~

Amortized
Cost

Unrealized
Gains

Unrealized
Losses
Fair
Value
(in millions)
U.S. Treasury and agency debt securities $ 647
$ —
$ (10 ) $ 637
Corporate and other debt securities 431
—
(5 ) 426
Certificates of deposit and commercial paper 317
—
—
317
Asset-backed securities 321
—
(3 ) 318
Municipal debt securities 104
—
(1 ) 103
Total available-for-sale investment securities $ 1,820
$ —
$ (19 ) $ 1,801

The amortized cost, gross unrealized gains and losses and fair value of available-for-sale investment securities at December 31, ~~2017~~2018 were as follows:



	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(in millions)
U.S. Treasury and agency debt securities	$	630	$	1	$	(6	)	$	625
Corporate and other debt securities	420		—		(4		)	416
Certificates of deposit and commercial paper	296		—		—			296
Asset-backed securities	336		—		(2		)	334
Municipal debt securities	90		—		(1		)	89
Total available-for-sale investment securities	$	1,772	$	1	$	(13	)	$	1,760

Amortized
Cost

Unrealized
Gains

Unrealized
Losses

Fair
Value
(in millions)
U.S. Treasury and agency debt securities $ 667
$ —
$ (6 ) $ 661
Corporate and other debt securities 439
—
(2 ) 437
Certificates of deposit and commercial paper 450
—
—
450
Asset-backed securities 297
—
(2 ) 295
Municipal debt securities 130
—
(1 ) 129
Total available-for-sale investment securities $ 1,983
$ —
$ (11 ) $ 1,972

The fair value and related unrealized losses of available-for-sale investment securities in a continuous unrealized loss position for less than 12 months and for 12 months or longer were as follows as of September 30, 2018:

Less than 12 Months 12 Months or More Total

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses
(in millions)
U.S. Treasury and agency debt securities $ 296
$ (4 ) $ 336
$ (6 ) $ 632
$ (10 )
Corporate and other debt securities 258
(3 ) 134
(2 ) 392
(5 )
Certificates of deposit and commercial paper 198
—
—
—
198
—
Asset-backed securities 168
(1 ) 137
(2 ) 305
(3 )
Municipal debt securities 62
(1 ) 40
—
102
(1 )
Total $ 982
$ (9 ) $ 647
$ (10 ) $ 1,629
$ (19 )



	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(in millions)
U.S. Treasury and agency debt securities	$	84	$	—		$	446	$	(6	)	$	530	$	(6	)
Corporate and other debt securities	108		(1		)	254		(3		)	362		(4		)
Certificates of deposit and commercial paper	295		—			—		—			295		—
Asset-backed securities	93		—			179		(2		)	272		(2		)
Municipal debt securities	17		—			64		(1		)	81		(1		)
Total	$	597	$	(1	)	$	943	$	(12	)	$	1,540	$	(13	)

Less than 12 Months 12 Months or More Total

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses
(in millions)
U.S. Treasury and agency debt securities $ 519
$ (4 ) $ 124
$ (2 ) $ 643
$ (6 )
Corporate and other debt securities 297
(1 ) 126
(1 ) 423
(2 )
Certificates of deposit and commercial paper 49
—
—
—
49
—
Asset-backed securities 193
(1 ) 94
(1 ) 287
(2 )
Municipal debt securities 107
(1 ) 18
—
125
(1 )
Total $ 1,165
$ (7 ) $ 362
$ (4 ) $ 1,527
$ (11 )

The unrealized losses for the above securities as of ~~September 30, 2018 and~~ December 31, ~~2017~~2018 were primarily attributable to changes in interest rates. At each reporting date, we perform an evaluation of impaired available-for-sale securities to determine if the unrealized losses are other-than-temporary. We do not consider any of the investments to be other-than-temporarily impaired as of September 30, 2018. The gross unrealized gains and losses in the above tables were recorded, net of tax, in "Accumulated other comprehensive income (loss)" in our unaudited consolidated ~~statements~~statement of financial position.

~~The contractual maturities of our fixed income available-for-sale investment securities as of September 30, 2018 are set forth in the following table:~~

Amortized
Cost

Fair
Value
(in millions)
Due within one year $ 579
$ 578
Due after one year up to two years 474
466
Due after two years up to three years 407
400
Due after three years 39
39
Asset-backed securities 321
318
Total available-for-sale investment securities $ 1,820
$ 1,801

Asset-backed securities were excluded from the maturity categories because the actual maturities may differ from the contractual maturities since the underlying receivables may be prepaid without penalties. Further, actual maturities of debt securities may differ from those presented above since certain obligations provide the issuer the right to call or prepay the obligation prior to scheduled maturity without penalty.

