UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended ~~June 30, 2020~~

March 31, 2021



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

For the transition period from to .

Commission file number 1-8729

UNISYS ~~CORPORATION~~CORPORATION

(Exact name of registrant as specified in its charter)



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

~~Blue Bell~~, ~~Pennsylvania19422~~

(~~215~~) (215) 986-4011

(Address, zip code and telephone number, including area code, of principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01	UIS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

~~Large accelerated filer~~

☐

~~Accelerated filer~~

☒

~~Non-accelerated filer~~

☐

~~Smaller reporting company~~

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of Common Stock outstanding as of ~~June 30, 2020: 63,017,239.~~March 31, 2021: 67,022,500

UNISYS CORPORATION

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

Page Number

Item 1.

Consolidated Financial Statements (Unaudited)

Consolidated Statements of Income (Loss)

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Balance Sheets

Consolidated Statements of Cash Flows

Consolidated Statements of Deficit

Notes to Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

2023

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

2928

Item 4.

Controls and Procedures

2928

~~Item 5.~~

~~Other Information~~

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

3029

Item 1A.

Risk Factors

3029

Item 6.

Exhibits

3530

Exhibit Index

3631

Signatures

3732

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements

UNISYS CORPORATION

CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited)

(Millions, except per share data)


	Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
	2020			2019			2020			2019					2021		2020
Revenue													Revenue
Services	$	396.0		$	481.0		$	821.9		$	955.0		Services		$	420.4	$	425.9
Technology	42.8			88.4			132.3			168.9			Technology		89.4		89.5
	438.8			569.4			954.2			1,123.9					509.8		515.4
Costs and expenses													Costs and expenses
Cost of revenue:
Cost of revenue													Cost of revenue
Services	340.0			399.1			715.7			795.9			Services		338.7		375.7
Technology	23.9			17.7			50.5			50.3			Technology		31.9		26.6
	363.9			416.8			766.2			846.2					370.6		402.3
Selling, general and administrative	80.2			92.4			167.0			183.3			Selling, general and administrative		90.0		86.8
Research and development	3.2			7.2			9.4			16.2			Research and development		5.6		6.2
	447.3			516.4			942.6			1,045.7					466.2		495.3
Operating income (loss)	(8.5		)	53.0			11.6			78.2
Operating income													Operating income		43.6		20.1
Interest expense	4.6			16.2			18.5			31.7			Interest expense		10.1		13.9
Other expense, net	(53.7		)	(28.9		)	(101.8		)	(59.3		)
Income (loss) from continuing operations before income taxes	(66.8		)	7.9			(108.7		)	(12.8		)
Other (expense), net													Other (expense), net		(182.6)		(48.1)
Loss from continuing operations before income taxes													Loss from continuing operations before income taxes		(149.1)		(41.9)
Provision for income taxes	9.7			3.6			20.5			13.0			Provision for income taxes		8.4		10.8
Consolidated net income (loss) from continuing operations	(76.5		)	4.3			(129.2		)	(25.8		)
Consolidated net loss from continuing operations													Consolidated net loss from continuing operations		(157.5)		(52.7)
Net income attributable to noncontrolling interests	—			3.6			0.5			6.2			Net income attributable to noncontrolling interests		0.3		0.5
Net income (loss) from continuing operations attributable to Unisys Corporation	(76.5		)	0.7			(129.7		)	(32.0		)
Income (loss) from discontinued operations, net of tax	(2.1		)	25.5			1,066.4			38.8
Net loss from continuing operations attributable to Unisys Corporation													Net loss from continuing operations attributable to Unisys Corporation		(157.8)		(53.2)
Income from discontinued operations, net of tax													Income from discontinued operations, net of tax		0		1,068.5
Net income (loss) attributable to Unisys Corporation	$	(78.6	)	$	26.2		$	936.7		$	6.8		Net income (loss) attributable to Unisys Corporation		$	(157.8)	$	1,015.3
Earnings (loss) per share attributable to Unisys Corporation													Earnings (loss) per share attributable to Unisys Corporation
Basic													Basic
Continuing operations	$	(1.21	)	$	0.01		$	(2.06	)	$	(0.62	)	Continuing operations		$	(2.45)	$	(0.85)
Discontinued operations	(0.04		)	0.50			16.97			0.75			Discontinued operations		0		17.06
Total	$	(1.25	)	$	0.51		$	14.91		$	0.13		Total		$	(2.45)	$	16.21
Diluted													Diluted
Continuing operations	$	(1.21	)	$	0.01		$	(2.06	)	$	(0.62	)	Continuing operations		$	(2.45)	$	(0.85)
Discontinued operations	(0.04		)	0.49			16.97			0.75			Discontinued operations		0		17.06
Total	$	(1.25	)	$	0.50		$	14.91		$	0.13		Total		$	(2.45)	$	16.21

See notes to consolidated financial statements

UNISYS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)

(Millions)

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Consolidated net income (loss) from continuing operations $ (76.5 ) $ 4.3
$ (129.2 ) $ (25.8 )
Income (loss) from discontinued operations, net of tax (2.1 ) 25.5
1,066.4
38.8
Total (78.6 ) 29.8
937.2
13.0
Other comprehensive income:

Foreign currency translation 6.4
(13.8 ) (81.2 ) (48.0 )
Postretirement adjustments, net of tax of $0.4 and $14.3 in 2020 and $4.2 and $3.1 in 2019 40.0
50.4
131.2
118.9
Total other comprehensive income 46.4
36.6
50.0
70.9
Comprehensive income (loss) (32.2 ) 66.4
987.2
83.9
Less comprehensive income (loss) attributable to noncontrolling interests 0.3
2.7
(1.5 ) 3.2
Comprehensive income (loss) attributable to Unisys Corporation $ (32.5 ) $ 63.7
$ 988.7
$ 80.7


	Three Months Ended March 31,
		2021		2020
Consolidated net loss from continuing operations		$	(157.5)	$	(52.7)
Income from discontinued operations, net of tax		0		1,068.5
Total		(157.5)		1,015.8
Other comprehensive income
Foreign currency translation		(17.1)		(87.6)
Postretirement adjustments, net of tax of $3.1 in 2021 and $13.9 in 2020		202.2		91.2
Total other comprehensive income		185.1		3.6
Comprehensive income		27.6		1,019.4
Less comprehensive income (loss) attributable to noncontrolling interests		1.1		(1.8)
Comprehensive income attributable to Unisys Corporation		$	26.5	$	1,021.2

See notes to consolidated financial statements

UNISYS CORPORATION

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Millions)


	June 30, 2020			December 31, 2019				March 31, 2021		December 31, 2020
Assets							Assets
Current assets:							Current assets:
Cash and cash equivalents	$	782.2		$	538.8		Cash and cash equivalents	$	716.6	$	898.5
Accounts receivable, net	364.5			417.7			Accounts receivable, net	410.3		460.5
Contract assets	39.0			38.4			Contract assets	45.1		44.3
Inventories	14.8			16.4			Inventories	9.6		13.4
Prepaid expenses and other current assets	119.6			100.7			Prepaid expenses and other current assets	99.0		89.3
Current assets of discontinued operations	—			109.3
Total current assets	1,320.1			1,221.3			Total current assets	1,280.6		1,506.0
Properties	761.2			784.0			Properties	704.6		727.0
Less-accumulated depreciation and amortization	652.7			668.0			Less-accumulated depreciation and amortization	597.7		616.5
Properties, net	108.5			116.0			Properties, net	106.9		110.5
Outsourcing assets, net	182.1			202.1			Outsourcing assets, net	163.6		173.9
Marketable software, net	187.5			186.8			Marketable software, net	195.5		193.6
Operating lease right-of-use assets	66.3			71.4			Operating lease right-of-use assets	70.8		79.3
Prepaid postretirement assets	136.1			136.2			Prepaid postretirement assets	188.2		187.5
Deferred income taxes	109.0			114.0			Deferred income taxes	134.1		136.2
Goodwill	108.6			110.4			Goodwill	108.6		108.6
Restricted cash	10.2			13.0			Restricted cash	9.9		8.2
Other long-term assets	170.9			198.9			Other long-term assets	198.5		204.1
Long-term assets of discontinued operations	—			133.9
Total assets	$	2,399.3		$	2,504.0		Total assets	$	2,456.7	$	2,707.9
Liabilities and deficit							Liabilities and deficit
Current liabilities:							Current liabilities:
Notes payable	$	60.3		$	—
Current maturities of long-term debt	97.5			13.5
Current maturities of long-term-debt							Current maturities of long-term-debt	$	19.9	$	102.8
Accounts payable	161.6			204.3			Accounts payable	172.7		223.2
Deferred revenue	217.8			246.4			Deferred revenue	248.0		257.1
Other accrued liabilities	255.6			316.7			Other accrued liabilities	289.3		352.0
Current liabilities of discontinued operations	—			146.4

