~~Interest expense related to the 5.50% convertible notes due 2021~~business segment for the three and nine month periods ended September 30, 2018 and 2017 ~~and 2016 was as follows:~~is presented below:



	Total			Corporate			Services		Technology
Three Months Ended September 30, 2018
Customer revenue	$	688.3		$	—		$	605.6	$	82.7
Intersegment	—			(4.3		)	—		4.3
Total revenue	$	688.3		$	(4.3	)	$	605.6	$	87.0
Operating income	$	55.8		$	2.7		$	18.6	$	34.5

Three Months Ended September 30, 2017
Customer revenue	$	666.3		$	—		$	575.5	$	90.8
Intersegment	—			(4.4		)	—		4.4
Total revenue	$	666.3		$	(4.4	)	$	575.5	$	95.2
Operating income (loss)	$	(2.9	)*	$	(51.2	)*	$	18.7	$	29.6

Nine Months Ended September 30, 2018
Customer revenue	$	2,064.1		$	—		$	1,760.8	$	303.3
Intersegment	—			(18.3		)	—		18.3
Total revenue	$	2,064.1		$	(18.3	)	$	1,760.8	$	321.6
Operating income	$	211.6		$	2.6		$	54.3	$	154.7

Nine Months Ended September 30, 2017
Customer revenue	$	1,997.0		$	—		$	1,735.6	$	261.4
Intersegment	—			(15.1		)	—		15.1
Total revenue	$	1,997.0		$	(15.1	)	$	1,735.6	$	276.5
Operating income (loss)	$	15.4	*	$	(98.2	)*	$	36.6	$	77.0



*	Amounts were changed to conform to the current-year presentation. See Note 3.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Contractual interest coupon $ 2.9
$ 2.9
$ 8.8
$ 6.3
Amortization of debt discount 1.6
1.4
4.5
2.9
Amortization of debt issuance costs 0.3
0.3
0.9
0.7
Total $ 4.8
$ 4.6
$ 14.2
$ 9.9

On April 17, 2017, the company issued $440 million aggregate principal amount of 10.75% Senior Secured Notes due 2022 (the “Notes”). The Notes are initially fully and unconditionally guaranteed on a senior secured basis by Unisys Holding Corporation, Unisys AP Investment Company I and Unisys NPL, Inc. (together with the Company, the “Grantors”). In the future, the Notes will be guaranteed by each material domestic subsidiary and each restricted subsidiary that guarantees the secured revolving credit facility and other indebtedness of the company or another subsidiary guarantor. The Notes and the guarantees will rank equally in right of payment with all of the existing and future senior debt of the company and the subsidiary guarantors. The Notes and the guarantees will be structurally subordinated to all existing and future liabilities (including preferred stock, trade payables and pension liabilities) of the company’s subsidiaries that are not subsidiary guarantors.

The Notes will pay interest semiannually on April 15 and October 15, commencing on October 15, 2017, at an annual rate of 10.75%, and will mature on April 15, 2022, unless earlier repurchased or redeemed.

~~The company may, at its option, redeem some~~Presented below is a reconciliation of total business segment operating income to consolidated income (loss) before income taxes:



	Three Months Ended September 30,							Nine Months Ended September 30,
	2018			2017				2018			2017
Total segment operating income	$	53.1		$	48.3			$	209.0		$	113.6
Interest expense	(15.9		)	(16.4		)		(48.2		)	(36.4		)
Other income (expense), net	(17.7		)	(21.1		)	*	(58.3		)	(78.5		)	*
Cost-reduction (charges) benefit⁽ⁱ⁾	0.9			(51.8		)		3.1			(99.6		)
Corporate and eliminations	1.8			0.6			*	(0.5		)	1.4			*
Total income (loss) before income taxes	$	22.2		$	(40.4	)		$	105.1		$	(99.5	)



*	Amounts were changed to conform to the current-year presentation. See Note 3.
⁽ⁱ⁾	The three and nine months ended September 30, 2017 excludes $5.7 million and $0.6 million, respectively, for net foreign currency gains related to exiting foreign countries which are reported in other income (expense), net in the Consolidated Statements of Income.

Customer revenue by classes of similar products or ~~all~~services, by segment, is presented below:



	Three Months Ended September 30,					Nine Months Ended September 30,
	2018		2017			2018		2017
Services
Cloud & infrastructure services	$	348.3	$	326.9	*	$	1,000.2	$	994.8	*
Application services	191.2		200.7		*	578.1		592.9		*
Business process outsourcing services	66.1		47.9			182.5		147.9
	605.6		575.5			1,760.8		1,735.6
Technology	82.7		90.8			303.3		261.4
Total	$	688.3	$	666.3		$	2,064.1	$	1,997.0



*	Amounts were changed to conform to the current-year presentation.

Geographic information about the company’s revenue, which is principally based on location of the Notes at any time on or after April 15, 2020 at a redemption price determined in accordance with the redemption schedule set forth in the indenture governing the Notes (the “indenture”), plus accrued and unpaid interest, if any.

Prior to April 15, 2020, the company may, at its option, redeem some or all of the Notes at any time, at a price equal to 100% of the principal amount of the Notes redeemed plus a “make-whole” premium, plus accrued and unpaid interest, if any. The company may also redeem, at its option, up to 35% of the Notes at any time prior to April 15, 2020, using the proceeds of certain equity offerings at a redemption price of 110.75% of the principal amount thereof, plus accrued and unpaid interest, if any. In addition, the company may redeem all (but not less than all) of the Notes at any time that the Collateral Coverage Ratioselling organization, is less than the Required Collateral Coverage Ratio (as such terms are described below and further defined in the indenture) at a price equal to 100% of the principal amount of the Notes plus accrued and unpaid interest, if any.

The indenture contains covenants that limit the ability of the company and its restricted subsidiaries to, among other things: (i) incur additional indebtedness and guarantee indebtedness; (ii) pay dividends or make other distributions or repurchase or redeem its capital stock; (iii) prepay, redeem or repurchase certain debt; (iv) make certain prepayments in respect of pension obligations; (v) issue certain preferred stock or similar equity securities; (vi) make loans and investments (including investments by the company and subsidiary guarantors in subsidiaries that are not guarantors); (vii) sell assets; (viii) create or incur liens; (ix) enter into transactions with affiliates; (x) enter into agreements restricting its subsidiaries’ ability to pay dividends; and (xi) consolidate, merge or sell all or substantially all of its assets. These covenants are subject to several important limitations and exceptions.

The indenture also includes a covenant requiring that the company maintain a Collateral Coverage Ratio of not less than 1.50:1.00 (the “Required Collateral Coverage Ratio”) as of any test date. The Collateral Coverage Ratio is based on the ratio of (A) Grantor unrestricted cash and cash equivalents plus 4.75 multiplied by of the greater of (x) Grantor EBITDA for the most recently ended four fiscal quarters and (y) (i) the average quarterly Grantor EBITDA for the most recently ended seven fiscal quarters, multiplied by (ii) four, to (B) secured indebtedness of the Grantors. The Collateral Coverage Ratio is tested quarterly. If the Collateral Coverage Ratio is less than the Required Collateral Coverage Ratio as of any test date, and the company has not redeemed the Notes within 90 days thereafter, this will be an event of default under the indenture.

If the company experiences certain kinds of changes of control, it must offer to purchase the 2022 Notes at 101% of the principal amount of the Notes, plus accrued and unpaid interest, if any. In addition, if the company sells assets under certain circumstances it must apply the proceeds towards an offer to repurchase the Notes at a price equal to par plus accrued and unpaid interest, if any.

The indenture also provides for events of default, which, if any of them occurs, would permit or require the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Notes to be due and payable immediately.

On May 8, 2017, the company redeemed all of its then outstanding 6.25% senior notes due 2017. As a result of this redemption, the company recognized a charge of $1.5 million in “Other income (expense), net” in the second quarter of 2017, which is comprised of $1.3 million of premium and expenses paid and $0.2 million for the write off of unamortized discount and fees related to the portion of the notes redeemed.

At September 30, 2017, the company’s secured revolving credit facility had no borrowings and $8.1 million of letters of credit outstanding, and availability under the facility was $91.5 million net of letters of credit issued. On October 5, 2017, the company entered into a new revolving credit facility (the “Credit Agreement”) providing for loans and letters of credit up to an aggregate amount of $125.0 million, which replaces the company’s credit agreement that was due to expire in June 2018. The Credit Agreement includes an accordion feature allowing for an increase in the amount of the facility up to $150.0 million. Availability under the credit facility is subject to a borrowing base calculated by reference to the company’s receivables. The Credit Agreement expires October 5, 2022, subject to a springing maturity (i) on the date that is 91 days prior to the maturity date of the company’s convertible notes due 2021 unless, on such date, certain conditions are met; or (ii) on the date that is 60 days prior to the maturity date of the company’s secured notes due 2022 unless, by such date, such secured notes have not been redeemed or refinanced.

The credit facility is guaranteed by Unisys Holding Corporation, Unisys NPL, Inc., Unisys AP Investment Company I and any future material domestic subsidiaries. The facility is secured by the assets of the company and the subsidiary guarantors, other than certain excluded assets, under a security agreement entered into by the company and the subsidiary guarantors in favor of JPMorgan Chase Bank, N.A., as agent for the lenders under the new credit facility.

The company is required to maintain a minimum fixed charge coverage ratio if the availability under the credit facility falls below the greater of 10% of the lenders’ commitments under the facility and $15 million.

The Credit Agreement contains customary representations and warranties, including that there has been no material adverse change in the company’s business, properties, operations or financial condition. The Credit Agreement includes limitations on the ability of the company and its subsidiaries to, among other things, incur other debt or liens, dispose of assets and make acquisitions, loans and investments, repurchase its equity, and prepay other debt. Events of default include non-payment, failure to comply with covenants, materially incorrect representations and warranties, change of control and default under other debt aggregating at least $50.0 million.

~~Note 13 - Goodwill~~

~~At September 30, 2017, the amount of goodwill allocated to reporting units with negative net assets was as follows: Business Process Outsourcing Services, $10.9 million.~~

~~Changes in the carrying amount of goodwill by segment for the nine months ended September 30, 2017 was as follows:~~

presented below:

Total Services Technology
Balance at December 31, 2016 $ 178.6
$ 69.9
$ 108.7
Translation adjustments 2.6
2.6
—
Balance at September 30, 2017 $ 181.2
$ 72.5
$ 108.7



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
United States	$	313.2	$	313.2	$	905.0	$	955.5
United Kingdom	82.0		65.8		277.7		211.3
Other foreign	293.1		287.3		881.4		830.2
Total	$	688.3	$	666.3	$	2,064.1	$	1,997.0

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

This discussion and analysis of the company’s financial condition and results of operations should be read in conjunction with the consolidated financial statements and the related notes included elsewhere in this quarterly report. In this discussion and analysis of the company’s financial condition and results of operations, the company has included information that may constitute “forward-looking” statements, as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations of future events and include any statement that does not directly relate to any historical or current fact. Words such as “anticipates,” “believes,” “expects,” “intends,” “plans,” “projects” and similar expressions may identify such forward-looking statements. All forward-looking statements rely on assumptions and are subject to risks, uncertainties and other factors that could cause the company’s actual results to differ materially from expectations. Factors that could affect future results include, but are not limited to, those discussed under “Risk Factors” in Part I, Item 1A of the company’s ~~2016~~2017 Form 10-K. Any forward-looking statement speaks only as of the date on which that statement is made. The company assumes no obligation to update any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made.