Proceeds from sales of available-for-sale investment securities and the gross gains and losses that have been included in earnings as a result of those sales were as follows:



	Three Months Ended September 30, 2018			Nine Months Ended September 30, 2018
	(in millions)
Proceeds from sales of available-for-sale investment securities	$	490		$	1,049

Gross gains	$	—		$	—
Gross losses	(1		)	(3		)
Net realized (losses) on sales of available-for-sale investment securities	$	(1	)	$	(3	)

Three Months Ended
September 30, Nine Months Ended
September 30,
2018 2017 2018 2017
(in millions)
Proceeds from sales of available-for-sale investment securities $ 490
$ 375
$ 1,049
$ 2,020

Gross gains $ —
$ —
$ —
$ 1
Gross losses (1 ) (1 ) (3 ) (2 )
Net realized (losses) on sales of available-for-sale investment securities $ (1 ) $ (1 ) $ (3 ) $ (1 )

Held-to-Maturity Investment Securities

Our held-to-maturity investment securities consist of Indian rupee denominated investments primarily in commercial paper, international corporate bonds and government debt securities. Our investment guidelines are to purchase securities that are investment grade at the time of acquisition. We monitor the credit ratings of the securities in our portfolio on an ongoing basis. The basis for the measurement of fair value of our held-to-maturity investments is Level 2 in the fair value hierarchy.

The amortized cost, gross unrealized gains and losses and fair value of held-to-maturity investment securities at September 30, ~~2018~~2019 were as follows:


	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
	(in millions)									(in millions)
Short-term investments:
Corporate and other debt securities	$	677	$	—	$	(3	)	$	674	$	77	$	—	$	—	$	77
Commercial paper	456		—		(2		)	454		147		1		—		148
Total short-term held-to-maturity investments	1,133		—		(5		)	1,128		224		1		—		225
Long-term investments:
Corporate and other debt securities	6		—		—			6		6		—		—		6
Commercial paper	12		—		—			12
Total held-to-maturity investment securities	$	1,151	$	—	$	(5	)	$	1,146	$	230	$	1	$	—	$	231

The amortized cost, gross unrealized gains and losses and fair value of held-to-maturity investment securities at December 31, ~~2017~~2018 were as follows:



	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(in millions)
Short-term investments:
Corporate and other debt securities	$	546	$	—	$	—		$	546
Commercial paper	519		—		(1		)	518
Total short-term held-to-maturity investments	1,065		—		(1		)	1,064
Long-term investments:
Corporate and other debt securities	6		—		—			6
Total held-to-maturity investment securities	$	1,071	$	—	$	(1	)	$	1,070

Amortized
Cost Unrealized
Gains Unrealized
Losses Fair
Value
(in millions)
Short-term investments:
Corporate and other debt securities $ 346
$ —
$ (1 ) $ 345
Commercial paper 399
—
(2 ) 397
Total short-term held-to-maturity investments 745
—
(3 ) 742
Long-term investments:
Corporate and other debt securities 161
—
(1 ) 160
Total held-to-maturity investment securities $ 906
$ —
$ (4 ) $ 902

The fair value and related unrealized losses of held-to-maturity investment securities in a continuous unrealized loss position for less than 12 months and for 12 months or longer were as follows as of September 30, ~~2018:~~2019:



	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in millions)
Corporate and other debt securities	$	15	$	—	$	6	$	—	$	21	$	—
Total	$	15	$	—	$	6	$	—	$	21	$	—

Less than 12 Months 12 Months or More Total

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses
(in millions)
Corporate and other debt securities $ 469
$ (2 ) $ 168
$ (1 ) $ 637
$ (3 )
Commercial paper 454
(2 ) —
—
454
(2 )
Total $ 923
$ (4 ) $ 168
$ (1 ) $ 1,091
$ (5 )



	Less than 12 Months					12 Months or More				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in millions)
Corporate and other debt securities	$	263	$	—		$	57	$	—	$	320	$	—
Commercial paper	268		(1		)	—		—		268		(1		)
Total	$	531	$	(1	)	$	57	$	—	$	588	$	(1	)

Less than 12 Months 12 Months or More Total

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses
(in millions)
Corporate and other debt securities $ 473
$ (2 ) $ —
$ —
$ 473
$ (2 )
Commercial paper 394
(2 ) —
—
394
(2 )
Total $ 867
$ (4 ) $ —
$ —
$ 867
$ (4 )

At each reporting date, the Company performs an evaluation of held-to-maturity securities to determine if the unrealized losses are other-than-temporary. We do not consider any of the investments to be other-than-temporarily impaired as of September 30, ~~2018.~~2019.

The contractual maturities of our fixed income held-to-maturity investment securities as of September 30, ~~2018~~2019 are set forth in the following table:



	Amortized Cost		Fair Value
	(in millions)
Due within one year	$	224	$	225
Due after one year and before two years	6		6
Total held-to-maturity investment securities	$	230	$	231

Amortized
Cost

Fair
Value
(in millions)
Due within one year $ 1,133
$ 1,128
Due after one year up to two years 12
12
Due after two years 6
6
Total held-to-maturity investment securities $ 1,151
$ 1,146

During the nine months ended September 30, ~~2018~~2019 and the year ended December 31, ~~2017,~~2018, there were no transfers of investments between our available-for-sale and held-to-maturity investment portfolios.



Note 6 — Leases

Adoption of the New Lease Standard

On January 1, 2019, we adopted the New Lease Standard using the Effective Date Method applied to all lease contracts existing as of January 1, 2019. Under the Effective Date Method, results for reporting periods beginning on or after January 1, 2019 are presented under the New Lease Standard. We elected the package of practical expedients that permits us to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. Prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting policies.

