UNISYS CORP

Previous wording

For the three months ended March 31, 2024, the company reported net loss attributable to Unisys Corporation of $149.5 million, or $2.18 per diluted share, compared with a loss of $175.4 million, or $2.58 per diluted share, for the three months ended March 31, 2023. Included in the loss for the three months ended March 31, 2024 and 2023, was $132.3 million and $183.2 million, respectively, of U.S. pension plan settlement losses net of tax.

Current wording

For the six months ended June 30, 2024, the company reported net loss attributable to Unisys Corporation of $161.5 million, or $2.34 per diluted share, compared with a loss of $215.4 million, or $3.16 per diluted share, for the six months ended June 30, 2023. The loss for the six months ended June 30, 2024 and 2023 included $132.3 million and $183.2 million, respectively, of U.S. pension plan settlement losses.

Previous wording

In March 2024, the company purchased a group annuity contract, with plan assets, for approximately $195 million to transfer projected benefit obligations related to one of the company’s U.S. defined benefit pension plans. This action resulted in a pre-tax settlement loss of $132.3 million for the three months ended March 31, 2024.

Current wording

In March 2024, the company purchased a group annuity contract, with plan assets, for approximately $195 million to transfer projected benefit obligations related to one of the company’s U.S. defined benefit pension plans. This action resulted in a pre-tax settlement loss of $132.3 million for the six months ended June 30, 2024.

Previous wording

Revenue from U.S. operations for the three months ended March 31, 2024 was $212.3 million, compared with $201.0 million for the three months ended March 31, 2023, an increase of 5.6% from the prior-year period. Revenue from international operations for the three months ended March 31, 2024 was $275.5 million, compared with $315.4 million for the three months ended March 31, 2023, a decrease 12.7% from the prior-year period. Foreign currency had a 2 percentage-point positive impact on international revenue in the three months ended March 31, 2024 compared with the three months ended March 31, 2023.

Current wording

Revenue from U.S. operations for the three months ended June 30, 2024 was $204.4 million, compared with $212.2 million for the three months ended June 30, 2023, a decrease of 3.7% from the prior-year period. Revenue from international operations for the three months ended June 30, 2024 was $273.8 million, compared with $264.6 million for the three months ended June 30, 2023, an increase 3.5% from the prior-year period. Foreign currency had a negligible impact on international revenue in the three months ended June 30, 2024 compared with the three months ended June 30, 2023.

Previous wording

During the three months ended March 31, 2023, the company recognized net charges related to workforce reductions of $0.7 million. These net charges were principally related to severance costs, and were comprised of: (a) a charge of $2.6 million and (b) a credit of $1.9 million for changes in estimates. In addition, the company recorded a credit of $3.5 million for net foreign currency gains related to exiting foreign countries.

Current wording

During the three months ended June 30, 2023, the company recognized net cost-reduction charges and other costs of $3.5 million. The net charges related to workforce reductions were $2.1 million, principally related to severance costs, and were comprised of: (a) a charge of $3.9 million and (b) a credit of $1.8 million for changes in estimates. In addition, the company recorded charges of $1.4 million comprised of $1.3 million for professional fees and other expenses related to cost-reduction efforts and $0.1 million for net foreign currency losses related to exiting foreign countries.

Previous wording

Selling, general and administrative expense in the three months ended March 31, 2024 was $112.2 million (23.0% of revenue) compared with $102.9 million (19.9% of revenue) for the three months ended March 31, 2023. The increase was primarily driven by higher cost-reduction charges and increased stock compensation expense.

Current wording

Selling, general and administrative expense in the three months ended June 30, 2024 was $101.4 million (21.2% of revenue) compared with $110.3 million (23.1% of revenue) for the three months ended June 30, 2023. The decrease was primarily driven by lower professional services and lower cost reduction and other expenses.

Previous wording

Research and development expense for the three months ended March 31, 2024 and 2023 was $6.1 million and $6.2 million, respectively.

Current wording

Research and development expense for the three months ended June 30, 2024 and 2023 was $4.9 million and $5.4 million, respectively.