Overview

~~In April 2015,~~As described in ~~connection with organizational initiatives to create a more competitive cost structure and rebalance the company’s global skill set,~~Note 3, effective January 1, 2018, the company ~~initiated a restructuring plan~~adopted the requirements of Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606) using the modified retrospective method whereby prior periods were not restated. This resulted in an adjustment to Technology revenue and profit of $53.0 million ($47.7 million, net of tax) in the first quarter of 2018. The adjustment represents revenue from software license extensions and renewals, which were contracted for in the fourth quarter of 2017 and properly recorded as revenue at that time under the revenue recognition rules then in effect (Topic 605). Topic 606 requires revenue related to software license renewals or extensions to be recorded when the new license term begins, which in the case of the $53.0 million, is ~~currently expected to result in estimated charges~~January 1, 2018. Upon adoption of ~~approximately $320 to $330 million through 2017. During 2016 and 2015,~~ASU 2014-09, the company ~~recognized charges~~was required to include this $53.0 million in ~~connection with this plan and other costs of $82.1 million and $118.5 million, respectively, principally related~~the cumulative effect adjustment to ~~a reduction in employees. During the nine months ended September 30, 2017, the company incurred an additional $99.0 million of cost reduction charges and other costs.~~retained earnings on January 1, 2018.

For the nine months ended September 30, ~~2017,~~2018, the company reported a net ~~loss~~income attributable to Unisys Corporation of $50.5 million, or income of $0.89 per diluted share, compared with a net loss of $115.8 million, or a loss of $2.30 per diluted share ~~compared with a net loss of $46.5 million, or a loss of $0.93 per diluted share~~ for the nine months ended September 30, ~~2016.~~2017. The company’s results of operations in the current period were positively impacted by the Topic 606 adjustment described above, lower ~~gross profit margins in the Technology segment driven by lower sales of the company’s enterprise software~~cost-reduction charges and ~~servers, higher cost reduction charges, higher interest expense principally caused by the issuance of the senior secured notes and the negative impact of foreign currency fluctuations~~savings due to cost-reduction actions partially offset by ~~lower~~an increase in income tax ~~expense as described below.~~expense.

Results of operations

Company results

Three months ended September 30, ~~2017~~2018 compared with the three months ended September 30, ~~2016~~2017

Revenue for the quarter ended September 30, 2018 was $688.3 million compared with $666.3 million for the third quarter of 2017, an increase of 3.3% from the prior year. Foreign currency fluctuations had a 3 percentage-point negative impact on revenue in the current period compared with the year-ago period.

Services revenue increased 5.2% and Technology revenue decreased 8.9% in the current quarter compared with the year-ago period. U.S. revenue was flat quarter over quarter. International revenue increased 6.2% in the current quarter primarily due to increases in the European and Asia Pacific regions partially offset by a decline in Latin America. Foreign currency had a 5 percentage-point negative impact on international revenue in the three months ended September 30, 2018 compared with the three months ended September 30, 2017.

No cost-reduction charges were recorded in the three months ended September 30, 2018; however, a benefit of $0.9 million was recorded in the current quarter for changes in estimates. During the three months ended September 30, 2017, the company recognized charges in connection with its cost-reduction plan and other costs of $46.1 million. The charges related to work-force reductions were $49.5 million, principally related to severance costs, and were comprised of: (a) a charge of $2.6 million for 93 employees and $(0.4) million for changes in estimates in the U.S. and (b) a charge of $48.3 million for 1,459 employees and $(1.0) million for changes in estimates outside the U.S. In addition, the company recorded charges of $(3.4) million comprised of $0.6 million for idle leased ~~facility~~facilities costs, $0.1 million for contract amendment and termination costs, $0.9 million for professional fees and other expenses related to the ~~cost reduction~~cost-reduction effort, $0.7 million for net asset sales and write-offs and $(5.7) million for net foreign currency ~~translation~~ gains related to exiting foreign countries. The charges were recorded in the following statement of income classifications: cost of revenue - services, $42.8 million; selling, general and administrative expenses, $7.9 million; research and development expenses, $1.1 million; and other income (expense), net, $(5.7) million.

During the three months ended September 30, 2016, the company recognized charges of $31.9 million in connection with this plan, principally related to a reduction in employees. The charges related to workforce reductions were $26.5 million, principally related to severance costs, and were comprised of: (a) a charge of $0.5 million for 49 employees in the U.S. and (b) a charge of $26.0 million for 329 employees outside the U.S. In addition, the company recorded charges of $5.4 million for other expenses related to the cost reduction effort. The charges were recorded in the following statement of income classifications: cost of revenue - services, $18.0 million; selling, general and administrative expenses, $14.2 million; and research and development expenses, $(0.3) million.

Revenue for the quarter ended September 30, 2017 was $666.3 million compared with $683.3 million for the third quarter of 2016, a decrease of 2% from the prior year. Foreign currency fluctuations had a 1 percentage-point positive impact on revenue in the current period compared with the year-ago period.

Services revenue decreased 4% and Technology revenue increased 10% in the current quarter compared with the year-ago period. U.S. revenue decreased 4% in the third quarter compared with the year-ago period. International revenue decreased 1% in the current quarter primarily due to a decline in Europe partially offset by increases in Latin America and Asia Pacific. Foreign currency had a 2 percentage-point positive impact on international revenueTotal gross profit margin was 22.3% in the three months ended September 30, ~~2017~~2018 compared with ~~the three months ended September 30, 2016.~~

~~Total gross profit margin was 12.9%~~15.5% in the three months ended September 30, ~~2017 compared with 17.8%~~2017. Included in the ~~three months ended September 30, 2016. Gross~~2017 gross profit margin ~~was impacted by higher cost reduction charges. Cost reduction~~were cost-reduction charges of $42.8 million ~~were recorded in cost of revenue in the three months ended September 30, 2017~~ compared with ~~$18.0~~a benefit of $0.7 million in 2018 for changes in estimates. The increase in gross profit margin excluding these charges principally reflects benefits derived in 2018 from the ~~three months ended September 30, 2016.~~prior-years’ cost-reduction actions.

Selling, general and administrative expense in the three months ended September 30, ~~2017~~2018 was ~~$102.3~~$90.9 million ~~(15.4%~~(13.2% of revenue) compared with ~~$120.0~~$97.8 million ~~(17.6%~~(14.7% of revenue) in the year-ago period. ~~Cost reduction charges~~The decrease in selling, general and administrative expense is principally attributed to a decrease of ~~$7.9 million were recorded in the three months ended September 30, 2017 compared with $14.2~~$8.1 million in ~~the three months ended September 30, 2016. Exclusive of these~~cost-reduction charges ~~the decline was due to the~~and benefits derived in 2018 from the ~~cost reduction~~prior-years’ cost-reduction actions.

Research and development ~~(“R&D”) expenses~~(R&D) expense in the third quarter of ~~2017~~2018 was ~~$10.8~~$7.1 million compared with ~~$11.4~~$8.7 million in the third quarter of ~~2016.~~2017. The decrease is principally attributed to an increase in capitalized marketable software.

For the three months ended September 30, ~~2017, pension~~2018, postretirement expense was ~~$23.6~~$19.7 million compared with ~~pension~~postretirement expense of ~~$21.2~~$25.3 million for the three months ended September 30, ~~2016.~~2017. The change in postretirement expense in 2018 from 2017 was principally due to a lower interest cost component of postretirement expense for the company’s U.S. defined benefit pension plans. For the full year ~~2017,~~2018, the company expects to recognize ~~pension~~postretirement expense of approximately ~~$92.7~~$73.2 million compared with ~~$82.7~~$98.1 million for the full year of ~~2016.~~2017. The company records ~~pension~~the service cost component of postretirement income or expense ~~as well as other employee-related costs such as payroll taxes and medical insurance costs,~~ in ~~operating income in the following income statement categories:~~ cost of ~~revenue;~~revenue and selling, general and administrative ~~expenses; and research and development~~ expenses. ~~The amount allocated to each category is principally based on where~~All other components of postretirement income or expense are recorded in other income (expense), net in the ~~salaries~~Consolidated Statements of ~~plan participants who are active employees are charged.~~Income.

For the third quarter of ~~2017,~~2018, the company reported an operating ~~loss~~profit of ~~$27.0~~$55.8 million compared with an operating loss of ~~$9.8~~$2.9 million in the third quarter of ~~2016.~~2017. The ~~current year loss principally reflects higher cost reduction charges.~~principal items affecting the comparison of 2018 to 2017 were charges of $51.8 million in 2017 related to the cost-reduction actions compared with a benefit of $0.9 million in 2018 for changes in estimates and benefits derived in 2018 from the prior-years’ cost-reduction actions.

Interest expense for the three months ended September 30, ~~2017~~2018 was ~~$16.4~~$15.9 million compared with ~~$7.7~~$16.4 million for the three months ended September 30, ~~2016. The increase was principally caused by the issuance of the senior secured notes due 2022 in the second quarter of~~ 2017. ~~See Note 12 of the Notes to Consolidated Financial Statements.~~

Other income (expense), net was ~~income~~expense of ~~$3.0~~$17.7 million in the third quarter of ~~2017~~2018 compared with ~~income~~expense of ~~$2.3~~$21.1 million in the third quarter of ~~2016.~~2017. Included in ~~the current~~2018 was postretirement expense, excluding service cost, of $18.7 million as described above and foreign exchange gains of $1.7 million. The prior-year period ~~were~~included postretirement expense, excluding service cost, of $24.1 million, $5.7 million of net foreign currency ~~translation~~ gains related to exiting foreign countries in connection with the company’s restructuring plan ~~noted above. In addition, other foreign currency translation losses of~~and $3.5 million ~~were recorded~~of foreign exchange losses.