Total current liabilities	792.8			927.3			Total current liabilities	729.9		935.1
Long-term debt	47.3			565.9			Long-term debt	521.2		527.1
Long-term postretirement liabilities	1,574.4			1,960.2			Long-term postretirement liabilities	1,230.0		1,286.1
Long-term deferred revenue	130.4			147.0			Long-term deferred revenue	138.3		137.9
Long-term operating lease liabilities	47.9			56.0			Long-term operating lease liabilities	57.5		62.4
Other long-term liabilities	45.2			47.6			Other long-term liabilities	65.6		71.4
Long-term liabilities of discontinued operations	—			28.3
Commitments and contingencies (see note 14)							Commitments and contingencies (see note 14)	0		0
Deficit:							Deficit:
Common stock, shares issued: 2020; 66.8, 2019; 65.9	0.7			0.7
Common stock, shares issued: 2021; 72.3, 2020; 66.8							Common stock, shares issued: 2021; 72.3, 2020; 66.8	0.7		0.7
Accumulated deficit	(774.5		)	(1,711.2		)	Accumulated deficit	(1,118.3)		(960.5)
Treasury stock, shares at cost: 2020; 3.8, 2019; 3.5	(114.3		)	(109.6		)
Treasury stock, shares at cost: 2021; 5.3, 2020; 3.8							Treasury stock, shares at cost: 2021; 5.3, 2020; 3.8	(151.9)		(114.4)
Paid-in capital	4,650.4			4,643.3			Paid-in capital	4,693.1		4,656.9
Accumulated other comprehensive loss	(4,036.6		)	(4,088.6		)	Accumulated other comprehensive loss	(3,755.2)		(3,939.5)
Total Unisys Corporation stockholders’ deficit	(274.3		)	(1,265.4		)	Total Unisys Corporation stockholders’ deficit	(331.6)		(356.8)
Noncontrolling interests	35.6			37.1			Noncontrolling interests	45.8		44.7
Total deficit	(238.7		)	(1,228.3		)	Total deficit	(285.8)		(312.1)
Total liabilities and deficit	$	2,399.3		$	2,504.0		Total liabilities and deficit	$	2,456.7	$	2,707.9

See notes to consolidated financial statements

UNISYS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(Millions)


	Six Months Ended June 30,							Three Months Ended March 31,
	2020			2019				2021		2020
Cash flows from operating activities							Cash flows from operating activities
Consolidated net loss from continuing operations	$	(129.2	)	$	(25.8	)	Consolidated net loss from continuing operations	$	(157.5)	$	(52.7)
Income from discontinued operations, net of tax	1,066.4			38.8			Income from discontinued operations, net of tax	0		1,068.5
Adjustments to reconcile consolidated net loss to net cash used for operating activities:							Adjustments to reconcile consolidated net loss to net cash used for operating activities:
Gain on sale of U. S. Federal business	(1,057.4		)	—
Loss on debt extinguishment	28.5			—
Gain on sale of U.S. Federal business							Gain on sale of U.S. Federal business	0		(1,059.5)
Foreign currency translation losses	15.3			5.3			Foreign currency translation losses	2.9		15.8
Non-cash interest expense	2.7			5.4			Non-cash interest expense	0.9		1.5
Employee stock compensation	8.0			7.3			Employee stock compensation	3.3		5.1
Depreciation and amortization of properties	15.6			17.8			Depreciation and amortization of properties	7.6		8.2
Depreciation and amortization of outsourcing assets	32.7			31.7			Depreciation and amortization of outsourcing assets	16.1		16.0
Amortization of marketable software	36.0			21.6			Amortization of marketable software	15.5		13.6
Other non-cash operating activities	1.3			(0.2		)	Other non-cash operating activities	(0.6)		0.2
Loss on disposal of capital assets	0.5			1.3			Loss on disposal of capital assets	0.8		0.8
Postretirement contributions	(333.0		)	(47.7		)	Postretirement contributions	(21.6)		(327.7)
Postretirement expense	48.4			47.1			Postretirement expense	169.0		23.5
Deferred income taxes, net	(7.0		)	2.7			Deferred income taxes, net	(2.0)		(5.6)
Changes in operating assets and liabilities:
Receivables, net	39.6			10.1
Changes in operating assets and liabilities							Changes in operating assets and liabilities
Receivables, net and contract assets							Receivables, net and contract assets	48.8		(18.6)
Inventories	1.4			(0.3		)	Inventories	3.7		5.6
Accounts payable and other current liabilities	(161.5		)	(140.3		)
Other assets							Other assets	(15.2)		(14.2)
Accounts payable and current liabilities							Accounts payable and current liabilities	(124.8)		(58.0)
Other liabilities	2.6			16.9			Other liabilities	10.2		(0.4)
Other assets	(3.0		)	(11.2		)
Net cash used for operating activities	(392.1		)	(19.5		)	Net cash used for operating activities	(42.9)		(377.9)
Cash flows from investing activities							Cash flows from investing activities
Net proceeds from sale of U.S. Federal business	1,159.4			—			Net proceeds from sale of U.S. Federal business	0		1,164.7
Proceeds from investments	1,735.3			1,704.1			Proceeds from investments	1,229.5		828.8
Purchases of investments	(1,755.9		)	(1,706.9		)	Purchases of investments	(1,235.5)		(870.5)
Investment in marketable software	(36.7		)	(37.2		)	Investment in marketable software	(17.4)		(17.3)
Capital additions of properties	(10.6		)	(20.8		)	Capital additions of properties	(5.1)		(5.6)
Capital additions of outsourcing assets	(15.8		)	(39.7		)	Capital additions of outsourcing assets	(5.0)		(4.8)
Net proceeds from sale of properties	—			(0.2		)
Other	(0.2		)	(0.4		)	Other	(0.4)		(1.5)
Net cash provided by (used for) investing activities	1,075.5			(101.1		)
Net cash (used for) provided by investing activities							Net cash (used for) provided by investing activities	(33.9)		1,093.8
Cash flows from financing activities							Cash flows from financing activities
Proceeds from notes payable	60.3			—
Net proceeds from short-term borrowings							Net proceeds from short-term borrowings	0		59.5
Proceeds from issuance of long-term debt	4.0			28.1			Proceeds from issuance of long-term debt	1.5		2.1

Payments of long-term debt	(448.4		)	(10.5		)	Payments of long-term debt	(91.6)		(6.1)
Cash paid for debt extinguishment	(23.7		)	—
Proceeds from exercise of stock options							Proceeds from exercise of stock options	2.7		0
Other	(4.7		)	(4.5		)	Other	(7.4)		(4.7)
Net cash (used for) provided by financing activities	(412.5		)	13.1			Net cash (used for) provided by financing activities	(94.8)		50.8
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(30.3		)	0.9			Effect of exchange rate changes on cash, cash equivalents and restricted cash	(8.6)		(31.0)
Increase (decrease) in cash, cash equivalents and restricted cash	240.6			(106.6		)	Increase (decrease) in cash, cash equivalents and restricted cash	(180.2)		735.7
Cash, cash equivalents and restricted cash, beginning of period	551.8			624.1			Cash, cash equivalents and restricted cash, beginning of period	906.7		551.8
Cash, cash equivalents and restricted cash, end of period	$	792.4		$	517.5		Cash, cash equivalents and restricted cash, end of period	$	726.5	$	1,287.5

See notes to consolidated financial statements

UNISYS CORPORATION

CONSOLIDATED STATEMENTS OF DEFICIT (Unaudited)

(Millions)


			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 December 31, 2020	$	(312.1)	$	(356.8)	$	0.7	$	(960.5)	$	(114.4)	$	4,656.9	$	(3,939.5)	$	44.7
Consolidated net income	(157.5)		(157.8)				(157.8)								0.3

Capped call on conversion of notes	—		—						(30.8)		30.8
Stock-based activity	(1.3)		(1.3)						(6.7)		5.4
Translation adjustments	(17.1)		(17.9)										(17.9)		0.8
Postretirement plans	202.2		202.2										202.2		0
Balance at March 31, 2021	$	(285.8)	$	(331.6)	$	0.7	$	(1,118.3)	$	(151.9)	$	4,693.1	$	(3,755.2)	$	45.8