Previous wording

For the three months ended March 31, 2024, the company reported an operating profit of $17.7 million compared with an operating profit of $49.9 million in the three months ended March 31, 2023. The decrease was primarily driven by lower gross profit and increased selling, general and administrative expense as discussed above.

Current wording

For the three months ended June 30, 2024, the company reported an operating profit of $23.6 million compared with an operating profit of $0.1 million in the three months ended June 30, 2023. The increase was primarily driven by higher gross profit and lower selling, general and administrative expense as discussed above.

Previous wording

Interest expense for the three months ended March 31, 2024 and 2023 was $7.9 million and $7.6 million, respectively.

Current wording

Interest expense for the three months ended June 30, 2024 and 2023 was $7.9 million and $7.5 million, respectively.

Previous wording

The loss before income taxes for the three months ended March 31, 2024 was $132.3 million compared with loss of $154.6 million for the three months ended March 31, 2023.

Current wording

The income before income taxes for the three months ended June 30, 2024 was $6.3 million compared with loss of $24.1 million for the three months ended June 30, 2023.

Previous wording

The provision for income taxes was $17.0 million for the three months ended March 31, 2024 compared with a provision of $19.9 million for the three months ended March 31, 2023. The change in the tax provision is a result of the geographic distribution of income as described below.

Current wording

The provision for income taxes was $18.8 million for the three months ended June 30, 2024 compared with a provision of $15.4 million for the three months ended June 30, 2023. The change in the tax provision is a result of the geographic distribution of income as described below.

Previous wording

Revenue for the three months ended March 31, 2024 was $487.8 million compared with $516.4 million for the three months ended March 31, 2023, a decrease of 5.5% from the prior-year period. The decrease was primarily due to the timing of software license renewals within the Enterprise Computing Solutions segment. Foreign currency fluctuations had a 2 percentage-point positive impact on revenue in the current period compared with the prior-year period.

Current wording

Revenue for the six months ended June 30, 2024 was $966.0 million compared with $993.2 million for the six months ended June 30, 2023, a decrease of 2.7% from the prior-year period. The decrease was primarily due to the timing of software license renewals. Foreign currency fluctuations had a 1 percentage-point positive impact on revenue in the current period compared with the prior-year period.

Previous wording

During the three months ended March 31, 2024, the company recognized net cost-reduction charges and other costs of $6.3 million. The net charges related to workforce reductions were $6.6 million, principally related to severance costs, and were comprised of: (a) a charge of $9.4 million and (b) a credit of $2.8 million for changes in estimates. The company recorded a net credit of $0.3 million comprised of a net credit of $0.8 million for changes in estimates related to other cost-reduction efforts and a charge of $0.5 million for net foreign currency losses related to exiting foreign countries.

Current wording

During the six months ended June 30, 2024, the company recognized net cost-reduction charges and other costs of $6.9 million. The net charges related to workforce reductions were $5.9 million, principally related to severance costs, and were comprised of: (a) a charge of $9.7 million and (b) a credit of $3.8 million for changes in estimates. The company recorded a net charge of $1.0 million comprised of a charge of $1.7 million for net foreign currency losses related to exiting foreign countries and a net credit of $0.7 million for changes in estimates related to other cost-reduction efforts.

Previous wording

Gross profit and gross profit margin were $136.0 million and 27.9% in the three months ended March 31, 2024, respectively, compared with $159.0 million and 30.8% for the three months ended March 31, 2023, respectively. The decrease was primarily due to the timing of software license renewals, partially offset by a benefit from the resolution of a contractual dispute with a former client.

Current wording

Gross profit and gross profit margin were $265.9 million and 27.5% in the six months ended June 30, 2024, respectively, compared with $274.8 million and 27.7% in the six months ended June 30, 2023, respectively. The decrease was primarily due to the timing of software license renewals, partially offset by a benefit from the resolution of a contractual dispute with a former client, delivery modernization and efficiency initiatives.