The impact of adoption primarily relates to the recognition of ROU operating lease assets and operating lease liabilities on our unaudited consolidated statement of financial position for all operating leases with a term greater than twelve months. The accounting for our finance leases remained substantially unchanged. The following table provides the impact of adoption of the New Lease Standard on our unaudited consolidated statement of financial position as of January 1, 2019:



Location on Statement of Financial Position	January 1, 2019
	(in millions)
Property and equipment, net⁽¹⁾	$	(81	)
Operating lease assets, net^{(1) (2) (3)}	839
Total assets	$	758

Operating lease liabilities^{(2) (3)}	$	191
Operating lease liabilities, noncurrent^{(2) (3)}	670
Accrued expenses and other liabilities⁽³⁾	(10		)
Other noncurrent liabilities⁽³⁾	(95		)
Total liabilities	$	756

Retained earnings⁽⁴⁾	$	2


(1)	Reflects the reclassification of leasehold land and a built-to-suit lease asset from "Property and equipment, net" to "Operating lease assets, net".


(2)	Represents the recognition of operating lease assets and liabilities (current and noncurrent), as defined by the New Lease Standard, including the liability for a built-to-suit lease that was previously accounted for as a capital lease under the former lease guidance.


(3)	Represents the reclassification of deferred rent from "Accrued expenses and other liabilities" and "Other noncurrent liabilities" to "Operating lease assets, net" and the reclassification of built-to-suit lease liabilities from "Accrued expenses and other liabilities" and "Other noncurrent liabilities" to "Operating lease liabilities" and "Operating lease liabilities, noncurrent".


(4)	Represents the net impact of the derecognition of a built-to-suit lease under the former lease guidance and the re-establishment of that lease as an operating lease under the New Lease Standard.

The adoption of the New Lease Standard did not materially impact our unaudited consolidated statement of operations or our unaudited statement of cash flows.

Leases

Our lease asset classes primarily consist of operating leases for office space, data centers and equipment. At inception of a contract, we determine whether a contract contains a lease, and if a lease is identified, whether it is an operating or finance lease. In determining whether a contract contains a lease we consider whether (1) we have the right to obtain substantially all of the economic benefits from the use of the asset throughout the term of the contract, (2) we have the right to direct how and for what purpose the asset is used throughout the term of the contract and (3) we have the right to operate the asset throughout the term of the contract without the lessor having the right to change the terms of the contract. Some of our lease agreements contain both lease and non-lease components that we account for as a single lease component for all our lease asset classes.

Our ROU lease assets represent our right to use an underlying asset for the lease term and may include any advance lease payments made and any initial direct costs, and exclude lease incentives. Our lease liabilities represent our obligation to make lease payments arising from the contractual terms of the lease. ROU lease assets and lease liabilities are recognized at the commencement of the lease and are calculated using the present value of lease payments over the lease term. Typically, our lease agreements do not provide sufficient detail to arrive at an implicit interest rate. Therefore, we use our estimated country-specific incremental borrowing rate based on information available at the commencement date of the lease to calculate the present value of the lease payments. In estimating our country-specific incremental borrowing rates, we consider market rates of comparable collateralized borrowings for similar terms. Our lease terms may include the option to extend or terminate the lease before the end of the contractual lease term. Our ROU lease assets and lease liabilities include these options when it is reasonably certain that they will be exercised.

The following table provides information on the components of our operating and finance leases included in our unaudited consolidated statement of financial position:



Leases	Location on Statement of Financial Position	September 30, 2019
Assets		(in millions)
ROU operating lease assets	Operating lease assets, net	$	905
ROU finance lease assets	Property and equipment, net	15
	Total	$	920

Liabilities
Current
Operating lease	Operating lease liabilities	$	195
Finance lease	Accrued expenses and other current liabilities	10
Noncurrent
Operating lease	Operating lease liabilities, noncurrent	734
Finance lease	Other noncurrent liabilities	14
	Total	$	953

Our operating lease cost was $68 million and $195 million for the three and nine months ended September 30, 2019, respectively, and included $5 million and $14 million, respectively, of variable lease cost. A portion of our real estate lease costs is subject to annual changes in the Consumer Price Index ("CPI"). The changes to the CPI are treated as variable lease payments and are recognized in the period in which the obligation for those payments was incurred. Other variable lease costs primarily relate to adjustments for common area maintenance, utilities and property tax. These variable costs are recognized in the period in which the obligation for those payments was incurred. Our short term lease rental expense was $2 million and $10 million for the three and nine months ended September 30, 2019, respectively. Lease interest expense related to our finance leases for the three and nine months ended September 30, 2019 was immaterial.

The following table provides information on the weighted average remaining lease term and weighted average discount rate for our operating leases:



Operating Lease Term and Discount Rate	September 30, 2019

Weighted average remaining lease term	6.1 years
Weighted-average discount rate	6.0	%

The following table provides supplemental cash flow information related to our operating leases:



	Nine Months Ended September 30, 2019
	(in millions)
Cash paid for amounts included in the measurement of operating lease liabilities	$	173
ROU assets obtained in exchange for operating lease liabilities	203

Cash paid for amounts included in the measurement of finance lease liabilities was immaterial for the nine months ended September 30, 2019. Additionally, ROU assets obtained in exchange for finance lease liabilities were immaterial for the nine months ended September 30, 2019.

The following table provides the schedule of maturities of our operating lease liabilities, under the New Lease Standard, as of September 30, 2019:



	September 30, 2019
	(in millions)
2019- remainder of year	$	62
2020	238
2021	203
2022	158
2023	124
2024	87
Thereafter	242
Total lease payments	1,114
Interest	(185		)
Total lease liabilities	$	929

The following table provides the schedule of our future minimum payments on our operating leases, as of December 31, 2018, which were accounted for in accordance with our historic accounting policies.