Effective July 1, 2018, the company’s Argentinian subsidiary began to apply highly inflationary accounting due to cumulative inflation of approximately 100 percent or more over the last 3-year period. For those international subsidiaries operating in highly inflationary economies, the ~~third~~U.S. dollar is the functional currency, and as such, nonmonetary assets and liabilities are translated at historical exchange rates, and monetary assets and liabilities are translated at current exchange rates. Exchange gains and losses arising from translation are included in other income (expense), net. The impact of applying highly inflationary accounting for the quarter ~~of 2017 compared to foreign currency translation losses of $0.6 million in the third quarter of 2016.~~ended September 30, 2018 was immaterial.

~~Loss~~Income before income taxes for the three months ended September 30, ~~2017~~2018 was ~~$40.4~~$22.2 million compared with a loss of ~~$15.2~~$40.4 million for the three months ended September 30, ~~2016.~~

2017. The increase is principally attributed to lower cost-reduction charges and savings due to prior-years’ cost-reduction actions.

The provision for income taxes was ~~$12.5~~$15.2 million in the current quarter compared with ~~$9.9~~$12.5 million in the year-ago period. During the three months ended September 30, 2018, the company recognized a benefit of $6.6 million due to the release of a valuation allowance on certain foreign deferred tax assets (net operating losses) as a result of the identification of an additional source of taxable income available in prior periods. The company evaluates quarterly the realizability of its deferred tax assets by assessing its valuation allowance and by adjusting the amount of such allowance, if necessary. The company records a tax provision or benefit for those international subsidiaries that do not have a full valuation allowance against their net deferred tax assets. Any profit or loss recorded for the company’s U.S. operations will have no provision or benefit associated with it due to the company’s valuation allowance, except with respect to ~~refundable tax credits and~~ withholding taxes not creditable against future taxable income. As a result, the company’s provision or benefit for taxes may vary significantly quarter to quarter depending on the geographic distribution of income.

Net ~~loss~~income attributable to Unisys Corporation for the three months ended September 30, ~~2017~~2018 was ~~$41.1~~$6.1 million, or ~~a loss~~income of ~~$0.81~~$0.12 per diluted share, compared with a net loss of ~~$28.2~~$41.1 million, or loss of ~~$0.56~~$0.81 per diluted share, for the three months ended September 30, ~~2016.~~2017. The increase is principally attributed to lower cost-reduction charges and savings due to prior-years’ cost-reduction actions.

Nine months ended September 30, ~~2017~~2018 compared with the nine months ended September 30, ~~2016~~2017

Revenue for the nine months ended September 30, 2018 was $2,064.1 million compared with $1,997.0 million for the nine months ended September 30, 2017, an increase of 3.4% from the prior year principally due to the impact of the Topic 606 adjustment described above. Excluding this adjustment, revenue was relatively flat. Foreign currency fluctuations had a 1 percentage-point positive impact on revenue in the current period compared with the year-ago period.

Services revenue increased 1.5% and Technology revenue increased 16.0% for the nine months ended September 30, 2018 compared with the year-ago period with the Topic 606 adjustment primarily contributing to the Technology revenue increase. Excluding this adjustment, Technology revenue decreased 4.2%. U.S. revenue decreased 5.3% in the current period compared with the year-ago period. International revenue increased 11.3% in the current period primarily due to increases in the European and Asia Pacific regions partially offset by a decline in Latin America. Without the Topic 606 adjustment, U.S. revenue decreased 5.8% and international revenue increased 6.7%. Foreign currency had a 2 percentage-point positive impact on international revenue in the nine months ended September 30, 2018 compared with the nine months ended September 30, 2017.

No cost-reduction charges were recorded in the nine months ended September 30, 2018; however, a benefit of $3.1 million was recorded in the current period for changes in estimates. During the nine months ended September 30, 2017, the company recognized charges in connection with its cost-reduction plan and other costs of $99.0 million. The charges related to work-force reductions were $86.2 million, principally related to severance costs, and were comprised of: (a) a charge of $7.9 million for 507 employees and $(0.6) million for changes in estimates in the U.S. and (b) a charge of $72.3 million for 1,835 employees, $8.2 million for additional benefits provided in 2017 and $(1.6) million for changes in estimates outside the U.S. In addition, the company recorded charges of $12.8 million comprised of $3.5 million for idle leased facilities costs, $5.3 million for contract amendment and termination costs, $3.9 million for professional fees and other expenses related to the ~~cost reduction~~cost-reduction effort, $0.7 million for net asset sales and write-offs and $(0.6) million for net foreign currency ~~translation~~ gains related to exiting foreign countries. The charges were recorded in the following statement of income classifications: cost of revenue - services, $70.4 million; cost of revenue - technology, $0.4 ~~million;~~million, selling, general and administrative expenses, $27.4 ~~million;~~million, research and development expenses, $1.4 million; and other income (expense), net, $(0.6) million.

During the nine months ended September 30, 2016, the company recognized charges of $69.0 million in connection with this plan, principally related to a reduction in employees. The charges related to workforce reductions were $54.9 million, principally related to severance costs, and were comprised of: (a) a charge of $5.8 million for 293 employees in the U.S. and (b) a charge of $49.1 million for 928 employees outside the U.S. In addition, the company recorded charges of $14.1 million for other expenses related to the cost reduction effort. The charges were recorded in the following statement of income classifications: cost of revenue - services, $34.6 million; selling, general and administrative expenses, $33.0 million; and research and development expenses, $1.4 million.

~~Revenue for the nine months ended September 30, 2017~~Total gross profit margin was $1,997.0 million compared with $2,099.0 million for the nine months ended September 30, 2016, a decline of 5%. Foreign currency fluctuations had an immaterial impact on revenue in the current period compared with the year-ago period.

Services revenue decreased 4% and Technology revenue decreased 10% for the nine months ended September 30, 2017 compared with the year-ago period. Current period Technology revenue was primarily impacted by lower sales of the company’s enterprise software and servers. U.S. revenue decreased 5% in the current period compared with the year-ago period. International revenue decreased 5% in the current period primarily due to declines in Europe and Asia Pacific partially offset by an increase in Latin America. Foreign currency had an immaterial impact on international revenue24.6% in the nine months ended September 30, ~~2017~~2018 compared with ~~the nine months ended September 30, 2016.~~

~~Total gross profit margin was 15.5%~~18.1% in the nine months ended September 30, 2017. Included in the 2017 gross profit margin were cost-reduction charges of $70.8 million compared with ~~19.0%~~a benefit of $4.2 million in 2018 for changes in estimates. The increase in gross profit margin excluding these charges principally reflects the impact of the Topic 606 adjustment described above and benefits derived in 2018 from the prior-years’ cost-reduction actions. Excluding the Topic 606 adjustment, total gross profit margin in the nine months ended September 30, ~~2016. Gross margin~~2018 was impacted by lower sales in the Technology segment as well as higher cost reduction charges. Cost reduction charges of $70.8 million were recorded in cost of revenue during the nine months ended September 30, 2017 compared with $34.6 million in the nine months ended September 30, 2016.22.6%.

Selling, general and administrative expense in the nine months ended September 30, ~~2017~~2018 was ~~$325.6~~$274.5 million ~~(16.3%~~(13.3% of revenue) compared with ~~$345.8~~$314.2 million ~~(16.5%~~(15.7% of revenue) in the year-ago period. ~~Cost reduction~~The decrease in selling, general and administrative expense is principally attributed to a decrease of $26.3 million in cost-reduction charges, a $7.3 million gain on the sale of ~~$27.4 million were~~property in the U.K. recorded in 2018 and benefits derived in 2018 from the prior-years’ cost-reduction actions. Excluding the Topic 606 adjustment, selling, general and administrative expense as a percentage of revenue was 13.6% in the nine months ended September 30, ~~2017 compared with $33.0 million in the nine months ended September 30, 2016. Exclusive of these charges, the decline was due to the benefits derived from the cost reduction actions.~~2018.

R&D ~~expenses~~expense for the nine months ended September 30, ~~2017 were $37.7~~2018 was $21.8 million compared with ~~$40.5~~$31.3 million in the prior-year period. The decrease is principally attributed to an increase in capitalized marketable software.

For the nine months ended September 30, ~~2017, pension~~2018, postretirement expense was ~~$69.4~~$58.2 million compared with ~~pension~~postretirement expense of ~~$63.0~~$74.5 million for the nine months ended September 30, ~~2016.~~2017. The change in postretirement expense in 2018 from 2017 was principally due to a lower interest cost component of postretirement expense for the company’s U.S. defined benefit pension plans partially offset by a curtailment gain recognized in 2017 related to a foreign defined benefit plan.

For the nine months ended September 30, ~~2017,~~2018, the company reported an operating ~~loss~~profit of ~~$54.5~~$211.6 million compared with an operating ~~income~~profit of ~~$12.1~~$15.4 million in the prior-year period. The ~~current period principally reflects lower margins~~principal items affecting the comparison of 2018 to 2017 were the Topic 606 adjustment described above, charges of $99.6 million in 2017 related to cost-reduction actions compared with a benefit of $3.1 million in 2018 for changes in estimates, a $7.3 million gain on the sale of property in the ~~Technology segment~~U.K. recorded in 2018 and ~~higher cost reduction charges.~~benefits derived in 2018 from the prior-years’ cost-reduction actions. Excluding the Topic 606 adjustment, operating profit in the nine months ended September 30, 2018 was $158.6 million.

Interest expense for the nine months ended September 30, ~~2017~~2018 was ~~$36.4~~$48.2 million compared with ~~$19.9~~$36.4 million for the nine months ended September 30, ~~2016.~~2017. The increase was principally caused by the issuance of the senior secured notes due 2022 in the second quarter of 2017. See Note 12 of the Notes to Consolidated Financial Statements.

Other income (expense), net was expense of ~~$8.6~~$58.3 million ~~for~~in the nine months ended September 30, ~~2017~~2018 compared with ~~income~~expense of ~~$3.7~~$78.5 million in ~~2016. The~~2017. Included in the current period ~~includes~~was postretirement expense, excluding service cost, of $55.3

million as described above and foreign exchange losses of $0.7 million. The prior-year period included postretirement expense, excluding service cost, of $69.9 million, $0.6 million of net foreign currency gains related to exiting foreign countries in connection with the company’s restructuring plan and $7.5 million ~~compared with~~of foreign exchange ~~gains of $2.5 million in the prior-year period.~~losses.

~~Loss~~Income (loss) before income taxes for the nine months ended September 30, ~~2017~~2018 was ~~$99.5~~income of $105.1 million compared with a loss of ~~$4.1~~$99.5 million for the nine months ended September 30, ~~2016.~~2017. The increase is principally attributed to the Topic 606 adjustment described above, lower cost-reduction charges, a gain on the sale of property in the U.K. recorded in 2018 and savings due to cost-reduction actions partially offset by an increase in interest expense.