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, 2020 $ (1,228.3 ) $ (1,265.4 ) $ 0.7
$ (1,711.2 ) $ (109.6 ) $ 4,643.3
$ (4,088.6 ) $ 37.1
Consolidated net income 1,015.8
1,015.3
1,015.3
0.5
Stock-based activity (0.5 ) (0.5 )
(4.6 ) 4.1

Translation adjustments (87.6 ) (81.6 ) (81.6 ) (6.0 )
Postretirement plans 91.2
87.5
87.5
3.7
Balance at March 31, 2020 $ (209.4 ) $ (244.7 ) $ 0.7
$ (695.9 ) $ (114.2 ) $ 4,647.4
$ (4,082.7 ) $ 35.3
Consolidated net loss (78.6 ) (78.6 ) (78.6 )

Stock-based activity 2.9
2.9
(0.1 ) 3.0

Translation adjustments 6.4
6.5

6.5
(0.1 )
Postretirement plans 40.0
39.6

39.6
0.4
Balance at June 30, 2020 $ (238.7 ) $ (274.3 ) $ 0.7
$ (774.5 ) $ (114.3 ) $ 4,650.4
$ (4,036.6 ) $ 35.6


			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 December 31, 2019	$	(1,228.3)	$	(1,265.4)	$	0.7	$	(1,711.2)	$	(109.6)	$	4,643.3	$	(4,088.6)	$	37.1
Consolidated net income	1,015.8		1,015.3				1,015.3								0.5
Stock-based activity	(0.5)		(0.5)		0				(4.6)		4.1
Translation adjustments	(87.6)		(81.6)										(81.6)		(6.0)
Postretirement plans	91.2		87.5										87.5		3.7
Balance at March 31, 2020	$	(209.4)	$	(244.7)	$	0.7	$	(695.9)	$	(114.2)	$	4,647.4	$	(4,082.7)	$	35.3

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, 2019 $ (1,299.6 ) $ (1,343.5 ) $ 0.5
$ (1,694.0 ) $ (105.0 ) $ 4,539.8
$ (4,084.8 ) $ 43.9
Consolidated net income (loss) (16.8 ) (19.4 ) (19.4 ) 2.6
Stock-based activity (0.4 ) (0.4 ) 0.1
(4.4 ) 3.9

Translation adjustments (34.2 ) (32.8 ) (32.8 ) (1.4 )
Postretirement plans 68.5
69.2
69.2
(0.7 )
Balance at March 31, 2019 $ (1,282.5 ) $ (1,326.9 ) $ 0.6
$ (1,713.4 ) $ (109.4 ) $ 4,543.7
$ (4,048.4 ) $ 44.4
Consolidated net income 29.8
26.2
26.2
3.6
Stock-based activity 2.4
2.4
(0.1 ) 2.5

Translation adjustments (13.8 ) (11.6 )
(11.6 ) (2.2 )
Postretirement plans 50.4
49.1

49.1
1.3
Balance at June 30, 2019 $ (1,213.7 ) $ (1,260.8 ) $ 0.6
$ (1,687.2 ) $ (109.5 ) $ 4,546.2
$ (4,010.9 ) $ 47.1

See notes to consolidated financial statements

UNISYS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(Dollars in millions, except share and per share amounts)

Note 1 - Basis of Presentation

The accompanying consolidated financial statements and footnotes of Unisys Corporation have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP). The financial statements and footnotes are unaudited. In the opinion of management, the financial information furnished herein reflects all adjustments necessary for a fair statement of the results of operations, comprehensive income, financial position, cash flows and deficit for the interim periods specified. These adjustments consist only of normal recurring accruals except as disclosed herein. Because of seasonal and other factors, results for interim periods are not necessarily indicative of the results to be expected for the full year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events. These estimates and assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities and the reported amounts of revenue and expenses. Such estimates include the valuation of estimated credit losses, contract assets, ~~inventories,~~ operating lease right-of-use assets, outsourcing assets, marketable software, goodwill and other long-lived assets, legal contingencies, ~~indemnifications,~~ assumptions used in the calculation for systems integration projects, income taxes and retirement and other post-employment benefits, among others. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ materially from these estimates. Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.

WeThe company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts of COVID-19 as of ~~June 30, 2020~~March 31, 2021 and through the date of this report. The accounting matters assessed included, but were not limited to the valuation of estimated credit losses, contract assets, outsourcing assets, marketable software, goodwill and other long-lived assets, and retirement and other post-employment benefits. While there was not a material impact to our consolidated financial position as of ~~June 30, 2020~~March 31, 2021 resulting from our assessments, our future assessment of our current expectations at that time of the magnitude and duration of COVID-19, as well as other factors, could result in material impacts to our consolidated financial position in future reporting periods.

The company’s accounting policies are set forth in detail in Note 1 of the Notes to Consolidated Financial Statements in the company’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 filed with the Securities and Exchange Commission. Such Annual Report also contains a discussion of the company’s critical accounting policies and estimates. The company believes that these critical accounting policies and estimates affect its more significant estimates and judgments used in the preparation of the company’s consolidated financial statements.

Note 2 - Discontinued Operations

On March 13, 2020, the company completed the sale of its U.S. Federal business to Science Applications International Corporation for cash of $1.2 billion. ~~The company’s financial statements have been retroactively reclassified to report~~Net cash proceeds of the ~~U.S. Federal business as discontinued operations. As a result, all items relating to the business within the consolidated statements~~sale was $1,164.7 million (net of ~~income (loss) have been reported as income from discontinued operations, net of tax,~~working capital adjustments and all items relating to the business within the consolidated balance sheets have been reported as either assets or liabilities of discontinued operations. Depreciation, amortization, capital expenditures, and significant noncash operating and investing activities related to the U.S. Federal business were immaterial for all periods presented.transaction costs).

The results of the U.S. Federal business discontinued operations ~~for the three and six months ended June 30, 2020 and 2019~~ were as follows:

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020* 2019
Revenue $ —
$ 184.4
$ 149.5
$ 325.7
Income (loss):
Operations 0.1
34.0
9.1
51.7
Gain on sale (0.9 ) —
1,060.8
—
(0.8 ) 34.0
1,069.9
51.7
Income tax provision 1.3
8.5
3.5
12.9
Income (loss) from discontinued operations, net of tax $ (2.1 ) $ 25.5
$ 1,066.4
$ 38.8


	Three Months Ended March 31, 2020*
Revenue	$	149.5
Income
Operations	9.0
Gain on sale	1,061.7
	1,070.7
Income tax provision	2.2
Income from discontinued operations, net of tax	$	1,068.5

* Includes results of operations through the March 13, 2020 closing date.

~~Note 3 - Accounting Standards~~7

~~Effective January 1, 2020, the company adopted ASU No. 2018-15,~~

~~Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)~~: ~~Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract~~ which clarifies the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The company adopted the new guidance on a prospective basis and the adoption did not have a material impact on its consolidated results of operations and financial position.

~~Effective January 1, 2020, the company adopted ASU No. 2016-13~~ ~~Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~ which introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected losses. This includes trade and other receivables, contract assets, loans and other financial instruments. The adoption did not have a material impact on the company’s consolidated results of operations and financial position.

~~Effective January 1, 2020, the company adopted ASU 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~ which removed certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new standard was applied to the presentation of the company’s U.S. Federal business, which is reflected in discontinued operations.

Note 43 - Cost-Reduction Actions

During the three months ended ~~June 30, 2020,~~March 31, 2021, the company recognized cost-reduction charges and other costs of ~~$7.9~~$8.5 million. The charges (credits) related to work-force reductions were ~~$(3.0)~~$(1.6) million, principally related to severance costs, and were comprised of: (a) a charge of ~~$1.6~~$2.9 million ~~for 19 employees~~ and (b) a credit of ~~$4.6~~$(4.5) million for changes in estimates. In addition, the company recorded ~~a credit~~charges of ~~$0.6~~$10.1 million comprised of $2.3 million for ~~net~~ foreign currency ~~gains~~losses related to exiting foreign countries, ~~and a charge of $11.5~~$2.4 million for asset ~~impairments. The charges (credits) were recorded in~~impairments and $5.4 million of other expenses related to the following statement of income classifications: cost of revenue - services, $6.9 million; selling, general and administrative expenses, $1.5 million; research and development expenses, $0.1 million; and other expense, net, $(0.6) million.cost-reduction effort.

During the three months ended June 30, 2019, the company recognized cost-reduction charges and other costs of $2.6 million. Charges (credits) were comprised of $0.8 million for lease abandonment costs and $1.8 million for changes in estimates principally related to work-force reductions. The charges were recorded in the following statement of income classifications: cost of revenue - services, $(1.0) million and selling, general and administrative expenses, $3.6 million.