	December 31, 2018
	(in millions)
2019	$	226
2020	197
2021	157
2022	121
2023	90
Thereafter	197
Total lease payments	$	988

As of September 30, 2019, we had $363 million of additional operating leases whose lease term had yet to commence and therefore are not included in our unaudited statement of financial position. These leases are primarily related to real estate and will commence in various months in 2019 and 2020 with lease terms of 1 year to 11 years.



Note 7 — Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities were as follows:


	September 30, 2018		December 31, 2017		September 30, 2019		December 31, 2018
	(in millions)				(in millions)
Compensation and benefits	$	1,053	$	1,272	$	1,158	$	1,216
Customer volume and other incentives	320		289		366		323
Derivative financial instruments	67		5		16		25
FCPA Accrual	28		—
FCPA accrual⁽¹⁾					—		28
Income taxes	158		48		111		162
Professional fees	114		100		111		110
Travel and entertainment	57		32		47		34
Other	329		325		366		369
Total accrued expenses and other current liabilities	$	2,126	$	2,071	$	2,175	$	2,267



ý☒	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended	September 30, ~~2018~~2019
¨☐	Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from to



Delaware		13-3728359
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

Glenpointe Centre West
500 Frank W. Burr Blvd.
Teaneck,	New Jersey	07666
(Address of Principal Executive Offices)		(Zip Code)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 par value per share	CTSH	The Nasdaq Stock Market LLC



Large ~~accelerated filer~~Accelerated Filer	ý☒	Accelerated filer	¨☐

Non-accelerated filer	¨ ☐	Smaller reporting company	¨☐

		Emerging growth company	¨☐



Class		Number of Shares
Class A Common Stock, par value ~~$.01~~$0.01 per share		~~579,028,009~~547,565,822



		Page
PART I.	FINANCIAL INFORMATION	1

Item 1.	Consolidated Financial Statements (Unaudited)	1

	Consolidated Statements of Financial Position (Unaudited) as of September 30, ~~2018~~2019 and December 31, ~~2017~~2018	1

	Consolidated Statements of Operations (Unaudited) for the Three and Nine Months Ended September 30, ~~2018~~2019 and ~~2017~~2018	2

	Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Nine Months Ended September 30, ~~2018~~2019 and ~~2017~~2018	3

	Consolidated Statements of Stockholders' Equity (Unaudited) for the ~~Nine~~Three Months Ended March 31, 2019 and 2018, June 30, 2019 and 2018 and September 30, ~~2018~~2019 and ~~2017~~2018	4

	Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, ~~2018~~2019 and ~~2017~~	5

	~~Notes to Consolidated Financial Statements (Unaudited)~~2018	6

	Notes to Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3530

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5749

Item 4.	Controls and Procedures	5749

PART II.	OTHER INFORMATION	5850

Item 1.	Legal Proceedings	5850

Item 1A.	Risk Factors	5850

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5850

Item 5.	Other Information	50

Item 6.	Exhibits	5952

SIGNATURES		6053


	September 30, 2018			December 31, 2017		September 30, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	1,339		$	1,925	$	2,343		$	1,161
Short-term investments	3,424			3,131		734			3,350
Trade accounts receivable, net of allowances of $68 and $65, respectively	3,187			2,865
Unbilled accounts receivable	—			357
Trade accounts receivable, net of allowances of $104 and $78, respectively						3,438			3,257
Other current assets	777			833		876			909
Total current assets	8,727			9,111		7,391			8,677
Property and equipment, net	1,362			1,324		1,318			1,394
Operating lease assets, net						905			—
Goodwill	3,037			2,704		3,694			3,481
Intangible assets, net	1,021			981		1,192			1,150
Deferred income tax assets, net	391			418		492			442
Long-term investments	93			235		79			80
Other noncurrent assets	643			448		773			689
Total assets	$	15,274		$	15,221	$	15,844		$	15,913
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	223		$	210	$	246		$	215
Deferred revenue	244			383		265			286
Short-term debt	100			175		38			9
Operating lease liabilities						195			—
Accrued expenses and other current liabilities	2,126			2,071		2,175			2,267
Total current liabilities	2,693			2,839		2,919			2,777
Deferred revenue, noncurrent	72			104		71			62
Operating lease liabilities, noncurrent						734			—
Deferred income tax liabilities, net	157			146		57			183
Long-term debt	624			698		709			736
Long-term income taxes payable	490			584		471			478
Other noncurrent liabilities	260			181		181			253
Total liabilities	4,296			4,552		5,142			4,489
Commitments and contingencies (See Note 13)
Stockholders’ equity:
Preferred stock, $0.10 par value, 15.0 shares authorized, none issued	—			—		—			—
Class A common stock, $0.01 par value, 1,000 shares authorized, 580 and 588 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively	6			6
Class A common stock, $0.01 par value, 1,000 shares authorized, 550 and 577 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively						6			6
Additional paid-in capital	119			49		35			47
Retained earnings	11,041			10,544		10,820			11,485
Accumulated other comprehensive income (loss)	(188		)	70		(159		)	(114		)
Total stockholders’ equity	10,978			10,669		10,702			11,424
Total liabilities and stockholders’ equity	$	15,274		$	15,221	$	15,844		$	15,913