The provision for income taxes was ~~$21.6~~$50.4 million in the current period compared with ~~$34.2~~$21.6 million in the year-ago period. The Topic 606 adjustment contributed $5.3 million of the increase from the prior-year period to the current-year period and was partially offset by a benefit of $6.6 million due to the release of a valuation allowance on certain foreign deferred tax assets (net operating losses) as a result of the identification of an additional source of taxable income available in prior periods. In the second quarter of 2017, the company elected to receive cash refunds of a portion of its U.S. alternative minimum tax ~~(“AMT”)~~(AMT) credit carryforwards in lieu of claiming bonus depreciation as provided by Internal Revenue Code ~~Section 168(k)~~Section168(k)(4). The decision to make this election resulted in a ~~total~~ tax benefit of $21.1 million ~~in 2017, of which $20.0 million was~~ recorded induring the ~~second quarter of~~nine months ended September 30, 2017. ~~The company received a refund of $9.1 million in October 2017 and expects to receive refunds of approximately $12 million in future periods.~~

Net ~~loss~~income attributable to Unisys Corporation for the nine months ended September 30, ~~2017~~2018 was ~~$115.8~~$50.5 million, or ~~a loss~~income of ~~$2.30~~$0.89 per diluted share, compared with a net loss of ~~$46.5~~$115.8 million, or loss of ~~$0.93~~$2.30 per diluted share, for the nine months ended September 30, ~~2016.~~2017. The increase is principally attributed to the Topic 606 adjustment described above, lower cost-reduction charges, a gain on the sale of property in the U.K. recorded in 2018 and savings due to cost-reduction actions partially offset by an increase in interest expense and income tax expense.

Segment results

Effective January 1, 2018, the company changed the grouping of certain of its classes of services. As a result, prior-periods’ customer revenue by classes of similar services have been reclassified to conform to the current-year period.

The company has two business segments: Services and Technology. Revenue classifications within the Services ~~segment~~and Technology segments are as follows:

Cloud & infrastructure services. This represents revenue from helping clients apply cloud and as-a-service delivery models to capitalize on business opportunities, make their end users more productive and manage and secure their IT infrastructure and operations more economically.

Application services. This represents revenue from helping clients transform their business processes by ~~providing advanced solutions for select industries,~~ developing and managing new leading-edge applications ~~providing digital transformation services,~~for select industries, offering advanced data analytics and modernizing existing enterprise applications.

Business process outsourcing (BPO) services. This represents revenue from the management of critical processes and functions for clients in target industries, helping them improve performance and reduce costs.

Technology. This represents revenue from designing and developing software and offering hardware and other related products to help clients reduce costs, improve security and flexibility and improve the efficiency of their data-center environments.

The accounting policies of each business segment are the same as those followed by the company as a whole. Intersegment sales and transfers are priced as if the sales or transfers were to third parties. Accordingly, the Technology segment recognizes intersegment revenue and manufacturing profit on hardware and software shipments to customers under Services contracts. The Services segment, in turn, recognizes customer revenue and marketing profits on such shipments of company hardware and software to customers. The Services segment also includes the sale of hardware and software products sourced from third parties that are sold to customers through the company’s Services channels. In the company’s ~~consolidated statements~~Consolidated Statements of ~~income,~~Income, the manufacturing costs of products sourced from the Technology segment and sold to Services customers are reported in cost of revenue for Services.

Also included in the Technology segment’s sales and operating profit are sales of hardware and software sold to the Services segment for internal use in Services engagements. The amount of such profit included in operating income of the Technology segment for the three months ended September 30, ~~2017~~2018 was ~~immaterial,~~$0.1 million, and for the three months ended September 30, ~~2016~~2017 was ~~$0.1 million.~~immaterial. The amount for the nine months ended September 30, 2018 and 2017 ~~and 2016~~ was ~~$1.0~~$2.3 million and ~~$0.6~~$1.0 million, respectively. The sales and profit on these transactions are eliminated in Corporate.

The company evaluates business segment performance based on operating income exclusive of the service cost component of pension income or expense, restructuring charges and unusual and nonrecurring items, which are included in Corporate. All

other corporate and centrally incurred costs are allocated to the business segments based principally on revenue, employees, square footage or usage.

Three months ended September 30, ~~2017~~2018 compared with the three months ended September 30, ~~2016~~2017

Information by business segment is presented below:



	Total				Eliminations			Services			Technology
Three Months Ended September 30, 2018
Customer revenue	$	688.3			$	—		$	605.6		$	82.7
Intersegment	—				(4.3		)	—			4.3
Total revenue	$	688.3			$	(4.3	)	$	605.6		$	87.0
Gross profit percent	22.3		%					15.9		%	62.4		%
Operating profit percent	8.1		%					3.1		%	39.7		%

Three Months Ended September 30, 2017
Customer revenue	$	666.3			$	—		$	575.5		$	90.8
Intersegment	—				(4.4		)	—			4.4
Total revenue	$	666.3			$	(4.4	)	$	575.5		$	95.2
Gross profit percent	15.5		%	*				16.5		%	53.3		%
Operating profit (loss) percent	(0.4		)%	*				3.2		%	31.1		%

Total Eliminations Services Technology
Three Months Ended September 30, 2017
Customer revenue $ 666.3
$ —
$ 575.5
$ 90.8
Intersegment —
(4.4 ) —
4.4
Total revenue $ 666.3
$ (4.4 ) $ 575.5
$ 95.2
Gross profit percent 12.9 % 16.5 % 53.3 %
Operating profit (loss) percent (4.1 )% 3.2 % 31.1 %

Three Months Ended September 30, 2016

Customer revenue $ 683.3
$ —
$ 600.9
$ 82.4
Intersegment —
(5.8 ) —
5.8
Total revenue $ 683.3
$ (5.8 ) $ 600.9
$ 88.2
Gross profit percent 17.8 % 16.7 % 59.8 %
Operating profit (loss) percent (1.4 )% 2.6 % 32.3 %



	Gross profit and operating profit percent are as a percent of total revenue.

*	Amounts were changed to conform to the current-year presentation. See Note 3.

~~Gross profit and operating profit (loss) percent are as a percent of total revenue.~~

Customer revenue by classes of similar products or services, by segment, is presented below:



	Three Months Ended September 30,					Percent Change
	2018		2017			Percent Change
Services
Cloud & infrastructure services	$	348.3	$	326.9	*	6.5	%
Application services	191.2		200.7		*	(4.7	)%
Business process outsourcing services	66.1		47.9			38.0	%
	605.6		575.5			5.2	%
Technology	82.7		90.8			(8.9	)%
Total	$	688.3	$	666.3		3.3	%



*	Amounts were changed to conform to the current-year presentation.

Three Months Ended
September 30,
Percent
Change
2017 2016
Services
Cloud & infrastructure services $ 321.2
$ 341.9
(6.1 )%
Application services 206.4
210.4
(1.9 )%
Business process outsourcing services 47.9
48.6
(1.4 )%
575.5
600.9
(4.2 )%
Technology 90.8
82.4
10.2 %
Total $ 666.3
$ 683.3
(2.5 )%

In the Services segment, customer revenue was ~~$575.5~~$605.6 million for the three months ended September 30, ~~2017, down 4.2%~~2018, up 5.2% from the three months ended September 30, ~~2016.~~2017. Foreign currency translation had a 12 percentage-point ~~positive~~negative impact on Services revenue in the current quarter compared with the year-ago ~~period.~~quarter.

Revenue from cloud & infrastructure services was ~~$321.2~~$348.3 million in the ~~September 2017~~current quarter, ~~down 6.1%~~up 6.5% compared with the ~~September 2016~~prior-year quarter. Foreign currency fluctuations had a 12 percentage-point ~~positive~~negative impact on cloud & infrastructure services revenue in the current period compared with the year-ago period.

Application services revenue decreased ~~1.9%~~4.7% for the ~~three month~~three-month period ended September 30, ~~2017~~2018 compared with the ~~three month~~three-month period ended September 30, ~~2016.~~2017. Foreign currency fluctuations had a 13 percentage-point ~~positive~~negative impact on application services revenue in the current period compared with the year-ago period.

Business process outsourcing services revenue ~~decreased 1.4%~~increased 38.0% in the current quarter compared with the prior-year quarter. Foreign currency fluctuations had a 12 percentage-point negative impact on business process outsourcing services revenue in the current period compared with the year-ago period.

Services gross profit was ~~16.5%~~15.9% in the third quarter of ~~2017~~2018 compared with ~~16.7%~~16.5% in the year-ago period. Services operating profit percent was 3.1% in the three months ended September 30, 2018 compared with 3.2% in the three months ended September 30, ~~2017 compared with 2.6%~~2017. The decline in ~~the three months ended September 30, 2016.~~Services margins is primarily attributed to new Services contracts in implementation stage.

In the Technology segment, customer revenue ~~increased 10.2%~~decreased 8.9% to ~~$90.8~~$82.7 million in the current quarter compared with ~~$82.4~~$90.8 million in the year-ago period. Foreign currency translation had ~~an immaterial~~a 4 percentage-point negative impact on Technology revenue in the current quarter compared with the year-ago period.

Technology gross profit was ~~53.3%~~62.4% in the current quarter compared with ~~59.8%~~53.3% in the year-ago quarter. Technology operating profit percent was 39.7% in the three months ended September 30, 2018 compared with 31.1% in the three months ended September 30, ~~2017 compared with 32.3% in the three months ended September 30, 2016. Current period~~2017. The improvements to Technology margins were ~~primarily impacted~~driven in part by a higher mix of software sales ~~of lower margin third-party products.~~in the current quarter.

Nine months ended September 30, ~~2017~~2018 compared with the nine months ended September 30, ~~2016~~2017

Information by business segment is presented below:



	Total				Eliminations			Services			Technology
Nine Months Ended September 30, 2018
Customer revenue	$	2,064.1			$	—		$	1,760.8		$	303.3
Intersegment	—				(18.3		)	—			18.3
Total revenue	$	2,064.1			$	(18.3	)	$	1,760.8		$	321.6
Gross profit percent	24.6		%					16.3		%	66.7		%
Operating profit percent	10.3		%					3.1		%	48.1		%

Nine Months Ended September 30, 2017
Customer revenue	$	1,997.0			$	—		$	1,735.6		$	261.4
Intersegment	—				(15.1		)	—			15.1
Total revenue	$	1,997.0			$	(15.1	)	$	1,735.6		$	276.5
Gross profit percent	18.1		%	*				16.3		%	53.2		%
Operating profit percent	0.8		%	*				2.1		%	27.8		%

Total Eliminations Services Technology
Nine Months Ended September 30, 2017
Customer revenue $ 1,997.0
$ —
$ 1,735.6
$ 261.4
Intersegment —
(15.1 ) —
15.1
Total revenue $ 1,997.0
$ (15.1 ) $ 1,735.6
$ 276.5
Gross profit percent 15.5 % 16.3 % 53.2 %
Operating profit (loss) percent (2.7 )% 2.1 % 27.8 %

Nine Months Ended September 30, 2016

Customer revenue $ 2,099.0
$ —
$ 1,809.8
$ 289.2
Intersegment —
(17.3 ) —
17.3
Total revenue $ 2,099.0
$ (17.3 ) $ 1,809.8
$ 306.5
Gross profit percent 19.0 % 15.9 % 60.2 %
Operating profit percent 0.6 % 1.8 % 36.0 %



	Gross profit and operating profit percent are as a percent of total revenue.