~~During the six months ended June 30,~~March 31, 2020, the company recognized cost-reduction charges and other costs of ~~$35.4~~$27.5 million. The charges related to work-force reductions were ~~$5.5~~$8.5 million, principally related to severance costs, and were comprised of: (a) a charge of ~~$11.3~~$9.7 million ~~for 309 employees~~ and (b) a credit of ~~$5.8~~$(1.2) million for changes in estimates. In addition, the company recorded charges of ~~$18.4~~$19.0 million for net foreign currency losses related to exiting foreign ~~countries and $11.5 million for asset impairments.~~ countries.

The charges (credits) were recorded in the following statement of income classifications: ~~cost of revenue - services, $12.8 million; selling, general and administrative expenses, $4.0 million; research and development expenses, $0.2 million; and other expense, net, $18.4 million.~~


	Three Months Ended March 31,
	2021		2020
Cost of revenue	$	(1.7)	$	5.9
Selling, general and administrative	6.2		2.5
Research and development	1.7		0.1
Other (expense), net	2.3		19.0
Total	$	8.5	$	27.5

~~classifications: cost of revenue - services, $(4.7) million; selling, general and administrative expenses, $8.6 million; and research and development expenses, $1.3 million.~~

Liabilities and expected future payments related to the company’s work-force reduction actions are as follows:

Total U.S. International
Balance at December 31, 2019 $ 49.8
$ 5.2
$ 44.6
Additional provisions 11.3
3.0
8.3
Payments (14.3 ) (1.4 ) (12.9 )
Changes in estimates (5.8 ) 0.1
(5.9 )
Translation adjustments (0.7 ) —
(0.7 )
Balance at June 30, 2020 $ 40.3
$ 6.9
$ 33.4
Expected future utilization on balance at June 30, 2020:
2020 remaining six months $ 32.3
$ 6.4
$ 25.9
Beyond 2020 $ 8.0
$ 0.5
$ 7.5


	Total		U.S.		International
Balance at December 31, 2020	$	55.9	$	13.1	$	42.8
Additional provisions	2.9		2.8		0.1
Payments	(12.0)		(5.2)		(6.8)
Changes in estimates	(4.5)		(0.5)		(4.0)
Translation adjustments	(1.3)		0		(1.3)
Balance at March 31, 2021	$	41.0	$	10.2	$	30.8
Expected future utilization on balance at March 31, 2021:
Short-term	$	31.2	$	9.9	$	21.3
Long-term	$	9.8	$	0.3	$	9.5

Note 54 - Pension and Postretirement Benefits

Net periodic pension expense ~~for the three and six months ended June 30, 2020 and 2019~~ is presented below:


	Three Months Ended June 30, 2020									Three Months Ended June 30, 2019										Three Months Ended March 31, 2021
	Total			U.S. Plans			International Plans			Total			U.S. Plans			International Plans					Total		U.S. Plans		International Plans
Service cost⁽ⁱ⁾	$	0.7		$	—		$	0.7		$	0.7		$	—		$	0.7		Service cost(i)		$	1.2	$	0	$	1.2
Interest cost	53.8			40.8			13.0			66.5			49.3			17.2			Interest cost		39.6		29.4		10.2
Expected return on plan assets	(73.9		)	(52.0		)	(21.9		)	(80.9		)	(54.5		)	(26.4		)	Expected return on plan assets		(74.1)		(51.4)		(22.7)
Amortization of prior service benefit	(1.3		)	(0.7		)	(0.6		)	(1.3		)	(0.7		)	(0.6		)	Amortization of prior service benefit		(1.3)		(0.6)		(0.7)
Recognized net actuarial loss	44.7			34.3			10.4			37.6			29.0			8.6			Recognized net actuarial loss		46.2		33.2		13.0
Net periodic pension expense (benefit)	$	24.0		$	22.4		$	1.6		$	22.6		$	23.1		$	(0.5	)
Settlement loss																			Settlement loss		158.0		158.0		0
Net periodic pension expense																			Net periodic pension expense		$	169.6	$	168.6	$	1.0


	Three Months Ended March 31, 2020
		Total		U.S. Plans		International Plans
Service cost(i)		$	0.7	$	0	$	0.7
Interest cost		53.8		40.4		13.4
Expected return on plan assets		(75.1)		(52.3)		(22.8)
Amortization of prior service benefit		(1.2)		(0.6)		(0.6)
Recognized net actuarial loss		44.3		33.5		10.8
Net periodic pension expense		$	22.5	$	21.0	$	1.5

Six Months Ended
June 30, 2020 Six Months Ended
June 30, 2019
Total
U.S.
Plans

International
Plans
Total
U.S.
Plans

International
Plans
Service cost⁽ⁱ⁾
$ 1.4
$ —
$ 1.4
$ 1.4
$ —
$ 1.4
Interest cost 107.6
81.2
26.4
133.2
98.5
34.7
Expected return on plan assets (149.0 ) (104.3 ) (44.7 ) (162.1 ) (109.0 ) (53.1 )
Amortization of prior service benefit (2.5 ) (1.3 ) (1.2 ) (2.5 ) (1.3 ) (1.2 )
Recognized net actuarial loss 89.0
67.8
21.2
75.2
57.9
17.3
Net periodic pension expense (benefit) $ 46.5
$ 43.4
$ 3.1
$ 45.2
$ 46.1
$ (0.9 )



⁽ⁱ⁾Service cost is reported in selling, general and administrative expense. All other components of net periodic pension expense are reported in other expense, net in the consolidated statements of income (loss).

In January of 2021, the company purchased a group annuity contract for $279 million to transfer projected benefit obligations related to approximately 11,600 retirees of the company’s U.S. defined benefit pension plans. This action resulted in a first quarter 2021 settlement loss of $158.0 million.

The American Rescue Plan Act, which was signed into law on March 11, 2021, includes a provision for pension relief that extends the amortization period for required contributions from 7 to 15 years and provides for the stabilization of interest rates used to calculate future required contributions. As a result, based on year-end 2020 pension data and assumptions, current projections indicate that the company will not be required to make future cash contributions to its U.S. qualified defined benefit pension plans and the company has determined that it will not make the previously-contemplated voluntary $200 million contribution to its U.S. pension plans in 2021.

Any future material deterioration in the value of the company’s U.S. qualified defined benefit pension plan assets, as well as changes in pension legislation, discount rate changes, asset return changes, or changes in economic or demographic trends, could require the company to make cash contributions to its U.S. defined benefit pension plans.

In ~~2020,~~2021, the company expects to make cash contributions of approximately ~~$634 million to its worldwide defined benefit pension plans, which are comprised of $600 million for the company’s U.S. qualified defined benefit pension plans and $34~~$50.3 million primarily for the company’s international defined benefit pension plans. In ~~2019,~~2020, the company made cash contributions of ~~$103.9~~$826.2 million to its worldwide defined benefit pension plans. For the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ the company made cash contributions of ~~$329.9~~$20.2 million and ~~$45.9~~$325.6 million, respectively.

Net periodic postretirement benefit (income) expense ~~for the three and six months ended June 30, 2020 and 2019~~ is presented below:

Service cost⁽ⁱ⁾



⁽ⁱ⁾Service cost is reported in selling, general and administrative expense. All other components of net periodic postretirement benefit expense are reported in other expense, net in the consolidated statements of income (loss).

The company expects to make cash contributions of approximately ~~$7.0~~$5.0 million to its postretirement benefit plan in ~~2020~~2021 compared to ~~$5.5~~$6.0 million in ~~2019.~~2020. For the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ the company made cash contributions of ~~$3.1~~$1.4 million and ~~$1.8~~$2.1 million, respectively.

Note 65 - Stock Compensation

Under stockholder approved stock-based plans, stock options, stock appreciation rights, restricted stock and restricted stock units may be granted to officers, directors and other key employees.

As of ~~June 30, 2020,~~March 31, 2021, the company has granted non-qualified stock options and restricted stock units under these plans. The company recognizes compensation cost, net of a forfeiture rate, in selling, general and administrative expense, and recognizes compensation cost only for those awards expected to vest. The company estimates the forfeiture rate based on its historical experience and its expectations about future forfeitures.

During the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ the company recorded ~~$8.0~~$3.3 million and ~~$7.3~~$5.1 million of share-based restricted stock unit compensation expense, respectively.