	Class A Common Stock				Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total			Class A Common Stock				Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
	Shares		Amount		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total			Shares		Amount		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance, December 31, 2017	588		$	6	$	49		$	10,544		$	70		$	10,669
Balance, December 31, 2018																	577		$	6	$	47		$	11,485		$	(114	)	$	11,424
Cumulative effect of changes in accounting principle⁽¹⁾	—		—		—			122			(1		)	121			—		—		—			2			—			2
Net income	—		—		—			1,453			—			1,453			—		—		—			441			—			441
Other comprehensive income (loss)	—		—		—			—			(257		)	(257		)	—		—		—			—			40			40
Common stock issued, stock-based compensation plans	5		—		142			—			—			142			2		—		50			—			—			50
Stock-based compensation expense	—		—		199			—			—			199			—		—		66			—			—			66
Repurchases of common stock	(13	)	—		(271		)	(723		)	—			(994		)	(10	)	—		(99		)	(672		)	—			(771		)
Dividends	—		—		—			(355		)	—			(355		)
Balance, September 30, 2018	580		$	6	$	119		$	11,041		$	(188	)	$	10,978

	Class A Common Stock				Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
	Shares		Amount		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance, December 31, 2016	608		$	6	$	358		$	10,478		$	(114	)	$	10,728
Dividends declared, $0.20 per share																	—		—		—			(116		)	—			(116		)
Balance, March 31, 2019																	569		6		64			11,140			(74		)	11,136
Net income	—		—		—			1,522			—			1,522			—		—		—			509			—			509
Other comprehensive income (loss)	—		—		—			—			158			158			—		—		—			—			4			4
Common stock issued, stock-based compensation plans	6		—		146			—			—			146			2		—		40			—			—			40
Stock-based compensation expense	—		—		161			—			—			161			—		—		54			—			—			54
Repurchases of common stock	(24	)	—		(457		)	(1,100		)	—			(1,557		)	(19	)	—		(120		)	(952		)	—			(1,072		)
Dividends	—		—		—			(179		)	—			(179		)
Balance, September 30, 2017	590		$	6	$	208		$	10,721		$	44		$	10,979
Dividends declared, $0.20 per share																	—		—		—			(114		)	—			(114		)
Balance, June 30, 2019																	552		6		38			10,583			(70		)	10,557
Net income																	—		—		—			497			—			497
Other comprehensive income (loss)																	—		—		—			—			(89		)	(89		)
Common stock issued, stock-based compensation plans																	2		—		37			—			—			37
Stock-based compensation expense																	—		—		52			—			—			52
Repurchases of common stock																	(4	)	—		(92		)	(149		)	—			(241		)
Dividends declared, $0.20 per share																	—		—		—			(111		)	—			(111		)
Balance, September 30, 2019																	550		$	6	$	35		$	10,820		$	(159	)	$	10,702


(1)	Reflects the adoption of ~~accounting standards~~the Accounting Standards Codification ("ASC") Topic 842 "Leases" (the "New Lease Standard") as described in Note 16.


(1)	Reflects the adoption of the ASC Topic 606 "Revenue from Contacts with Customers" (the "New Revenue Standard") as well as Accounting Standards Update ("ASU") 2018-02 "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" ("ASU 2018-02") on January 1, 2018. Refer to our Annual Report on Form 10-K for the year ended December 31, 2018.


	For the Nine Months Ended September 30,						For the Nine Months Ended September 30,
	2018			2017			2019			2018
Cash flows from operating activities:
Net income	$	1,453		$	1,522		$	1,447		$	1,453
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	367			321			393			367
Provision for doubtful accounts	5			12			26			5
Deferred income taxes	46			(46		)	(203		)	46
Stock-based compensation expense	199			161			172			199
Other	196			(49		)	13			196
Changes in assets and liabilities:
Trade accounts receivable	(313		)	(284		)	(176		)	(313		)
Other current assets	338			21
Other noncurrent assets	(194		)	(65		)
Other current and noncurrent assets							(80		)	144
Accounts payable	(5		)	(5		)	21			(5		)
Deferred revenues, current and noncurrent	(116		)	(21		)	(14		)	(116		)
Other current and noncurrent liabilities	(86		)	4			(38		)	(86		)
Net cash provided by operating activities	1,890			1,571			1,561			1,890
Cash flows from investing activities:
Purchases of property and equipment	(281		)	(204		)	(299		)	(281		)
Purchases of available-for-sale investment securities	(1,356		)	(2,163		)	(333		)	(1,356		)
Proceeds from maturity or sale of available-for-sale investment securities	1,516			2,352			2,107			1,516
Purchases of held-to-maturity investment securities	(1,093		)	(1,015		)	(423		)	(1,093		)
Proceeds from maturity of held-to-maturity investment securities	750			208			1,281			750
Purchases of other investments	(479		)	(363		)	(460		)	(479		)
Proceeds from maturity or sale of other investments	345			835			468			345
Payments for business combinations, net of cash acquired	(479		)	(72		)	(378		)	(479		)
Net cash (used in) investing activities	(1,077		)	(422		)
Net cash provided by (used in) investing activities							1,963			(1,077		)
Cash flows from financing activities:
Issuance of common stock under stock-based compensation plans	142			146			127			142
Repurchases of common stock	(994		)	(1,557		)	(2,084		)	(994		)
Repayment of term loan borrowings and capital lease obligations	(89		)	(62		)
Repayment of term loan borrowings and finance lease and earnout obligations							(16		)	(89		)
Net change in notes outstanding under the revolving credit facility	(75		)	—			—			(75		)
Dividends paid	(352		)	(179		)	(343		)	(352		)
Net cash (used in) financing activities	(1,368		)	(1,652		)	(2,316		)	(1,368		)
Effect of exchange rate changes on cash and cash equivalents	(31		)	46			(26		)	(31		)
(Decrease) in cash and cash equivalents	(586		)	(457		)
Increase (decrease) in cash and cash equivalents							1,182			(586		)
Cash and cash equivalents, beginning of year	1,925			2,034			1,161			1,925
Cash and cash equivalents, end of period	$	1,339		$	1,577		$	2,343		$	1,339