*	Amounts were changed to conform to the current-year presentation. See Note 3.

~~Gross profit and operating profit (loss) percent are as a percent of total revenue.~~

Customer revenue by classes of similar products or services, by segment, is presented below:



	Nine Months Ended September 30,					Percent Change
	2018		2017			Percent Change
Services
Cloud & infrastructure services	$	1,000.2	$	994.8	*	0.5	%
Application services	578.1		592.9		*	(2.5	)%
Business process outsourcing services	182.5		147.9			23.4	%
	1,760.8		1,735.6			1.5	%
Technology	303.3		261.4			16.0	%
Total	$	2,064.1	$	1,997.0		3.4	%



*	Amounts were changed to conform to the current-year presentation.

Nine Months Ended September 30,
Percent
Change
2017 2016
Services
Cloud & infrastructure services $ 983.4
$ 1,017.8
(3.4 )%
Application services 604.3
641.4
(5.8 )%
Business process outsourcing services 147.9
150.6
(1.8 )%
1,735.6
1,809.8
(4.1 )%
Technology 261.4
289.2
(9.6 )%
Total $ 1,997.0
$ 2,099.0
(4.9 )%

In the Services segment, customer revenue was ~~$1,735.6~~$1,760.8 million for the nine months ended September 30, ~~2017, down 4.1%~~2018, up 1.5% from the nine months ended September 30, ~~2016.~~2017. Foreign currency translation had ~~an immaterial~~a 1 percentage-point positive impact on Services revenue in the current period compared with the year-ago period.

Revenue from cloud & infrastructure services was ~~$983.4~~$1,000.2 million for the nine months ended September ~~2017, down 3.4%~~30, 2018, up 0.5% compared with the year-ago period. Foreign currency fluctuations had a 1 percentage-point positive impact on cloud & infrastructure services revenue in the current period compared with the year-ago period.

Application services revenue decreased ~~5.8%~~2.5% for the ~~nine month~~nine-month period ended September 30, ~~2017~~2018 compared with the ~~nine month~~nine-month period ended September 30, ~~2016.~~2017. Foreign currency fluctuations had an immaterial impact on application services revenue in the current period compared with the year-ago period.

Business process outsourcing services revenue ~~decreased 1.8%~~increased 23.4% in the current period compared with the prior-year period. Foreign currency fluctuations had a 65 percentage-point ~~negative~~positive impact on business process outsourcing services revenue in the current period compared with the year-ago period.

Services gross profit was 16.3% for both the nine months ended September 30, 2018 and the nine months ended September 30, 2017. Services operating profit percent was 3.1% in the nine months ended September 30, ~~2017~~2018 compared with ~~15.9% in the year-ago period. Services operating profit percent was~~ 2.1% in the nine months ended September 30, ~~2017 compared with 1.8%~~2017. Current-period margins were positively impacted by a gain on the sale of property in the ~~nine months ended September 30, 2016.~~U.K offset in part by new Services contracts in implementation stage.

In the Technology segment, customer revenue ~~decreased 9.6%~~increased 16.0% to ~~$261.4~~$303.3 million in the current period compared with ~~$289.2~~$261.4 million in the year-ago period. The increase is principally attributed to the Topic 606 adjustment described above. Foreign currency translation had ~~a 1 percentage-point negative~~an immaterial impact on Technology revenue in the current period compared with the year-ago period. Excluding the Topic 606 adjustment, customer revenue decreased 4.2%.

Technology gross profit was ~~53.2%~~66.7% in the current period compared with ~~60.2%~~53.2% in the year-ago period. Technology operating profit percent was 48.1% in the nine months ended September 30, 2018 compared with 27.8% in the nine months ended September 30, ~~2017 compared~~2017. The increase in gross profit and operating profit was principally due to the Topic 606 adjustment coupled with ~~36.0%~~lower R&D costs and a higher mix of software sales in the ~~nine months ended September 30, 2016. Current period technology margins were primarily impacted by lower sales~~current period. Excluding the impact of the ~~company’s enterprise software~~Topic 606 adjustment, gross profit percent was 60.1% and ~~servers and higher sales of lower margin third-party products.~~operating profit percent was 37.9% in the current period.

New accounting pronouncements

See Note 113 of the Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements, including the expected dates of adoption and estimated effects on the company’s consolidated financial statements.

Financial condition

The company’s principal sources of liquidity are cash on hand, cash from operations and its revolving credit facility, discussed below. The company and certain international subsidiaries have access to uncommitted lines of credit from various banks. The company believes that it will have adequate sources of liquidity to meet its expected near-term cash requirements.

Cash and cash equivalents at September 30, ~~2017~~2018 were ~~$598.7~~$516.1 million compared to ~~$370.6~~$733.9 million at December 31, 2016. The increase was primarily due to the net proceeds received from the sale of $440.0 million of its 10.75% senior secured notes due 2022 and was partially offset by the redemption of $95.0 million of its remaining outstanding 6.25% senior notes due 2017. ~~See Note 12 of the Notes to Consolidated Financial Statements.~~

As of September 30, ~~2017, $291.6~~2018, $315.2 million of cash and cash equivalents were held by the company’s foreign subsidiaries and branches operating outside of the U.S. In the future, if these funds are needed for the company’s operations in the U.S., it is expected the company would be required to pay taxes on only a limited portion of this balance.

During the nine months ended September 30, ~~2017,~~2018, cash used for operations was ~~$36.3~~$77.4 million compared to cash ~~provided by operations~~usage of ~~$103.0~~$36.3 million for the nine months ended September 30, ~~2016.~~2017. The fluctuation in cash flows from operating activities is principally ~~attributed~~driven by an increase in receivables related to ~~lower operating income as well as~~several Technology contracts signed late in the ~~timing of receivables collection.~~current quarter.

Cash used for investing activities during the nine months ended September 30, ~~2017~~2018 was ~~$98.6~~$125.9 million compared to cash usage of ~~$131.9~~$98.6 million during the nine months ended September 30, ~~2016.~~2017. Net ~~proceeds from~~purchases of investments were ~~$30.7~~$3.1 million for the nine months ended September 30, ~~2017~~2018 compared with net ~~purchases~~proceeds of ~~$24.3~~$30.7 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 ~~addition, in~~ the current period, the investment in marketable software was ~~$46.6~~$61.7 million compared with ~~$47.1~~$46.6 million in the year-ago period, capital additions of properties were $25.0 million in 2018 compared with $21.8 million in 2017 ~~compared with $18.3 million in 2016~~ and capital additions of outsourcing assets were $54.4 million in 2018 compared with $60.1 million in ~~2017 compared with $41.4 million in 2016.~~2017. The increase in capital additions of ~~outsourcing assets~~marketable software is attributed to ~~assets acquired by~~additional development of the ~~company for its~~company’s proprietary software. In addition, the current year includes net proceeds of $19.2 million related to the sale of property in the U.K. ~~business process outsourcing joint venture.~~

Cash ~~provided by~~used for financing activities during the nine months ended September 30, ~~2017~~2018 was ~~$334.7~~$4.4 million compared to cash provided by financing activities of ~~$110.6~~$334.7 million during the nine months ended September 30, ~~2016.~~2017. In the ~~current~~prior-year period, the company issued $440.0 million of notes and received net proceeds of $427.9 million and retired the remaining aggregate principal amount of $95.0 million of its 6.25% senior notes due 2017. During the nine months ended September 30, 2016, the company issued $213.5 million of convertible senior notes due 2021 and received net proceeds of $178.9 million and also paid down the outstanding balance of $65.8 million of its revolving credit facility.

notes.

At September 30, ~~2017,~~2018, total debt was ~~$642.8~~$650.0 million compared to ~~$300.0~~$644.7 million at December 31, ~~2016.~~2017. The increase ~~was principally caused by~~is primarily due to the amortization of debt issuance ~~of the notes referred to above, partially offset by the retirement of the remaining 6.25% senior notes due 2017.~~costs and fees.

~~At September 30, 2017, the company’s~~

The company has a secured revolving credit facility had no borrowings and $8.1 million of letters of credit outstanding, and availability under the facility was $91.5 million net of letters of credit issued. On October 5, 2017, the company entered into a new revolving credit facility (the “Credit Agreement”) ~~providing~~that provides for loans and letters of ~~credit up to an aggregate~~credit. During the second quarter of 2018, the maximum amount ofavailable under the facility was increased from $125.0 million ~~which replaces~~to $145.0 million (with a limit on letters of credit of $30.0 million). The accordion feature contained in the ~~company’s credit agreement that was due to expire in June 2018. The~~ Credit Agreement ~~includes an accordion feature allowing~~that permitted this increase allows for an increase in the amount of the facility up to $150.0 million. Availability under the credit facility is subject to a borrowing base calculated by reference to the company’s receivables. At September 30, 2018, the company had no borrowings and $6.4 million of letters of credit outstanding, and availability under the facility was $103.4 million net of letters of credit issued. The Credit Agreement expires October 5, 2022, subject to a springing maturity (i) on the date that is 91 days prior to the maturity date of the company’s convertible notes due 2021 unless, on such date, certain conditions are met; or (ii) on the date that is 60 days prior to the maturity date of the company’s secured notes due 2022 unless, by such date, such secured notes have ~~not~~ been redeemed or refinanced.

On April 17, 2017, the company issued $440.0 million aggregate principal amount of 10.75% Senior Secured Notes due 2022 (the “Notes”). The Notes are initially fully and unconditionally guaranteed on a senior secured basis by Unisys Holding Corporation, Unisys AP Investment Company I and Unisys NPL, Inc. (together with the Company, the “Grantors”). In the future, the Notes will be guaranteed by each material domestic subsidiary and each restricted subsidiary that guarantees the secured revolving credit facility and other indebtedness of the company or another subsidiary guarantor. The Notes and the guarantees will rank equally in right of payment with all of the existing and future senior debt of the company and the subsidiary guarantors. The Notes and the guarantees will be structurally subordinated to all existing and future liabilities (including preferred stock, trade payables and pension liabilities) of the company’s subsidiaries that are not subsidiary guarantors.