Restricted stock unit awards may contain time-based units, performance-based units, total shareholder return market-based units, or a combination of these units. Each performance-based and market-based unit will vest into 0 to 2 shares depending on the degree to which the performance or market conditions are met. Compensation expense for performance-based awards is recognized as expense ratably for each installment from the date of grant until the date the restrictions lapse and is based on the fair market value at the date of grant and the probability of achievement of the specific performance-related goals. Compensation expense for market-related awards is recognized as expense ratably over the measurement period, regardless of the actual level of achievement, provided the service requirement is met. Restricted stock unit grants for the company’s directors vest upon award and compensation expense for such awards is recognized upon grant.

A summary of restricted stock unit activity for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 follows (shares in thousands):


	Restricted Stock Units	Weighted- Average Grant-Date Fair Value
Outstanding at December 31, 2020	1,726	$	17.87
Granted	963	28.32
Vested	(839)	16.75
Forfeited and expired	(73)	18.18
Outstanding at March 31, 2021	1,777	22.38

Restricted
Stock
Units

Weighted-
Average
Grant-Date
Fair Value
Outstanding at December 31, 2019 2,040
$ 14.17
Granted 746
22.50
Vested (910 ) 13.86
Forfeited and expired (89 ) 15.58
Outstanding at June 30, 2020 1,787
17.75

The aggregate weighted-average grant-date fair value of restricted stock units granted during the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ was ~~$17.2~~$24.1 million and ~~$16.8~~$16.4 million, respectively. The fair value of restricted stock units with time and performance conditions was determined based on the trading price of the company’s common shares on the date of grant. The fair value of awards with market conditions was estimated using a Monte Carlo simulation with the following weighted-average assumptions:

Risk-free interest rate⁽ⁱ⁾

Risk-free interest rate(i)

Expected volatility⁽ⁱⁱ⁾

Expected volatility(ii)

Expected life of restricted stock units in years⁽ⁱⁱⁱ⁾

Expected life of restricted stock units in years(iii)



⁽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

As of ~~June 30, 2020,~~March 31, 2021, there was ~~$19.7~~$29.8 million of total unrecognized compensation cost related to outstanding restricted stock units granted under the company’s plans. That cost is expected to be recognized over a weighted-average period of ~~2.3~~2.6 years. The aggregate weighted-average grant-date fair value of restricted stock units vested during the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ was ~~$12.6~~$14.0 million and ~~$14.5~~$11.8 million, respectively.

Common stock issued upon the lapse of restrictions on restricted stock units are newly issued shares. In light of its tax position, the company is currently not recognizing any tax benefits from the issuance of stock upon lapse of restrictions on restricted stock units.

Note 6 - Other (expense), net

Other (expense), net is comprised of the following:


	Three Months Ended March 31,
	2021		2020
Postretirement expense*	$	(167.7)	$	(22.7)
Foreign exchange losses**	(2.9)		(15.6)
Environmental costs and other, net	(12.0)		(9.8)
Total other expense, net	$	(182.6)	$	(48.1)

*Includes $158.0 million settlement loss in 2021 related to the U.S. defined benefit pension plans.

**Includes $2.3 million and $19.0 million for foreign currency losses in 2021 and 2020, respectively, related to substantial completion of liquidation of foreign subsidiaries.

Note 7 - Income Taxes

Accounting rules governing income taxes require that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities. These rules also require that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion or the entire deferred tax asset will not be realized.

The company evaluates the realizability of its deferred tax assets by assessing its valuation allowance and by adjusting the amount of such allowance, if necessary. The factors used to assess the likelihood of realization are the company’s historical profitability, forecast of future taxable income and available tax-planning strategies that could be implemented to realize the net deferred tax assets. The company uses tax-planning strategies to realize or renew net deferred tax assets to avoid the potential loss of future tax benefits.

A full valuation allowance is currently maintained for all U.S. and certain foreign deferred tax assets in excess of deferred tax liabilities. The company will record 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 such valuation allowance, except with respect to withholding taxes not creditable against future taxable income. As a result, the company’s provision or benefit for taxes may vary significantly depending on the geographic distribution of income.

A corporation’s ability to deduct its federal NOL carryforwards and utilize certain other available tax attributes can be substantially constrained under the general annual limitation rules of Section 382 of the Code (Section 382) if it undergoes an “ownership change” as defined in Section 382 (generally where cumulative stock ownership changes among material shareholders exceed 50 percent during a rolling three-year period). Similar rules may apply under state tax laws. A future tax “ownership change” pursuant to Section 382, may severely limit or effectively eliminate the company’s ability to utilize its NOL carryforwards and other tax attributes. ~~On August 4, 2020, the company has terminated the previously implemented tax asset protection plan as a result of the completion of sale of the company’s U.S. Federal business.~~

Note 8 - Earnings Per Share

The following table shows how earnings (loss) per share attributable to Unisys Corporation was computed ~~for the three and six months ended June 30, 2020 and 2019~~ (shares in thousands):


	Three Months Ended June 30,					Six Months Ended June 30,							Three Months Ended March 31,
	2020			2019		2020			2019					2021		2020
Basic earnings (loss) per common share computation:												Basic earnings (loss) per common share computation:
Net income (loss) from continuing operations attributable to Unisys Corporation	$	(76.5	)	$	0.7	$	(129.7	)	$	(32.0	)
Income (loss) from discontinued operations, net of tax	(2.1		)	25.5		1,066.4			38.8
Net loss from continuing operations attributable to Unisys Corporation												Net loss from continuing operations attributable to Unisys Corporation		$	(157.8)	$	(53.2)
Income from discontinued operations, net of tax												Income from discontinued operations, net of tax		0		1,068.5
Net income (loss) attributable to Unisys Corporation	$	(78.6	)	$	26.2	$	936.7		$	6.8		Net income (loss) attributable to Unisys Corporation		$	(157.8)	$	1,015.3

Weighted average shares	63,010			51,782		62,830			51,600			Weighted average shares		64,423		62,650

Basic earnings (loss) per share attributable to Unisys Corporation												Basic earnings (loss) per share attributable to Unisys Corporation
Continuing operations	$	(1.21	)	$	0.01	$	(2.06	)	$	(0.62	)	Continuing operations		$	(2.45)	$	(0.85)
Discontinued operations	(0.04		)	0.50		16.97			0.75			Discontinued operations		0		17.06
Total	$	(1.25	)	$	0.51	$	14.91		$	0.13		Total		$	(2.45)	$	16.21

Diluted earnings (loss) per common share computation:												Diluted earnings (loss) per common share computation:
Net income (loss) from continuing operations attributable to Unisys Corporation	$	(76.5	)	$	0.7	$	(129.7	)	$	(32.0	)
Add interest expense on convertible senior notes, net of tax of zero	—			—		—			—
Net income (loss) from continuing operations attributable to Unisys Corporation for diluted earnings per share	(76.5		)	0.7		(129.7		)	(32.0		)
Net loss from continuing operations attributable to Unisys Corporation												Net loss from continuing operations attributable to Unisys Corporation		$	(157.8)	$	(53.2)
Add interest expense on convertible senior notes, net of tax of 0												Add interest expense on convertible senior notes, net of tax of 0		0		0
Net loss from continuing operations attributable to Unisys Corporation for diluted earnings per share												Net loss from continuing operations attributable to Unisys Corporation for diluted earnings per share		(157.8)		(53.2)
Income from discontinued operations, net of tax	(2.1		)	25.5		1,066.4			38.8			Income from discontinued operations, net of tax		0		1,068.5
Net income (loss) attributable to Unisys Corporation for diluted earnings per share	$	(78.6	)	$	26.2	$	936.7		$	6.8		Net income (loss) attributable to Unisys Corporation for diluted earnings per share		$	(157.8)	$	1,015.3

Weighted average shares	63,010			51,782		62,830			51,600			Weighted average shares		64,423		62,650
Plus incremental shares from assumed conversions:												Plus incremental shares from assumed conversions:
Employee stock plans	—			328		—			—			Employee stock plans		0		0
Convertible senior notes	—			—		—			—			Convertible senior notes		0		0
Adjusted weighted average shares	63,010			52,110		62,830			51,600			Adjusted weighted average shares		64,423		62,650

Diluted earnings (loss) per share attributable to Unisys Corporation												Diluted earnings (loss) per share attributable to Unisys Corporation
Continuing operations	$	(1.21	)	$	0.01	$	(2.06	)	$	(0.62	)	Continuing operations		$	(2.45)	$	(0.85)
Discontinued operations	(0.04		)	0.49		16.97			0.75			Discontinued operations		0		17.06
Total	$	(1.25	)	$	0.50	$	14.91		$	0.13		Total		$	(2.45)	$	16.21

Anti-dilutive weighted-average stock options and restricted stock units⁽ⁱ⁾	1,274			1,572		1,074			1,360			Anti-dilutive weighted-average stock options and restricted stock units(i)		1,067		875
Anti-dilutive weighted-average common shares issuable upon conversion of the 5.50% convertible senior notes⁽ⁱ⁾	8,625			21,868		8,625			21,868			Anti-dilutive weighted-average common shares issuable upon conversion of the 5.50% convertible senior notes(i)		2,227		8,625

⁽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.