Previous wording

Other (expense), net was expense of $142.1 million for the three months ended March 31, 2024 compared with expense of $196.9 million for the three months ended March 31, 2023. Other (expense), net for the three months ended March 31, 2024 and 2023 included $132.3 million and $183.2 million, respectively, of U.S. pension plan settlement losses. Additionally, other (expense), net for the three months ended March 31, 2024 includes a net gain of approximately$14.9 million related to a favorable judgment received in a Brazilian services tax matter. See Note 6 of the Notes to Consolidated Financial Statements for details of other (expense), net.

Current wording

Other (expense), net was expense of $151.5 million for the six months ended June 30, 2024 compared with expense of $213.6 million for the six months ended June 30, 2023. Other (expense), net for the six months ended June 30, 2024 and 2023 included $132.3 million and $183.2 million, respectively, of U.S. pension plan settlement losses. Additionally, other (expense), net for the six months ended June 30, 2024 included a net gain of approximately$14.9 million related to a favorable judgment received in a Brazilian services tax matter. See Note 6 of the Notes to Consolidated Financial Statements for details of other (expense), net.

Previous wording

Net loss attributable to Unisys Corporation for the three months ended March 31, 2024 was $149.5 million, or $2.18 per diluted share, compared with a loss of $175.4 million, or $2.58 per diluted share, for the three months ended March 31, 2023. The loss for the three months ended March 31, 2024 and 2023 included $132.3 million and $183.2 million, respectively, of U.S. pension plan settlement losses net of tax.

Current wording

Net loss attributable to Unisys Corporation for the six months ended June 30, 2024 was $161.5 million, or $2.34 per diluted share, compared with a loss of $215.4 million, or $3.16 per diluted share, for the six months ended June 30, 2023. The loss for the six months ended June 30, 2024 and 2023 included $132.3 million and $183.2 million, respectively, of U.S. pension plan settlement losses net of tax.

Previous wording

CA&I revenue was $129.0 million for the three months ended March 31, 2024, an increase of 2.4% compared with the three months ended March 31, 2023. Foreign currency fluctuations had a negligible impact on CA&I revenue in the current period compared with the prior-year period. Gross profit percent was 16.6% in the current period compared with 13.0% in the prior-year period. The increase in gross profit was primarily driven by labor cost savings initiatives.

Current wording

CA&I revenue was $134.3 million for the three months ended June 30, 2024, an increase of 1.3% compared with the three months ended June 30, 2023. Foreign currency fluctuations had a negligible impact on CA&I revenue in the current period compared with the prior-year period. Gross profit percent was 17.8% in the current period compared with 16.9% in the prior-year period. The increase in gross profit was primarily driven by labor cost savings initiatives.

Previous wording

DWS revenue was $132.3 million for the three months ended March 31, 2024, an increase of 1.0% compared with the three months ended March 31, 2023. Foreign currency fluctuations had a 1 percentage-point positive impact on DWS revenue in the current period compared with the prior-year period. Gross profit percent was 14.4% in the current period compared with 11.9% in the year-ago period. The increase in gross profit was primarily drive by delivery modernization and efficiency initiatives.

Current wording

DWS revenue was $264.4 million for the six months ended June 30, 2024, a decrease of 0.6% compared with the six months ended June 30, 2023. Foreign currency fluctuations had a 1 percentage-point positive impact on DWS revenue in the current period compared with the prior-year period. Gross profit percent was 15.3% in the current period compared with 12.8% in the prior-year period. The increase in gross profit was primarily driven by delivery modernization and efficiency initiatives.

Previous wording

ECS revenue was $147.0 million for the three months ended March 31, 2024, a decline of 21.9% compared with the three months ended March 31, 2023. Foreign currency fluctuations had a 3 percentage-point positive impact on ECS revenue in the current period compared with the prior-year period. Gross profit percent was 57.8% in the current period compared with 66.7% in the prior-year period. The decrease in revenue and gross profit was driven by the timing software license renewals.

Current wording

ECS revenue was $284.5 million for the six months ended June 30, 2024, a decrease of 11.9% compared with the six months ended June 30, 2023. Foreign currency fluctuations had a 2 percentage-point positive impact on ECS revenue in the current period compared with the prior-year period. Gross profit percent was 56.9% in the current period compared with 61.4% in the prior-year period. The decrease in revenue and gross profit was driven by the timing software license renewals.