The company may, at its option, redeem some or all of the Notes at any time on or after April 15, 2020 at a redemption price determined in accordance with the redemption schedule set forth in the indenture governing the Notes (the “indenture”), plus accrued and unpaid interest, if any.

is less than the Required Collateral Coverage Ratio (as such terms are described below and further defined in the indenture) at a price equal to 100% of the principal amount of the Notes plus accrued and unpaid interest, if any.

If the company experiences certain kinds of changes of control, it must offer to purchase the Notes at 101% of the principal amount of the Notes, plus accrued and unpaid interest, if any. In addition, if the company sells assets under certain circumstances it must apply the proceeds towards an offer to repurchase the Notes at a price equal to par plus accrued and unpaid interest, if any.

At September 30, ~~2017,~~2018, the company has met all covenants and conditions under its various lending and funding agreements. The company expects to continue to meet these covenants and conditions.

In ~~2017,~~2018, the company expects to make cash contributions of approximately ~~$137.5~~$130.3 million to its worldwide defined benefit pension plans, which isare comprised of ~~$83.1~~$49.7 million primarily for non-U.S. defined benefit pension plans and ~~$54.4~~$80.6 million for the company’s U.S. qualified defined benefit pension ~~plan.~~plans. In the third quarter of 2018, the company completed tri-annual negotiations of one of its international defined benefit pension plans which resulted in a $10.0 million decrease in estimated 2018 cash contributions.

The company maintains a shelf registration statement with the Securities and Exchange Commission that covers the offer and sale of up to $700.0 million of debt or equity securities. Subject to the company’s ongoing compliance with securities laws, the company may offer and sell debt and equity securities from time to time under the shelf registration statement. In addition, from time to time, the company may explore a variety of institutional debt and equity sources to fund its liquidity and capital needs.

The company may, from time to time, redeem, tender for, or repurchase its securities in the open market or in privately negotiated transactions depending upon availability, market conditions and other factors. As certain conditions within the 2021 Notes indenture have been met during the current quarter, the 2021 Notes holders have the right to convert during the quarter ending December 31, 2018.

Critical accounting policies and estimates update

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. Certain accounting policies, methods and estimates are particularly important because of their significance to the financial statements and because of the possibility that future events affecting them may differ from management’s current judgments. The company bases its estimates and judgments on historical experience and on other assumptions that it believes are reasonable under the circumstances; however, to the extent there are material differences between these estimates, judgments and assumptions and actual results, the financial statements will be affected. There are a number of accounting policies, methods and estimates affecting the company’s financial statements as described in Note 1 of the Notes to Consolidated Financial Statements in the company’s 2017 Form 10-K. Significant changes to these critical accounting policies and estimates as a result of adopting Topic 606 are discussed below.

Revenue recognition

Many of the company’s sales agreements contain standard business terms and conditions; however, some agreements contain multiple elements or non-standard terms and conditions. As discussed in Note 2 of the Notes to Consolidated Financial

Statements, the company enters into multiple-element arrangements, which may include any combination of hardware, software or services. As a result, significant contract interpretation is sometimes required to determine the appropriate accounting, including whether the performance obligations specified in a multiple-element arrangement should be treated as separate performance obligations for revenue recognition purposes, and when to recognize revenue for each performance obligation.

The company must apply its judgment to determine the timing of the satisfaction of performance obligations as well as the transaction price and the amounts allocated to performance obligations including estimating variable consideration, adjusting the consideration for the effects of the time value of money and assessing whether an estimate of variable consideration is constrained.

Revenue and profit under systems integration contracts are recognized over time as the company transfers control of goods or services. The company measures its progress toward satisfaction of its performance obligations using the cost-to-cost method, or when services have been performed, depending on the nature of the project.

For contracts accounted for using the cost-to-cost method, revenue and profit recognized in any given accounting period are based on estimates of total projected contract costs. The estimates are continually reevaluated and revised, when necessary, throughout the life of a contract. The company follows this method because reasonably dependable estimates of the revenue and costs applicable to various elements of a contract can be made. The financial reporting of these contracts depends on estimates, which are assessed continually during the term of the contracts and therefore, recognized revenues and profit are subject to revisions as the contract progresses to completion. Revisions in profit estimates are reflected in the period in which the facts that give rise to the revision become known. Accordingly, favorable changes in estimates result in additional revenue and profit recognition, and unfavorable changes in estimates result in a reduction of recognized revenue and profit. When estimates indicate that a loss will be incurred on a contract upon completion, a provision for the expected loss is recorded in the period in which the loss becomes evident. As work progresses under a loss contract, revenue continues to be recognized, and a portion of the contract costs incurred in each period is charged to the contract loss reserve.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There has been no material change in the company’s assessment of its sensitivity to market risk since its disclosure in its ~~2016~~2017 Form 10-K.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

The company’s management, with the participation of the company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by

this report. Based on this evaluation, the company’s Chief Executive Officer and Chief Financial Officer concluded that ~~as of~~due to the ~~end of such period,~~material weakness in our internal control over financial reporting, the company’s disclosure controls and procedures ~~are effective. Such evaluation did~~were not ~~identify any change~~effective as of September 30, 2018.

As previously reported in the company’s 2017 Form 10-K, filed with the Securities and Exchange Commission on March 12, 2018, in connection with the company’s assessment of the effectiveness of its internal control over financial reporting at the end of its last fiscal year, management identified the following material weakness in the company’s internal control over financial reporting ~~(as such term~~as of December 31, 2017 which is ~~defined~~ in ~~Rules 13a-15(f)~~the process of being remediated as of September 30, 2018.

Our risk assessment procedures over Technology revenue did not adequately identify risks and ~~15d-15(f) under~~consider changes in business operations and the ~~Exchange Act)~~demands on personnel created by the efforts required to adopt the new revenue accounting pronouncement that ~~occurred~~will impact future financial reporting. As a result, the company had missing process level controls and insufficient trained personnel to operate process level controls over the measurement and recognition of multiple-element arrangements within Technology revenue.

This section of Item 4, “Controls and Procedures,” should be read in conjunction with Item 9A, “Controls and Procedures,” included in the company’s 2017 Form 10-K for additional information on Management’s Report on Internal Control over Financial Reporting.

To address the material weakness referenced above, the company performed additional analysis and performed other procedures in order to prepare the unaudited quarterly consolidated financial statements in accordance with generally accepted accounting principles (GAAP). Accordingly, management believes that the consolidated financial statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

Status of Remediation Plan

Management is actively remediating the identified material weakness, and is committed to remediate the material weakness as timely as possible. The company has taken the following remediation steps:

The company added personnel with an appropriate level of U.S. GAAP revenue recognition knowledge and experience by hiring additional personnel or by internal realignment.

Provided additional revenue recognition training to responsible staff.

Implemented enhanced procedures whereby a comprehensive review is being performed for certain Technology transactions.

Enhanced processes and reviews of all major multiple-element transactions.

Added data elements that support enhanced analytics and controls to the revenue recognition process.

The company has and will continue to supplement existing revenue recognition resources with consultants where necessary.

Management believes that the above actions are fully implemented and will be effective in remediating this material weakness. However, the company’s material weakness will not be considered remediated until the controls are tested during 2018 as part of its Section 404 compliance program and management concludes that these controls are properly designed and operating effectively.

Changes in Internal Control over Financial Reporting

Except as described above with respect to our remediation plan, there have been no changes in our internal control over financial reporting during the ~~fiscal~~ quarter ~~to which this report relates~~ended September 30, 2018 that ~~has~~have materially affected, or isare reasonably likely to materially affect, ~~the company’s~~our internal control over financial reporting.

Part II - OTHER INFORMATION

Item 1. Legal Proceedings

Information with respect to litigation is set forth in Note 913 of the Notes to Consolidated Financial Statements, and such information is incorporated herein by reference.

Item 1A. Risk Factors

There have been no significant changes to the “Risk Factors” in Part I, Item 1A of the company’s ~~2016~~2017 Form 10-K.

CAUTIONARY STATEMENT PURSUANT TO THE U.S. PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Risks and uncertainties that could cause the company’s future results to differ materially from those expressed in “forward-looking” statements include:

our ability to improve revenue and margins in our ~~services~~Services business;

our ability to maintain our installed base and sell new products in our ~~technology~~Technology business;

our ability to effectively anticipate and respond to volatility and rapid technological innovation in our industry;

~~our ability to access financing markets;~~

~~our significant pension obligations and requirements to make significant cash contributions to our defined benefit pension plans;~~

~~our ability to realize additional anticipated cost savings and successfully implement our cost reduction initiatives to drive efficiencies across all of our operations;~~

our ability to retain significant clients;

the potential adverse effects of aggressive competition in the information services and technology marketplace;

cybersecurity breaches could result in significant costs and could harm our business and reputation;

our significant pension obligations and required cash contributions and requirements to make additional significant cash contributions to our defined benefit pension plans;

our ability to attract, motivate and retain experienced and knowledgeable personnel in key positions;

the risks of doing business internationally when a significant portion of our revenue is derived from international operations;

our contracts may not be as profitable as expected or provide the expected level of revenues;

our ability to access financing markets;

contracts with U.S. governmental agencies may subject us to audits, criminal penalties, sanctions and other expenses and fines;

a significant disruption in our IT systems could adversely affect our business and reputation;

we may face damage to our reputation or legal liability if our clients are not satisfied with our services or products;

the performance and capabilities of third parties with whom we have commercial relationships;

aan involuntary termination of the company’s U.S. qualified defined benefit pension ~~plan~~

~~the adverse effects of global economic conditions, acts of war, terrorism or natural disasters;~~plan;

the potential for intellectual property infringement claims to be asserted against us or our clients;

the business and financial risk in implementing future acquisitions or dispositions;

the adverse effects of global economic conditions, acts of war, terrorism or natural disasters;

the possibility that pending litigation could affect our results of operations or cash flow; and

~~the~~our controls and procedures may fail or be circumvented, which may result in a material adverse effect on our business, results of operations and financial ~~risk in implementing future dispositions or acquisitions.~~condition.

Other factors discussed in this report, although not listed here, also could materially affect the company’s future results.