Note 9 - Contract Assets and ~~Contract Liabilities~~Deferred Revenue

Contract assets represent rights to consideration in exchange for goods or services transferred to a customer when that right is conditional on something other than the passage of time. ~~Contract liabilities represent deferred revenue.~~Deferred revenue represents contract liabilities.

Net contract assets (liabilities) ~~as of June 30, 2020 and December 31, 2019~~ are as follows:


	June 30, 2020			December 31, 2019				March 31, 2021		December 31, 2020
Contract assets - current	$	39.0		$	38.4		Contract assets - current	$	45.1	$	44.3
Contract assets - long-term⁽ⁱ⁾	20.8			21.6			Contract assets - long-term(i)	18.8		20.7
Deferred revenue - current	(217.8		)	(246.4		)	Deferred revenue - current	(248.0)		(257.1)
Deferred revenue - long-term	(130.4		)	(147.0		)	Deferred revenue - long-term	(138.3)		(137.9)



⁽ⁱ⁾Reported in other long-term assets on the company’s consolidated balance sheets

Significant changes ~~during the three and six months ended June 30, 2020 and 2019~~ in the above contract asset and liability balances were as follows:

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Revenue recognized that was included in deferred revenue at the beginning of the period $ 68.2
$ 74.0
$ 149.2
$ 172.0


	Three Months Ended March 31,
		2021		2020
Revenue recognized that was included in deferred revenue at the beginning of the period		$	99.1	$	81.0

Note 10 - Capitalized Contract Costs

The company’s incremental direct costs of obtaining a contract consist of sales commissions which are deferred and amortized ratably over the initial contract life. These costs are classified as current or noncurrent based on the timing of when the company expects to recognize the expense. The current and noncurrent portions of deferred commissions are included in prepaid expenses and other current assets and in other long-term assets, respectively, in the company’s consolidated balance sheets. At ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the company had ~~$9.8~~$7.9 million and ~~$9.1~~$8.7 million, respectively, of deferred commissions.

Amortization expense related to deferred commissions ~~for the three and six months ended June 30, 2020 and 2019~~ was as follows:

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Deferred commissions - amortization expense⁽ⁱ⁾
$ 0.8
$ 0.9
$ 1.5
$ 1.7


	Three Months Ended March 31,
		2021		2020
Deferred commissions - amortization expense(i)		$	0.8	$	0.7

⁽ⁱ⁾Reported in selling, general and administrative expense in the company’s consolidated statements of income (loss)

Costs on outsourcing contracts are generally expensed as incurred. However, certain costs incurred upon initiation of an outsourcing contract (costs to fulfill a contract), principally initial customer setup, are capitalized and expensed over the initial contract life. These costs are included in outsourcing assets, net in the company’s consolidated balance sheets. The amount of such costs at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 was ~~$73.4~~$70.5 million and ~~$75.8~~$74.4 million, respectively. These costs are amortized over the initial contract life and reported in ~~Services~~ cost of revenue.

~~During the three and six months ended June 30, 2020 and 2019, amortization~~Amortization expense related to costs to fulfill a contract was as follows:

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Costs to fulfill a contract - amortization expense $ 6.3
$ 5.7
$ 12.7
$ 11.9


	Three Months Ended March 31,
		2021		2020
Costs to fulfill a contract - amortization expense		$	5.9	$	6.4

The remaining balance of outsourcing assets, net is comprised of fixed assets and software used in connection with outsourcing contracts. These costs are capitalized and depreciated over the shorter of the initial contract life or in accordance with the company’s fixed asset policy.

Note 11 - Financial Instruments and Fair Value Measurements

Due to its foreign operations, the company is exposed to the effects of foreign currency exchange rate fluctuations on the U.S. dollar, principally related to intercompany account balances. The company uses derivative financial instruments to reduce its exposure to market risks from changes in foreign currency exchange rates on such balances. The company enters into foreign exchange forward contracts, generally having maturities of three months or less, which have not been designated as hedging instruments. At ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the notional amount of these contracts was ~~$373.3~~$500.9 million and ~~$437.0~~$588.5 million, respectively. The fair value of these forward contracts is based on quoted prices for similar but not identical financial instruments; as such, the inputs are considered Level 2 inputs.

The following table summarizes the fair value of the company’s foreign exchange forward ~~contracts as of June 30, 2020 and December 31, 2019.~~contracts.

The following table summarizes the location and amount of gains and losses recognized on foreign exchange forward ~~contracts for the three and six months ended June 30, 2020 and 2019.~~contracts.

Financial assets with carrying values approximating fair value include cash and cash equivalents and accounts receivable. Financial liabilities with carrying values approximating fair value include accounts payable and other liabilities. The carrying amounts of these financial assets and liabilities approximate fair value due to their short maturities. Such financial instruments are not included in the following table that provides information about the estimated fair values of other financial instruments that are not measured at fair value in the consolidated balance sheets as of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019.~~2020.

Long-term debt is carried at amortized cost and its estimated fair value is based on market prices classified as Level 2 in the fair value hierarchy.

In January 2021, the company changed its organizational structure to more effectively address evolving client needs. With these changes, the company changed its reportable segments, operating segments and reporting units. The realignment and change in operating segments was deemed a triggering event, resulting in the company performing an interim goodwill analysis on the reporting units impacted by this segment change as of immediately before and immediately after the change. There were no impairment charges resulting from this analysis. See Note 17, Segment Information, for additional information on the company’s operating and reportable segments.

As a result of the realignment, goodwill totaling $108.6 million was reallocated to reporting units on a relative fair value basis. The amount of goodwill at March 31, 2021 and December 31, 2020 was as follows: ClearPath Forward, $98.3 million and Other, $10.3 million. At ~~June 30, 2020,~~March 31, 2021, the amount of goodwill allocated to reporting units with negative net assets within Other was ~~as follows: Business Process Outsourcing Services,~~ $10.3 million.

~~Changes in the carrying amount of goodwill by segment at June 30, 2020 was as follows:~~

Total Services Technology
Balance at December 31, 2019 $ 110.4
$ 10.3
$ 100.1
Translation adjustments (1.8 ) —
(1.8 )
Balance at June 30, 2020 $ 108.6
$ 10.3
$ 98.3

Note 13 - Debt

Long-term debt ~~which excludes borrowings under the company’s revolving credit agreement,~~ is comprised of the following:


						March 31, 2021		December 31, 2020
	June 30, 2020		December 31, 2019
10.75% senior secured notes ($440.0 million face value less unamortized discount and fees of $5.5 million at December 31, 2019)	$	—	$	434.5
5.50% convertible senior notes due March 1, 2021 (Face value of $84.2 million less unamortized discount and fees of $2.4 million and $4.2 million at June 30, 2020 and December 31, 2019, respectively)	81.8		80.0
6.875% senior secured notes due November 1, 2027 (Face value of $485.0 million less unamortized issuance costs of $7.8 and $8.1 million at March 31, 2021 and at December 31, 2020)					6.875% senior secured notes due November 1, 2027 (Face value of $485.0 million less unamortized issuance costs of $7.8 and $8.1 million at March 31, 2021 and at December 31, 2020)	$	477.2	$	476.9
5.50% convertible senior notes (Face value of $84.2 million less unamortized discount and fees of $0.6 million at December 31, 2020)					5.50% convertible senior notes (Face value of $84.2 million less unamortized discount and fees of $0.6 million at December 31, 2020)	0		83.6
Finance leases	4.8		5.3		Finance leases	4.7		5.5
Other debt	58.2		59.6		Other debt	59.2		63.9
Total	144.8		579.4		Total	541.1		629.9
Less – current maturities	97.5		13.5		Less – current maturities	19.9		102.8
Total long-term debt	$	47.3	$	565.9	Total long-term debt	$	521.2	$	527.1

Senior Secured Notes due 2027

On October 29, 2020, the company issued $485.0 million aggregate principal amount of its 6.875% Senior Secured Notes due 2027 (the 2027 Notes). The 2027 Notes will pay interest semiannually on May 1 and November 1, commencing on May 1, 2021, and will mature on November 1, 2027, unless earlier repurchased or redeemed. The 2027 Notes are fully and unconditionally guaranteed on a senior secured basis by Unisys Holding Corporation, Unisys NPL, Inc., and Unisys AP Investment Company I, each a Delaware corporation that is directly or indirectly owned by the company (the subsidiary guarantors).