Date Issued and Topic	Date Adopted and Method	Description	Impact
~~May 2014~~ ~~Revenue~~February 2016 Leases	January 1, ~~2018~~2019 ~~Modified Retrospective~~	The new standard, as amended, sets forth a single comprehensive model for recognizing and reporting revenues. The standard also requires additional financial statement disclosures that enable users to understand the nature, amount, timing and uncertainty of revenues and cash flows relating to customer contracts. The standard allows for two methods of adoption: the full retrospective adoption, which requires the standard to be applied to each prior period presented, or the modified retrospective adoption, which requires the cumulative effect of adoption to be recognized as an adjustment to opening retained earnings in the period of adoption.	~~See~~ ~~Note 3~~ ~~for the impact of adoption of this standard.~~
~~November 2016~~ ~~Statement of Cash Flows~~	~~January 1, 2018~~ ~~Retrospective~~	This update requires restricted cash to be included with cash and cash equivalents when reconciling the beginning and ending amounts on the statement of cash flows. It also requires a reconciliation of such totals to the amounts on the statement of financial position and disclosure as to the nature of the restrictions.	~~There were no restricted cash balances as of September 30, 2018. The adoption of this update had no impact on our financial statements for the three and nine months ended September 30, 2018.~~
~~February 2018~~ ~~Income Statement - Reporting Comprehensive Income~~	~~January 1, 2018~~ ~~In the period of adoption~~	This update provides an option for entities to reclassify stranded tax effects caused by the recently-enacted Tax Cuts and Jobs Act, or Tax Reform Act, from accumulated other comprehensive income to retained earnings.	We have early adopted this update as of January 1, 2018. The adoption resulted in a decrease of $1 million in accumulated other comprehensive income and a corresponding increase of $1 million to opening retained earnings.



~~Date Issued and Topic~~	Effective Date	~~Description~~	~~Impact~~
~~February 2016~~ ~~Leases~~ Method	~~January 1, 2019~~	The new standard replaces the existing guidance on leases and requires the lessee to recognize a right-of-use ("ROU") asset and a lease liability for all leases with lease terms ~~equal to or~~ greater than twelve months. For finance leases, the lessee ~~would recognize~~recognizes interest expense and amortization of the ~~right-of-use~~ROU asset, and for operating leases, the lessee ~~would recognize~~recognizes total lease expense on a straight-line basis. The standard offers several practical expedients for transition and certain expedients specific to lessees or lessors. The standard allows for two methods of adoption: retrospective to each prior reporting period presented with the cumulative effect of adoption recognized at the beginning of the earliest period presented or retrospective to the beginning of the period of adoption through a cumulative-effect ~~adjustment.~~adjustment (the "Effective Date Method").	~~While we are continuing to evaluate~~See Note 6 for the ~~provisions~~impact of ~~this standard, the primary effect will be to require recording of right-of-use assets and corresponding lease obligations for current operating leases. We expect the~~ adoption of this standard to have a material impact on our consolidated statement of financial position, but not on the consolidated statements of operations or cash flows. As of December 31, 2017, our undiscounted operating lease commitments were $943 million. We are currently planning to elect the package of practical expedients which permits us to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. We intend to adopt the standard retrospectively to the beginning of the period of adoption through a cumulative-effect adjustment.standard.
March 2017 Nonrefundable Fees and Other Costs	January 1, 2019 Modified Retrospective	This update shortens the amortization period for certain callable debt securities held at a premium to the earliest call date. The amendments do not require an accounting change for securities held at a discount. Upon adoption, entities ~~will be~~are required to use a modified retrospective transition with the cumulative effect adjustment recognized to retained earnings as of the beginning of the period of adoption.	~~We do not expect the~~The adoption of this update todid not have ~~a material~~an impact on our consolidated financial statements.
August 2018 Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement ~~(CCA)~~("CCA") that is a Service Contract	Early adoption on January 1, ~~2020~~2019 Prospective	This update aligns the accounting for costs incurred to implement a CCA that is a service arrangement with the guidance on capitalizing costs associated with developing or obtaining internal-use software. ~~The~~In addition, this update clarifies ~~that a customer should capitalize certain~~the financial statement presentation requirement for capitalized implementation costs and ~~subsequently amortize~~related amortization of such ~~costs over the term~~costs.	The adoption of ~~the hosting arrangement as operating expenses.~~	~~We are currently evaluating the effect~~ this update ~~will~~did not have an impact on our consolidated financial ~~statements and related disclosures.~~ statements.