Item 6. Exhibits


(a)	Exhibits

See Exhibit Index

EXHIBIT INDEX




Exhibit Number	Description

3.1	Restated Certificate of Incorporation of Unisys Corporation (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on April 30, 2010)

3.2	Certificate of Amendment of the Restated Certificate of Incorporation of Unisys Corporation (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on April 28, 2011)

3.3	Certificate of Amendment of the Restated Certificate of Incorporation of Unisys Corporation (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on April 28, 2017)

3.4	Bylaws of Unisys Corporation, as amended through April 30, 2015 (incorporated by reference to Exhibit 3.3 to the ~~Company’s~~registrant’s Quarterly Report on Form 10-Q filed on April 30, 2015)

~~10.1~~	Credit Agreement dated as of October 5, 2017 by and among Unisys Corporation, the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on October 6, 2017)

~~10.2~~	Security Agreement dated as of October 5, 2017 by Unisys Corporation, Unisys Holding Corporation, Unisys NPL, Inc., and Unisys AP Investment Company I in favor of JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed on October 6, 2017)

~~10.3~~	Intercreditor Agreement dated as of October 5, 2017 by and among JPMorgan Chase Bank, N.A., as Administrative Agent, Wells Fargo Bank, National Association, as Collateral Trustee, and Unisys Corporation, Unisys Holding Corporation, Unisys NPL, Inc., and Unisys AP Investment Company I (incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed on October 6, 2017)

12	~~Statement of Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends~~

31.1	Certification of Peter A. Altabef required by Rule 13a-14(a) or Rule 15d-14(a)

31.2	Certification of Inder M. Singh required by Rule 13a-14(a) or Rule 15d-14(a)

32.1	Certification of Peter A. Altabef required by Rule 13a-14(b) or Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350

32.2	Certification of Inder M. Singh required by Rule 13a-14(b) or Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350

101.INSXBRL	Instance Document

101.SCHXBRL	Taxonomy Extension Schema Document

101.CALXBRL	Taxonomy Extension Calculation Linkbase Document

101.LABXBRL	Taxonomy Extension Labels Linkbase Document

101.PREXBRL	Taxonomy Extension Presentation Linkbase Document

101.DEFXBRL	Taxonomy Extension Definition Linkbase Document

SIGNATURES

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




	UNISYS CORPORATION

Date: ~~October 31, 2017~~November 8, 2018	By:	/s/ Inder M. Singh
		Inder M. Singh
		Senior Vice President and
		Chief Financial Officer
		(Principal Financial Officer)

	By:	/s/ Michael M. Thomson
		Michael M. Thomson
		Vice President and
		Corporate Controller
		(Principal Accounting Officer)

3337



Delaware		38-0387840
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

801 Lakeview Drive, Suite 100 Blue Bell, Pennsylvania		19422
(Address of principal executive offices)		(Zip Code)




Large accelerated filer	¨	Accelerated filer	ý

Non-accelerated filer	¨ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	¨

		Emerging growth company	¨



PART I - FINANCIAL INFORMATION		Page Number
Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Income	2
	Consolidated Statements of Comprehensive Income	3
	Consolidated Balance Sheets	4
	Consolidated Statements of Cash Flows	5
	Consolidated Statements of Deficit	6
	Notes to Consolidated Financial Statements	67
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2125
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2933
Item 4.	Controls and Procedures	2933
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	3135
Item 1A.	Risk Factors	3135
Item 6.	Exhibits	3135

Exhibit Index		3236
Signatures		3337


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Consolidated net loss	$	(52.9	)	$	(25.1	)	$	(121.1	)	$	(38.3	)
Consolidated net income (loss)													$	7.0		$	(52.9	)	$	54.7		$	(121.1	)
Other comprehensive income:
Foreign currency translation	25.5			(15.7		)	99.3			(54.1		)	(8.2		)	25.5			(36.6		)	99.3
Postretirement adjustments, net of tax of $(3.9) and $(12.0) in 2017 and $4.0 and $18.6 in 2016	5.2			54.0			17.2			200.9
Postretirement adjustments, net of tax of $1.4 and $4.3 in 2018 and $(3.9) and $(12.0) in 2017													39.1			5.2			118.0			17.2
Total other comprehensive income	30.7			38.3			116.5			146.8			30.9			30.7			81.4			116.5
Comprehensive income (loss)	(22.2		)	13.2			(4.6		)	108.5			37.9			(22.2		)	136.1			(4.6		)
Less comprehensive income (loss) attributable to noncontrolling interests	(12.2		)	2.4			(5.3		)	6.7			0.8			(12.2		)	4.0			(5.3		)
Comprehensive income (loss) attributable to Unisys Corporation	$	(10.0	)	$	10.8		$	0.7		$	101.8		$	37.1		$	(10.0	)	$	132.1		$	0.7


	September 30, 2017			December 31, 2016			September 30, 2018			December 31, 2017
Assets
Current assets:
Cash and cash equivalents	$	598.7		$	370.6		$	516.1		$	733.9
Accounts and notes receivable, net	511.8			505.8
Accounts receivable, net							492.2			503.3
Contract assets							73.3			—
Inventories:
Parts and finished equipment	17.7			14.0			12.3			13.6
Work in process and materials	15.1			15.0			10.7			12.5
Prepaid expenses and other current assets	118.8			121.9			102.6			126.2
Total current assets	1,262.1			1,027.3			1,207.2			1,389.5
Properties	915.4			886.6			857.2			898.8
Less-Accumulated depreciation and amortization	766.7			741.3			737.4			756.3
Properties, net	148.7			145.3			119.8			142.5
Outsourcing assets, net	190.6			172.5			202.0			202.3
Marketable software, net	136.4			137.0			157.2			138.3
Prepaid postretirement assets	47.9			33.3			155.0			148.3
Deferred income taxes	150.8			146.1			97.3			119.9
Goodwill	181.2			178.6			178.1			180.8
Restricted cash	21.3			30.5		*	17.8			30.2
Other long-term assets	157.9			151.0		*	193.6			190.6
Total assets	$	2,296.9		$	2,021.6		$	2,328.0		$	2,542.4
Liabilities and deficit
Current liabilities:
Current maturities of long-term-debt	11.3			106.0			$	9.9		$	10.8
Accounts payable	195.5			189.0			225.7			241.8
Deferred revenue	326.9			337.4			254.7			327.5
Other accrued liabilities	387.8			349.2			351.9			391.5
Total current liabilities	921.5			981.6			842.2			971.6
Long-term debt	631.5			194.0			640.1			633.9
Long-term postretirement liabilities	2,195.2			2,292.6			1,814.0			2,004.4
Long-term deferred revenue	108.3			117.6			167.4			159.0
Other long-term liabilities	90.3			83.2			68.1			100.0
Commitments and contingencies
Deficit:
Common stock, shares issued:
2017; 53.4, 2016; 52.8	0.5			0.5
2018; 54.2, 2017; 53.4							0.5			0.5
Accumulated deficit	(2,013.6		)	(1,893.4		)	(1,725.3		)	(1,963.1		)
Treasury stock, shares at cost:
2017; 2.9, 2016; 2.7	(102.7		)	(100.5		)
2018; 3.1, 2017; 2.9							(104.9		)	(102.7		)
Paid-in capital	4,523.9			4,515.2			4,536.6			4,526.4
Accumulated other comprehensive loss	(4,036.3		)	(4,152.8		)	(3,942.9		)	(3,815.8		)
Total Unisys stockholders’ deficit	(1,628.2		)	(1,631.0		)	(1,236.0		)	(1,354.7		)
Noncontrolling interests	(21.7		)	(16.4		)	32.2			28.2
Total deficit	(1,649.9		)	(1,647.4		)	(1,203.8		)	(1,326.5		)
Total liabilities and deficit	$	2,296.9		$	2,021.6		$	2,328.0		$	2,542.4



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



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



				Unisys Corporation
	Total			Total Unisys Corporation			Common Stock Par Value		Accumu-lated Deficit			Treasury Stock At Cost			Paid-in Capital		Accumu-lated Other Compre-hensive Loss			Non-controlling Interests
Balance at January 1, 2018	$	(1,326.5	)	$	(1,354.7	)	$	0.5	$	(1,963.1	)	$	(102.7	)	$	4,526.4	$	(3,815.8	)	$	28.2
Cumulative effect adjustment - ASU No. 2014-09	(21.4		)	(21.4		)			(21.4		)
Consolidated net income	41.7			40.6					40.6											1.1
Stock-based compensation	1.5			1.5								(2.1		)	3.6
Translation adjustments	(5.1		)	(5.9		)											(5.9		)	0.8
Postretirement plans	39.0			38.6													38.6			0.4
Balance at March 31, 2018	$	(1,270.8	)	$	(1,301.3	)	$	0.5	$	(1,943.9	)	$	(104.8	)	$	4,530.0	$	(3,783.1	)	$	30.5
Consolidated net income	6.0			3.8					3.8											2.2
Stock-based compensation	4.1			4.1											4.1
Translation adjustments	(23.3		)	(21.6		)											(21.6		)	(1.7		)
Postretirement plans	39.9			39.5													39.5			0.4
Balance at June 30, 2018	$	(1,244.1	)	$	(1,275.5	)	$	0.5	$	(1,940.1	)	$	(104.8	)	$	4,534.1	$	(3,765.2	)	$	31.4
Reclassification pursuant to ASU No. 2018-02	—			—					208.7								(208.7		)
Consolidated net income	7.0			6.1					6.1											0.9
Stock-based compensation	2.4			2.4								(0.1		)	2.5
Translation adjustments	(8.2		)	(7.8		)											(7.8		)	(0.4		)
Postretirement plans	39.1			38.8													38.8			0.3
Balance at September 30, 2018	$	(1,203.8	)	$	(1,236.0	)	$	0.5	$	(1,725.3	)	$	(104.9	)	$	4,536.6	$	(3,942.9	)	$	32.2



	As Reported		Adjustments			Balances Without Adoption of Topic 606
For the three months ended September 30, 2018
Statement of Income
Revenue
Services	$	605.6	$	(3.1	)	$	602.5
Technology	82.7		(8.1		)	74.6
Costs and expenses
Cost of revenue
Services	504.9		(0.9		)	504.0
Technology	29.6		0.2			29.8
Selling, general and administrative expenses	90.9		0.3			91.2
Operating income	55.8		(10.7		)	45.1
Income before income taxes	22.2		(10.7		)	11.5
Provision for income taxes	15.2		(5.3		)	9.9
Consolidated net income	7.0		(5.4		)	1.6
Net income attributable to Unisys Corporation	6.1		(5.4		)	0.7

For the nine months ended September 30, 2018
Statement of Income
Revenue
Services	$	1,760.8	$	(5.6	)	$	1,755.2
Technology	303.3		(101.1		)	202.2
Costs and expenses
Cost of revenue
Services	1,460.0		(2.2		)	1,457.8
Technology	96.2		(0.5		)	95.7
Selling, general and administrative expenses	274.5		0.7			275.2
Operating income	211.6		(104.7		)	106.9
Income before income taxes	105.1		(104.7		)	0.4
Provision for income taxes	50.4		(14.7		)	35.7
Consolidated net income (loss)	54.7		(90.0		)	(35.3		)
Net income (loss) attributable to Unisys Corporation	50.5		(90.0		)	(39.5		)

As of September 30, 2018
Balance Sheet
Assets
Accounts receivable, net current	$	492.2	$	63.5		$	555.7
Contract assets	73.3		(73.3		)	—
Inventories	23.0		4.6			27.6
Prepaid expenses and other current assets	102.6		0.9			103.5
Deferred income taxes - long-term	97.3		1.7			99.0