Previous wording

Cash and cash equivalents at March 31, 2024 were $382.8 million compared to $387.7 million at December 31, 2023.

Current wording

Cash and cash equivalents at June 30, 2024 were $344.9 million compared to $387.7 million at December 31, 2023.

Previous wording

As of March 31, 2024, $256.3 million of cash and cash equivalents were held by the company’s foreign subsidiaries and branches operating outside of the U.S. The company may not be able to readily transfer approximately one-quarter of these funds out of the country in which they are located as a result of local restrictions, contractual or other legal arrangements or commercial considerations. Additionally, any transfers of these funds to the U.S. in the future may require the company to accrue or pay withholding or other taxes on a portion of the amount transferred.

Current wording

As of June 30, 2024, $236.7 million of cash and cash equivalents were held by the company’s foreign subsidiaries and branches operating outside of the U.S. The company may not be able to readily transfer approximately one-fifth of these funds out of the country in which they are located as a result of local restrictions, contractual or other legal arrangements or commercial considerations. Additionally, any transfers of these funds to the U.S. in the future may require the company to accrue or pay withholding or other taxes on a portion of the amount transferred.

Previous wording

During the three months ended March 31, 2024, cash provided by operations was $23.8 million compared to cash provided of $12.8 million during the three months ended March 31, 2023, primarily due to lower postretirement contributions.

Current wording

During the six months ended June 30, 2024, cash provided by operations was $26.5 million compared to cash provided of $55.3 million during the six months ended June 30, 2023, primarily due to the timing of collections.

Previous wording

Cash used for investing activities during the three months ended March 31, 2024 was $18.8 million compared to cash usage of $11.5 million during the three months ended March 31, 2023. Net proceeds of investments were $1.2 million for the three months ended March 31, 2024 compared with net proceeds of $9.2 million in the prior-year period. Proceeds from investments and purchases of investments represent derivative financial instruments used to reduce the company’s currency exposure to market risks from changes in foreign currency exchange rates. In the current period, the investment in marketable software was $13.2 million compared with $10.3 million in the prior-year period, capital additions of properties were $2.2 million compared with $7.3 million in the prior-year period and capital additions of outsourcing assets were $4.5 million compared with $2.7 million in the prior-year period.

Current wording

Cash used for investing activities during the six months ended June 30, 2024 was $46.8 million compared to cash usage of $23.5 million during the six months ended June 30, 2023. Net purchases of foreign exchange forward contracts were $5.6 million for the six months ended June 30, 2024 compared with net proceeds of $15.0 million in the prior-year period. Proceeds from foreign exchange forward contracts and purchases of foreign exchange forward contracts represent derivative financial instruments used to reduce the company’s currency exposure to market risks from changes in foreign currency exchange rates. In the current period, the investment in marketable software was $25.7 million compared with $21.3 million in the prior-year period, capital additions of properties were $7.3 million compared with $11.9 million in the prior-year period and capital additions of outsourcing assets were $8.1 million compared with $4.9 million in the prior-year period.

Previous wording

Cash used for financing activities during the three months ended March 31, 2024 was $7.7 million compared to cash used of $7.6 million during the three months ended March 31, 2023.

Current wording

Cash used for financing activities during the six months ended June 30, 2024 was $11.9 million compared to cash used of $11.0 million during the six months ended June 30, 2023.

Previous wording

In March 2024, the company purchased a group annuity contract, with plan assets, for approximately $195 million to transfer projected benefit obligations related to approximately 3,800 retirees of one of the company’s U.S. defined benefit pension plans. This action resulted in a pre-tax settlement loss of $132.3 million for the three months ended March 31, 2024. After considering this most recent group annuity contract purchase, the company has successfully reduced its global defined benefit pension obligations since December 2020 by $2.2 billion, including $1.5 billion in the U.S.

Current wording

In March 2024, the company purchased a group annuity contract, with plan assets, for approximately $195 million to transfer projected benefit obligations related to approximately 3,800 retirees of one of the company’s U.S. defined benefit pension plans. This action resulted in a pre-tax settlement loss of $132.3 million for the six months ended June 30, 2024. After considering this most recent group annuity contract purchase, the company has successfully reduced its global defined benefit pension obligations since December 2020 by $2.2 billion, including $1.5 billion in the U.S.