Note 2 — ~~Internal Investigation and Related Matters~~Revenues



	Three Months Ended September 30, 2019										Nine Months Ended September 30, 2019
	Three Months Ended September 30, 2019										Nine Months Ended September 30, 2019
	FS		HC		P&R		CMT		Total		FS		HC		P&R		CMT		Total
	(in millions)
Revenues
Geography:
North America	$	1,052	$	1,036	$	687	$	448	$	3,223	$	3,105	$	3,084	$	1,986	$	1,310	$	9,485
United Kingdom	117		36		95		77		325		365		90		286		235		976
Continental Europe	192		85		115		38		430		548		247		340		127		1,262
Europe - Total	309		121		210		115		755		913		337		626		362		2,238
Rest of World	131		18		69		52		270		383		53		195		145		776
Total	$	1,492	$	1,175	$	966	$	615	$	4,248	$	4,401	$	3,474	$	2,807	$	1,817	$	12,499

Service line:
Consulting and technology services	$	972	$	634	$	592	$	332	$	2,530	$	2,832	$	1,885	$	1,705	$	958	$	7,380
Outsourcing services	520		541		374		283		1,718		1,569		1,589		1,102		859		5,119
Total	$	1,492	$	1,175	$	966	$	615	$	4,248	$	4,401	$	3,474	$	2,807	$	1,817	$	12,499

Type of contract:
Time and materials	$	925	$	472	$	421	$	382	$	2,200	$	2,764	$	1,372	$	1,222	$	1,136	$	6,494
Fixed-price	481		420		441		202		1,544		1,422		1,202		1,279		589		4,492
Transaction or volume-based	86		283		104		31		504		215		900		306		92		1,513
Total	$	1,492	$	1,175	$	966	$	615	$	4,248	$	4,401	$	3,474	$	2,807	$	1,817	$	12,499



	September 30, 2018
	As Reported		Pro-forma Amounts		Impacts of the New Revenue Standard
	(in millions)
Assets:
Trade accounts receivable, net^{(1), (2)}	$	3,187	$	3,073	$	114
Unbilled accounts receivable^{(1), (3)}	—		432		(432		)
Other current assets^{(2), (3)}	777		457		320
Total current assets					2
Other noncurrent assets⁽⁴⁾	643		589		54
Total assets					$	56
Liabilities:
Deferred revenue⁽²⁾	$	244	$	417	$	(173	)
Total current liabilities					(173		)
Deferred revenue, noncurrent⁽²⁾	72		106		(34		)
Deferred income tax liabilities, net⁽⁵⁾	157		100		57
Total liabilities					(150		)
Stockholders’ equity:
Retained earnings	11,041		10,835		206
Total stockholders’ equity					206
Total liabilities and stockholders’ equity					$	56



	Costs to Fulfill
	(in millions)
Balance - January 1, 2018	$	303
Amortization expense	(50		)
Costs capitalized	132
Other	(2		)
Balance - September 30, 2018	$	383



	Three Months Ended
	September 30, 2018
	Financial Services		Healthcare		Products and Resources		Communications, Media and Technology		Total
	(in millions)
Revenues
Geography:
North America	$	1,033	$	1,084	$	609	$	381	$	3,107
United Kingdom	127		23		90		85		325
Rest of Europe	170		69		109		50		398
Europe - Total	297		92		199		135		723
Rest of World	134		13		55		46		248
Total	$	1,464	$	1,189	$	863	$	562	$	4,078

Service line:
Consulting and technology services	$	902	$	645	$	512	$	292	$	2,351
Outsourcing services	562		544		351		270		1,727
Total	$	1,464	$	1,189	$	863	$	562	$	4,078

Type of contract:
Time and materials	$	954	$	464	$	374	$	354	$	2,146
Fixed-price	453		452		392		187		1,484
Transaction or volume-based	57		273		97		21		448
Total	$	1,464	$	1,189	$	863	$	562	$	4,078



	Nine Months Ended
	September 30, 2018
	Financial Services		Healthcare		Products and Resources		Communications, Media and Technology		Total
	(in millions)
Revenues
Geography:
North America	$	3,133	$	3,167	$	1,766	$	1,083	$	9,149
United Kingdom	357		68		266		253		944
Rest of Europe	497		191		327		138		1,153
Europe - Total	854		259		593		391		2,097
Rest of World	407		40		165		138		750
Total	$	4,394	$	3,466	$	2,524	$	1,612	$	11,996

Service line:
Consulting and technology services	$	2,658	$	1,896	$	1,492	$	859	$	6,905
Outsourcing services	1,736		1,570		1,032		753		5,091
Total	$	4,394	$	3,466	$	2,524	$	1,612	$	11,996

Type of contract:
Time and materials	$	2,842	$	1,364	$	1,122	$	995	$	6,323
Fixed-price	1,384		1,406		1,120		545		4,455
Transaction or volume-based	168		696		282		72		1,218
Total	$	4,394	$	3,466	$	2,524	$	1,612	$	11,996



Long-term investments:			��
Equity and cost method investments	$	75	$	74
Held-to-maturity investment securities	18		161
Total long-term investments	$	93	$	235