Other long-term assets	193.6		(22.5	)	171.1
Total assets	2,328.0		(25.1	)	2,302.9
Liabilities
Deferred revenue - current	254.7		46.5		301.2
Other accrued liabilities - current	351.9		(16.8	)	335.1
Long-term deferred revenue	167.4		8.4		175.8
Other long-term liabilities	68.1		5.5		73.6
Equity
Accumulated deficit	(1,725.3	)	(68.7	)	(1,794.0	)
Total liabilities and deficit	2,328.0		(25.1	)	2,302.9



				Work-Force Reductions						Idle Leased Facilities Costs
	Total			U.S.			International			Idle Leased Facilities Costs
Balance at December 31, 2016	$	36.6		$	1.8		$	33.4		$	1.4
Additional provisions	91.9			7.9			80.5			3.5
Payments	(28.7		)	(3.5		)	(23.8		)	(1.4		)
Changes in estimates	(2.0		)	(0.6		)	(1.6		)	0.2
Translation adjustments	6.6			—			6.4			0.2
Balance at September 30, 2017	$	104.4		$	5.6		$	94.9		$	3.9
Expected future utilization on balance at September 30, 2017:
2017 remaining three months	$	30.1		$	3.5		$	25.9		$	0.7
Beyond 2017	$	74.3		$	2.1		$	69.0		$	3.2


	Three Months Ended September 30, 2017									Three Months Ended September 30, 2016									Three Months Ended September 30, 2018									Three Months Ended September 30, 2017
	Total			U.S. Plans			International Plans			Total			U.S. Plans			International Plans			Total			U.S. Plans			International Plans			Total			U.S. Plans			International Plans
Service cost(i)	$	1.0		$	—		$	1.0		$	1.8		$	—		$	1.8		$	0.8		$	—		$	0.8		$	1.0		$	—		$	1.0
Interest cost	71.4			52.8			18.6			79.3			57.7			21.6			63.1			46.8			16.3			71.4			52.8			18.6
Expected return on plan assets	(91.2		)	(58.8		)	(32.4		)	(97.2		)	(63.2		)	(34.0		)	(85.7		)	(57.7		)	(28.0		)	(91.2		)	(58.8		)	(32.4		)
Amortization of prior service benefit	(1.1		)	(0.6		)	(0.5		)	(1.4		)	(0.6		)	(0.8		)	(1.5		)	(0.6		)	(0.9		)	(1.1		)	(0.6		)	(0.5		)
Recognized net actuarial loss	43.5			31.6			11.9			38.7			29.0			9.7			41.9			31.4			10.5			43.5			31.6			11.9
Net periodic pension expense (benefit)	$	23.6		$	25.0		$	(1.4	)	$	21.2		$	22.9		$	(1.7	)	$	18.6		$	19.9		$	(1.3	)	$	23.6		$	25.0		$	(1.4	)



	Nine Months Ended September 30, 2018									Nine Months Ended September 30, 2017
	Total			U.S. Plans			International Plans			Total			U.S. Plans			International Plans
Service cost⁽ⁱ⁾	$	2.4		$	—		$	2.4		$	4.2		$	—		$	4.2
Interest cost	191.1			140.0			51.1			212.2			158.5			53.7
Expected return on plan assets	(259.9		)	(172.9		)	(87.0		)	(270.7		)	(176.4		)	(94.3		)
Amortization of prior service benefit	(4.7		)	(1.9		)	(2.8		)	(3.6		)	(1.9		)	(1.7		)
Recognized net actuarial loss	126.0			93.8			32.2			132.5			94.8			37.7
Curtailment gain	—			—			—			(5.2		)	—			(5.2		)
Net periodic pension expense (benefit)	$	54.9		$	59.0		$	(4.1	)	$	69.4		$	75.0		$	(5.6	)



	Nine Months Ended September 30, 2017									Nine Months Ended September 30, 2016
	Total			U.S. Plans			International Plans			Total			U.S. Plans			International Plans
Service cost	$	4.2		$	—		$	4.2		$	5.7		$	—		$	5.7
Interest cost	212.2			158.5			53.7			241.2			173.4			67.8
Expected return on plan assets	(270.7		)	(176.4		)	(94.3		)	(296.6		)	(189.8		)	(106.8		)
Amortization of prior service benefit	(3.6		)	(1.9		)	(1.7		)	(4.2		)	(1.9		)	(2.3		)
Recognized net actuarial loss	132.5			94.8			37.7			116.9			87.0			29.9
Curtailment gain	(5.2		)	—			(5.2		)	—			—			—
Net periodic pension expense (benefit)	$	69.4		$	75.0		$	(5.6	)	$	63.0		$	68.7		$	(5.7	)



⁽ⁱ⁾	Service cost is reported in cost of revenue - services and selling, general and administrative expenses. All other components of net periodic pension expense are reported in other income (expense), net in the Consolidated Statements of Income.



	Stock Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding at December 31, 2017	1,758		$	26.35
Granted	—		—
Exercised	(1	)	15.66
Forfeited and expired	(597	)	23.72
Outstanding at September 30, 2018	1,160		27.72		1.42	$	0.2
Expected to vest at September 30, 2018	6		11.99		4.20	$	0.1
Exercisable at September 30, 2018	1,154		27.81		1.41	$	0.2



	Restricted Stock Units		Weighted- Average Grant-Date Fair Value
Outstanding at December 31, 2017	1,688		$	13.39
Granted	1,449		12.53
Vested	(767	)	13.43
Forfeited and expired	(198	)	12.57
Outstanding at September 30, 2018	2,172		12.90



Options	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding at December 31, 2016	2,099		$	25.41
Granted	—		—
Exercised	(1	)	10.65
Forfeited and expired	(320	)	20.22
Outstanding at September 30, 2017	1,778		26.35		1.81	$	—
Expected to vest at September 30, 2017	204		22.93		3.70	—
Exercisable at September 30, 2017	1,571		26.80		1.56	—



⁽ⁱ⁾	Service cost is reported in selling, general and administrative expenses. All other components of net periodic postretirement benefit expense are reported in other income (expense), net in the Consolidated Statements of Income.



	Nine Months Ended September 30, 2018
Weighted-average fair value of grant	$	15.20
Risk-free interest rate⁽ⁱ⁾	2.26		%
Expected volatility⁽ⁱⁱ⁾	52.97		%
Expected life of restricted stock units in years⁽ⁱⁱⁱ⁾	2.88
Expected dividend yield	—		%



⁽ⁱ⁾	Represents the continuously compounded semi-annual zero-coupon U.S. treasury rate commensurate with the remaining performance period
⁽ⁱⁱ⁾	Based on historical volatility for the company that is commensurate with the length of the performance period
⁽ⁱⁱⁱ⁾	Represents the remaining life of the longest performance period



⁽ⁱ⁾	Amounts represent shares excluded from the computation of diluted earnings per share, as their effect, if included, would have been anti-dilutive for the periods presented.


	Fair Value as of				September 30, 2018			December 31, 2017
Balance Sheet Location	September 30, 2017		December 31, 2016
Prepaid expenses and other current assets	$	0.7	$	2.4	$	0.7		$	4.9
Other accrued liabilities	$	3.5	$	1.9	3.8			1.6
Total fair value					$	(3.1	)	$	3.3


	Amount of Gain (Loss) Recognized										Three months ended September 30,					Nine months ended September 30,
	Three months ended September 30,					Nine months ended September 30,					2018			2017		2018			2017
Statement of Income Location	2017		2016			2017		2016
Other income (expense), net	$	5.8	$	(5.7	)	$	27.3	$	(19.8	)	$	(2.7	)	$	5.8	$	(9.6	)	$	27.3



	September 30, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt:
10.75% senior secured notes due 2022^(a)	$	429.0	$	487.3	$	—	$	—
5.50% convertible senior notes due 2021	$	184.4	$	243.7	$	179.1	$	379.8
6.25% senior notes^(b)	$	—	$	—	$	94.7	$	97.8



	September 30, 2018				December 31, 2017
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt:
10.75% senior secured notes due 2022	$	431.4	$	496.1	$	429.6	$	492.8
5.50% convertible senior notes due 2021	$	192.2	$	476.2	$	186.3	$	237.9



	Nine Months Ended September 30, 2016
Weighted-average fair value of grant	$	4.53
Risk-free interest rate	1.29		%
Expected volatility	51.30		%
Expected life of options in years	4.90
Expected dividend yield	—



	September 30, 2018		December 31, 2017
10.75% senior secured notes due April 15, 2022 ($440.0 million face value less unamortized discount and fees of $8.6 million and $10.4 million at September 30, 2018 and December 31, 2017, respectively)	$	431.4	$	429.6
5.50% convertible senior notes due March 1, 2021 ($213.5 million face value less unamortized discount and fees of $21.3 million and $27.2 million at September 30, 2018 and December 31, 2017, respectively)	192.2		186.3
Capital leases	6.1		7.5
Other debt	20.3		21.3
Total	650.0		644.7
Less – current maturities	9.9		10.8
Total long-term debt	$	640.1	$	633.9



~~(a)~~	The three and nine months ended September 30, 2017 excludes $5.7 million and $0.6 million, respectively, for net foreign currency translation gains related to exiting foreign countries which are reportedThe Credit Agreement contains customary representations and warranties, including that there has been no material adverse change in ~~Other income (expense), net in the consolidated statements of income.~~



	Total			Translation Adjustments			Postretirement Plans
Balance at December 31, 2016	$	(4,152.8	)	$	(927.1	)	$	(3,225.7	)
Other comprehensive income before reclassifications	(2.5		)	91.8			(94.3		)
Amounts reclassified from accumulated other comprehensive income	119.0			0.6			118.4
Current period other comprehensive income	116.5			92.4			24.1
Balance at September 30, 2017	$	(4,036.3	)	$	(834.7	)	$	(3,201.6	)



~~(a)~~	~~Reported in Other income (expense), net in the consolidated statements of income~~
~~(b)~~	~~These items are included in net periodic postretirement cost (see Note 3).~~



	Noncontrolling Interests
Balance at December 31, 2016	$	(16.4	)
Net income (loss)	(5.3		)
Translation adjustments	6.9
Postretirement plans	(6.9		)
Balance at September 30, 2017	$	(21.7	)



⁽ⁱ⁾	Reported in other income (expense), net in the Consolidated Statements of Income
⁽ⁱⁱ⁾	These items are included in net periodic postretirement cost (see Note 5).



	Noncontrolling Interests
Balance at December 31, 2017	$	28.2
Net income	4.2
Translation adjustments	(1.3		)
Postretirement plans	1.1
Balance at September 30, 2018	$	32.2