Previous wording

At the end of each year, the company estimates its future cash contributions to its U.S. qualified defined benefit pension plans based on year-end pension data and assumptions. In 2023, the company made cash contributions of $42.4 million to its worldwide defined benefit pension plans. Based on current legislation, global regulations, recent interest rates and expected returns, the company estimates future cash contributions of approximately $20 million in 2024, primarily for its international defined benefit pension plans. For the three months ended March 31, 2024 and 2023, the company made cash contributions of $6.4 million and $14.5 million, respectively. The company estimates that cash contributions to its U.S. qualified defined benefit pension plans will begin in 2025, increasing the total estimated contributions for the company’s U.S. and non-U.S. defined benefit pension plans to approximately $110 million in 2025. If the company is not able to generate sufficient cash flows from operations, we may need to obtain additional funding in order to make these contributions. Any material deterioration in the value of the company’s U.S. qualified defined benefit pension plan assets, as well as changes in pension legislation, volatility in the capital markets, discount rate changes, asset return changes, or changes in economic or demographic trends, could require the company to make cash contributions to its U.S. qualified defined benefit pension plans in different amounts and on a different schedule than previously contemplated.

Current wording

At the end of each year, the company estimates its future cash contributions to its U.S. qualified defined benefit pension plans based on year-end pension data and assumptions. In 2023, the company made cash contributions of $42.4 million to its worldwide defined benefit pension plans. Based on current legislation, global regulations, recent interest rates and expected returns, the company estimates future cash contributions of approximately $20 million in 2024, primarily for its international defined benefit pension plans. For the six months ended June 30, 2024 and 2023, the company made cash contributions of $10.3 million and $28.4 million, respectively. The company estimates that cash contributions to its U.S. qualified defined benefit pension plans will begin in 2025, increasing the total estimated contributions for the company’s U.S. and non-U.S. defined benefit pension plans to approximately $95 million in 2025. If the company is not able to generate sufficient cash flows from operations, we may need to obtain additional funding in order to make these contributions. Any material deterioration in the value of the company’s U.S. qualified defined benefit pension plan assets, as well as changes in pension legislation, volatility in the capital markets, discount rate changes, asset return changes, or changes in economic or demographic trends, could require the company to make cash contributions to its U.S. qualified defined benefit pension plans in different amounts and on a different schedule than previously contemplated.

Previous wording

At March 31, 2024, total debt was $498.4 million compared to $504.2 million at December 31, 2023.

Current wording

At June 30, 2024, total debt was $496.4 million compared to $504.2 million at December 31, 2023.

Previous wording

The company has a secured revolving credit facility (the Amended and Restated ABL Credit Facility), which matures on October 29, 2025, and provides for revolving loans and letters of credit up to an aggregate amount of $145.0 million (with a limit on letters of credit of $40.0 million), with an accordion feature provision allowing for the aggregate amount available under the credit facility to be increased up to $175.0 million upon the satisfaction of certain specified conditions. Availability under the credit facility is subject to a borrowing base calculated by reference to the company’s receivables. At March 31, 2024, the company had no borrowings and $7.0 million of letters of credit outstanding. Availability under the facility was $43.4 million net of letters of credit issued. Any borrowings under the facility will be subject to variable interest rates.

Current wording

The company has a secured revolving credit facility (the Amended and Restated ABL Credit Facility), which matures on October 29, 2025, and provides for revolving loans and letters of credit up to an aggregate amount of $145.0 million (with a limit on letters of credit of $40.0 million), with an accordion feature provision allowing for the aggregate amount available under the credit facility to be increased up to $175.0 million upon the satisfaction of certain specified conditions. Availability under the credit facility is subject to a borrowing base calculated by reference to the company’s receivables. At June 30, 2024, the company had no borrowings and $7.0 million of letters of credit outstanding. Availability under the facility was $58.5 million net of letters of credit issued. Any borrowings under the facility will be subject to variable interest rates.