		September 30, 2019				December 31, 2018
Designation of Derivatives	Location on Statements of Financial Position	Assets		Liabilities		Assets		Liabilities
		(in millions)
Foreign exchange forward contracts – Designated as cash flow hedging instruments	Other current assets	$	26	$	—	$	11	$	—
	Other noncurrent assets	12		—		15		—
	Accrued expenses and other current liabilities	—		10		—		21
	Other noncurrent liabilities	—		4		—		9
	Total	38		14		26		30
Foreign exchange forward contracts – Not designated as hedging instruments	Other current assets	2		—		1		—
	Accrued expenses and other current liabilities	—		6		—		4
	Total	2		6		1		4
Total		$	40	$	20	$	27	$	34



	Change in Derivative Gains/Losses Recognized in Accumulated Other Comprehensive Income (Loss) (effective portion)						Location of Net Gains Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (effective portion)	Net Gains Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (effective portion)
	2019			2018				2019		2018
	(in millions)
Foreign exchange forward contracts – Designated as cash flow hedging instruments	$	(28	)	$	(96	)	Cost of revenues	$	1	$	6
							Selling, general and administrative expenses	1		1
							Total	$	2	$	7



	Change in Derivative Gains/Losses Recognized in Accumulated Other Comprehensive Income (Loss) (effective portion)					Location of Net Derivative Gains Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (effective portion)	Net Gains Reclassified from Accumulated Other Comprehensive Income (Loss) into Income (effective portion)
	2018			2017			2018		2017
	(in millions)
Foreign exchange forward contracts – Designated as cash flow hedging instruments	$	(96	)	$	6	Cost of revenues	$	6	$	29
						Selling, general and administrative expenses	1		5
						Total	$	7	$	34



	September 30, 2019					December 31, 2018
	Notional		Fair Value			Notional		Fair Value
	(in millions)
Contracts outstanding	$	461	$	(4	)	$	507	$	(3	)



	Location of Net Gains on Derivative Instruments	Amount of Net Gains on Derivative Instruments
		Three Months Ended September 30,				Nine Months Ended September 30,
		2019		2018		2019		2018
		(in millions)
Foreign exchange forward contracts – Not designated as hedging instruments	Foreign currency exchange gains (losses), net	$	6	$	3	$	1	$	23



	Location of Net Gains (Losses) on Derivative Instruments	Amount of Net Gains (Losses) on Derivative Instruments
		Three Months Ended September 30,					Nine Months Ended September 30,
		2018		2017			2018		2017
		(in millions)
Foreign exchange forward contracts – Not designated as hedging instruments	Foreign currency exchange gains (losses), net	$	3	$	(3	)	$	23	$	(16	)



	Level 1		Level 2			Level 3		Total
	(in millions)
Cash equivalents:
Money market funds	$	401	$	—		$	—	$	401
Commercial paper and bank deposits	—		6			—		6
Total cash equivalents	401		6			—		407
Short-term investments:
Time deposits⁽¹⁾	—		465			—		465
Available-for-sale investment securities:
U.S. Treasury and agency debt securities	572		65			—		637
Corporate and other debt securities	—		426			—		426
Certificates of deposit and commercial paper	—		317			—		317
Asset-backed securities	—		318			—		318
Municipal debt securities	—		103			—		103
Total available-for-sale investment securities	572		1,229			—		1,801
Held-to-maturity investment securities:
Corporate and other debt securities	—		674			—		674
Commercial paper	—		454			—		454
Total short-term held-to-maturity investment securities	—		1,128			—		1,128
Total short-term investments⁽²⁾	572		2,822			—		3,394
Long-term investments:
Held-to-maturity investment securities:
Corporate and other debt securities	—		6			—		6
Commercial paper	—		12			—		12
Total long-term held-to-maturity investment securities	—		18			—		18
Total long-term investments⁽³⁾	—		18			—		18
Derivative financial instruments - foreign exchange forward contracts:
Other current assets	—		7			—		7
Accrued expenses and other current liabilities	—		(67		)	—		(67		)
Other noncurrent liabilities	—		(48		)	—		(48		)
Total	$	973	$	2,738		$	—	$	3,711


(1)	Includes ~~$405~~$419 million in restricted time deposits. See Note 9.


~~(2)~~	~~Excludes an equity security invested in a mutual fund valued at $25 million based on the NAV of the fund.~~


~~(3)~~	~~Excludes equity and cost method investments of $75 million, which are accounted for using the equity method of accounting and at cost, respectively.~~


(1)	~~Excludes an equity security invested~~ Includes $423 million in ~~a mutual fund valued at $25 million based on the NAV of the fund.~~



Note 12 — ~~Stockholders' Equity~~Accumulated Other Comprehensive Income (Loss)



	Purchase Period End Date	Number of Shares		Average Repurchase Price per Share		ASR Amount
		(in millions)				(in millions)
June 2018 ASR	August 2018	7.6	⁽¹⁾	$	79.42	$	600
March 2018 ASR	May 2018	3.7	⁽²⁾	$	79.95	$	300
December 2017 ASR	March 2018	4.0	⁽³⁾	$	75.75	$	300
March 2017 ASR	August 2017	23.7		$	63.19	$	1,500


~~(1)~~	~~Includes 6.5 million shares initially delivered in June 2018 and 1.1 million shares delivered in August 2018 upon the final settlement of the ASR.~~


~~(2)~~	~~Includes 3.0 million shares initially delivered in March 2018 and 0.7 million shares delivered in May 2018 upon the final settlement of the ASR.~~