The 2027 Notes and the related guarantees rank equally in right of payment with all of the existing and future senior debt of the company and its subsidiary guarantors and senior in right of payment to any future subordinated debt of the company and its subsidiary guarantors. The 2027 Notes and the related guarantees are structurally subordinated to all existing and future liabilities (including preferred stock, trade payables and pension liabilities) of the subsidiaries of the company that are not subsidiary guarantors. The 2027 Notes and the guarantees will be secured by liens on substantially all assets of the company and the subsidiary guarantors, other than certain excluded assets (the collateral). The liens securing the 2027 Notes on certain ABL collateral will be subordinated to the liens on ABL collateral in favor of the ABL secured parties and, in the future, the liens securing the 2027 Notes may be subordinated to liens on the collateral securing certain permitted first lien debt, subject to certain limitations and permitted liens.

Prior to November 1, 2023 the company may, at its option, redeem some or all of the 2027 Notes at any time, at a price equal to 100% of the principal amount of the 2027 Notes redeemed plus a “make-whole” premium, plus accrued and unpaid interest, if any. The company may also redeem, at its option, up to 40% of the 2027 Notes at any time prior to November 1, 2023, using the proceeds of certain equity offerings at a redemption price of 106.875% of the principal amount thereof, plus accrued and unpaid interest, if any. On or after November 1, 2023, the company may, on any one or more occasions, redeem all or a part of the 2027 Notes at specified redemption premiums, declining to par for any redemptions on or after November 1, 2025.

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.

If the company experiences certain kinds of changes of control (as defined in the indenture), it will be required to offer to repurchase the 2027 Notes at 101% of the principal amount of the 2027 Notes, plus accrued and unpaid interest as of the repurchase date, if any. In addition, if the company sells assets, under certain circumstances it must apply the proceeds towards an offer to repurchase the 2027 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 occur, would permit or require the principal, premium, if any, interest and any other monetary obligations on all the then outstanding 2027 Notes to be due and payable immediately.

Interest expense related to the 2027 Notes is comprised of the following:


	Three Months Ended March 31, 2021
Contractual interest coupon	$	8.3
Amortization of issuance costs	0.3
Total	$	8.6

Senior Secured Notes Due 2022

On April 15, 2020, the company redeemed all $440.0 million in aggregate principal amount of its outstanding ~~10.750%~~10.75% Senior Secured Notes due 2022 (the 2022 Notes) for a redemption price equal to 105.375% of the aggregate principal amount of the 2022 Notes redeemed plus accrued but unpaid interest to, but not including, the redemption date. The redemption price paid was $487.3 million and is made up of the following: $440.0 million of principal amount due, $23.65 million of call premium and $23.65 million of accrued interest through April 14, 2020. In the second quarter of 2020, the company recorded a loss on debt extinguishment in other ~~expense,~~(expense), net of $28.5 million consisting of the premium of $23.65 million and write off of $4.8 million of unamortized discount and fees related to the issuance of the 2022 Notes.

Interest expense related to the 2022 Notes ~~for the three and six month periods ended June 30, 2020 and 2019~~ was as follows:

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Contractual interest coupon $ 2.0
$ 11.8
$ 13.8
$ 23.6
Amortization of debt issuance costs 0.1
0.6
0.7
1.2
Total $ 2.1
$ 12.4
$ 14.5
$ 24.8


	Three Months Ended March 31, 2020
Contractual interest coupon		$	11.8
Amortization of issuance costs		0.6
Total		$	12.4

Convertible Senior Notes Due 2021

In 2016, the company issued $213.5 million aggregate principal amount of Convertible Senior Notes due 2021 (the ~~“2021 Notes”)~~2021 Notes). ~~The~~Following the completion of separate, privately negotiated exchange agreements in 2019, $84.2 million aggregate principal amount of 2021 Notes ~~which are senior unsecured obligations, bear interest at a coupon rate of 5.50% (or 9.5% effective interest rate) per year until maturity, payable semiannually in arrears on~~remained outstanding.

On March ~~1 and September 1 of each year. The~~3, 2021, ~~Notes are not redeemable by~~ the company ~~prior to maturity. The 2021 Notes are convertible by~~completed the ~~holders into shares~~conversion of the company’s common stock if certain conditions set forth in the indenture governing the 2021 Notes have been satisfied. The conversion rate for the 2021 Notes is 102.4249 shares of the company’s common stock per $1,000$84.2 million aggregate principal amount of the 2021 Notes (or a total amount at issuance date of 21,867,716 shares), which is equivalent to an initial conversion price of approximately $9.76 per share of the company’s common stock. Upon any conversion, the company will settle its conversion obligation in cash, shares of its common stock, orthat remained outstanding for a combination of cash and shares of ~~its~~the company’s common ~~stock, at its election. On~~stock. As a result of the ~~maturity date,~~conversion of the ~~company will be required to repay in cash the principal amount, plus accrued and unpaid interest, of any 2021 Notes that remain~~ outstanding ~~on that date.~~

~~In connection with the issuance of the~~ 2021 Notes, the company delivered to the holders (i) aggregate cash payments totaling approximately $86.5 million, which included an aggregate cash payment for outstanding principal of approximately $84.2 million, an aggregate cash payment for accrued interest of approximately $2.3 million and a nominal cash payment in lieu of fractional shares, and (ii) the issuance of 4,537,123 shares of the company’s common stock. The issuance of the common stock was made in exchange for the 2021 Notes pursuant to an exemption from the registration requirements provided by Section 3(a)(9) of the Securities Act of 1933, as amended.

The company also ~~paid $27.3 million to enter into privately negotiated~~received 1,251,460 shares of its common stock, now held in treasury stock, from the settlement of the capped call transactions that the company had entered into with the initial purchasers and/or affiliates of the initial ~~purchasers. The capped call transactions will cover, subject to customary anti-dilution adjustments,~~purchasers of the 2021 Notes in connection with the issuance of the 2021 Notes. As a result, the net number of outstanding shares of the company’s common stock ~~that will initially underlie~~following the 2021 Notes. The capped call transactions will effectively raise the conversion premium on the 2021 Notes from approximately 22.5% to approximately 60%, which raises the initial conversion price from approximately $9.76 per share of common stock to approximately $12.75 per share of common stock. The capped call transactions are expected to reduce potential dilution to the company’s common stock and/or offset potential cash payments the company is required to make in excess of the principal amount upon any conversion of the 2021 ~~Notes.~~Notes increased by 3,285,663 shares.

On August 2, 2019, the company entered into separate, privately negotiated exchange agreements pursuant to which it (i) issued an aggregate of 10,593,930 shares of its common stock, and (ii) paid cash in an aggregate amount of $59.4 million, such cash amount included $3.1 million of accrued and unpaid interest on the exchanged 2021 Notes up to, but excluding, the settlement date, in exchange for $129.3 million in aggregate principal amount of its outstanding 2021 Notes. The transactions closed on August 6, 2019. Upon closing, $84.2 million aggregate principal amount of 2021 Notes remained outstanding. In connection with the transactions, the company unwound a pro rata portion of the capped call transactions described above and received proceeds of $7.2 million. Following the 2021 Notes exchange, the capped call transactions remaining cover approximately 8.6 million shares of the company’s common stock.

Interest expense related to the 2021 Notes ~~for the three and six month periods ended June 30, 2020 and 2019~~ was as follows:

In 2019, the company entered into a $27.7 million Installment Payment Agreement (IPA) maturing on December 20, 2023 with a syndicate of financial institutions to finance the acquisition of certain software licenses necessary for the provision of services to a client. Interest accrues at an annual rate of 7.0% and the company is required to make monthly principal and interest payments on each agreement in arrears. At March 31, 2021, $6.6 million was reported in current maturities of long-term debt.

In 2019, the company entered into a vendor agreement in the amount of $19.3 million to finance the acquisition of certain software licenses used to provide services to our clients and for its own internal use. Interest accrues at an annual rate of 5.47% and the company is required to make annual principal and interest payments in advance with the last payment due on March 1, 2024. At March 31, 2021, $3.8 million was reported in current maturities of long-term debt.

~~The~~Contemporaneously with the issuance of the 2027 Notes, the company ~~has a~~and the subsidiary guarantors entered into an amendment and restatement of the company’s secured revolving credit facility (the ~~“Credit Agreement”)~~Amended and Restated ABL Credit Facility) that provides for revolving loans and letters of credit up to an aggregate amount of $145.0 million (with a limit on letters of credit of ~~$30.0~~$40.0 million)~~. The Credit Agreement includes~~, with an accordion feature provision allowing for an increase in ~~the amount of the~~credit facility up to ~~$150.0 million.~~$175.0 million upon the satisfaction of certain conditions specified in the Amended and Restated ABL Credit Facility. The amendment and restatement extended the maturity from October 2022 to October 29, 2025 and modified certain other terms and covenants. Availability under the credit facility is subject to a borrowing base calculated by reference to the company’s receivables. At ~~June 30, 2020,~~March 31, 2021, the company had ~~$59.0 million of~~0 borrowings ~~reported in notes payable,~~ and $5.7 million of letters of credit outstanding, and availability under the facility was ~~$40.6~~$123.4 million net of letters of credit issued.

The Amended and Restated ABL Credit ~~Agreement expires October 5, 2022,~~Facility is subject to a springing maturity, onunder which the ~~date that is~~Amended and Restated ABL Credit Facility will immediately mature 91 days prior to any date on which contributions to pension funds in the ~~maturity date~~United States in an amount in excess of $100.0 million are required to be paid unless the ~~2021 Notes unless, on such date,~~company is able to meet certain conditions, ~~are met.~~including that the company has the liquidity (as defined in the Amended and Restarted ABL Credit Facility) to cash settle the amount of such pension payments, no default or event of default has occurred under the Amended and Restated ABL Credit Facility, the company’s liquidity is above $130.0 million and the company is in compliance with the then applicable fixed charge coverage ratio on a pro forma basis.

The ~~credit facility~~Amended and Restated ABL Credit Facility is guaranteed by ~~Unisys Holding Corporation, Unisys NPL, Inc., Unisys AP Investment Company I~~the subsidiary guarantors 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 credit facility.

The company is required to maintain a minimum fixed charge coverage ratio if the availability under the ~~credit facility~~Amended and Restated ABL Credit Facility falls below the greater of 10% of the lenders’ commitments under the facility and ~~$15.0~~$14.5 million.

The Amended and Restated ABL Credit ~~Agreement~~Facility contains customary representations and warranties, including, but not limited to, that there has been no material adverse change in the company’s business, properties, operations or financial condition. The Amended and Restated ABL Credit ~~Agreement~~Facility includes ~~limitations~~restrictions 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. These restrictions are subject to several important limitations and exceptions. 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.~~million, subject to relevant cure periods, as applicable.

OnAt March ~~27, 2019,~~31, 2021, the company ~~entered into a $27.7 million Installment Payment Agreement (IPA) with a syndicate of financial institutions to finance~~has met all covenants and conditions under its various lending and funding agreements. For at least the ~~acquisition of certain software licenses necessary for the provision of services to a client. Interest accrues at an annual rate of 7.0% and~~next twelve months, the company ~~is required~~expects to ~~make monthly principal~~continue to meet these covenants and ~~interest payments on each agreement in arrears. At June 30, 2020, $6.2 million was reported in current maturities of long-term debt.~~conditions.

On September 5, 2019, the company entered into a vendor agreement in the amount of $19.3 million to finance the acquisition of certain software licenses used to provide services to its clients and for its own internal use. Interest accrues at an annual rate of 5.47% and the company is required to make annual principal and interest payments in advance with the last payment due on March 1, 2024. At June 30, 2020, $3.6 million was reported in current maturities of long-term debt.

Note 14 - Litigation and Contingencies

There are various lawsuits, claims, investigations and proceedings that have been brought or asserted against the company, which arise in the ordinary course of business, including actions with respect to commercial and government contracts, labor and employment, employee benefits, environmental matters, intellectual property and non-income tax matters. The company records a provision for these matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Any provisions are reviewed at least quarterly and are adjusted to reflect the impact and status of settlements, rulings, advice of counsel and other information and events pertinent to a particular matter.

The company believes that it has valid defenses with respect to legal matters pending against it. Based on its experience, the company also believes that the damage amounts claimed in the lawsuits disclosed below are not a meaningful indicator of the company’s potential liability. Litigation is inherently unpredictable, however, and it is possible that the company’s results of operations or cash flow could be materially affected in any particular period by the resolution of one or more of the legal matters pending against it.

The company’s Brazilian operations, along with those of many other companies doing business in Brazil, are involved in various litigation matters, including numerous governmental assessments related to indirect and other taxes, as well as disputes associated with former employees and contract labor. The tax-related matters pertain to value-added taxes, customs, duties, sales and other non-income-related tax exposures. The labor-related matters include claims related to compensation. The company believes that appropriate accruals have been established for such matters based on information currently available. At ~~June 30, 2020,~~March 31, 2021, excluding those matters that have been assessed by management as being remote as to the likelihood of ultimately resulting in a loss, the amount related to unreserved tax-related matters, inclusive of any related interest, is estimated to be up to approximately ~~$77~~$66 million.

On June 26, 2014, the State of Louisiana filed a Petition for Damages against, among other defendants, the company and Molina Information Systems, LLC, in the Parish of East Baton Rouge, 19th Judicial District. The State alleged that between 1989 and 2012 the defendants, each acting successively as the State’s Medicaid fiscal intermediary, utilized an incorrect reimbursement formula for the payment of pharmaceutical claims causing the State to pay excessive amounts for prescription drugs. The State contends it has incurred damages of approximately $50 million for the period July 1, 1989 through September 4, 2012, plus interest. The company believes that it has valid defenses to Louisiana’s claims and is asserting them in the pending litigation.

With respect to the specific legal proceedings and claims described above, except as otherwise noted, either (i) the amount or range of possible losses in excess of amounts accrued, if any, is not reasonably estimable or (ii) the company believes that the amount or range of possible losses in excess of amounts accrued that are estimable would not be material.

Litigation is inherently unpredictable and unfavorable resolutions could occur. Accordingly, it is possible that an adverse outcome from such matters could exceed the amounts accrued in an amount that could be material to the company’s financial condition, results of operations and cash flows in any particular reporting period.

Notwithstanding that the ultimate results of the lawsuits, claims, investigations and proceedings that have been brought or asserted against the company are not currently determinable, the company believes that at ~~June 30, 2020,~~March 31, 2021, it has adequate provisions for any such matters.

Note 15 - Accumulated Other Comprehensive ~~Income (Loss)~~Loss

Accumulated other comprehensive ~~income (loss) as of June 30, 2020~~loss is as follows:

Total
Translation
Adjustments

Postretirement
Plans
Balance at December 31, 2019 $ (4,088.6 ) $ (872.9 ) $ (3,215.7 )
Other comprehensive income (loss) before reclassifications (12.3 ) (56.7 ) 44.4
Amounts reclassified from accumulated other comprehensive income 64.3
(18.4 ) 82.7
Current period other comprehensive income 52.0
(75.1 ) 127.1
Balance at June 30, 2020 $ (4,036.6 ) $ (948.0 ) $ (3,088.6 )


	Total		Translation Adjustments		Postretirement Plans
Balance at December 31, 2020	$	(3,939.5)	$	(826.6)	$	(3,112.9)
Other comprehensive income (loss) before reclassifications	(13.0)		(15.6)		2.6
Amounts reclassified from accumulated other comprehensive income (loss)	197.3		(2.3)		199.6
Current period other comprehensive income (loss)	184.3		(17.9)		202.2
Balance at March 31, 2021	$	(3,755.2)	$	(844.5)	$	(2,910.7)

Amounts reclassified out of accumulated other comprehensive ~~income for the three and six months ended June 30, 2020 and 2019~~loss are as follows:

Adjustment for substantial completion of liquidation of foreign subsidiaries⁽ⁱ⁾

Adjustment for substantial completion of liquidation of foreign subsidiaries(i)

Postretirement Plans⁽ⁱⁱ⁾:

Postretirement plans(ii):

⁽ⁱ⁾ Reported in other ~~expense,~~(expense), net in the consolidated statements of income (loss).

⁽ⁱⁱ⁾These items are included in net periodic postretirement cost (see Note 5)4).

Note 16 - Supplemental Cash Flow Information

Six Months Ended
June 30,
2020 2019
Cash paid during the period for:
Income taxes, net of refunds $ 24.4
$ 32.8
Interest $ 28.4
$ 30.2


	Three Months Ended March 31,
	2021		2020
Cash paid during the period for:
Income taxes, net of refunds	$	14.4	$	16.7
Interest	$	4.1	$	3.7

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the total of the amounts shown in the consolidated statements of cash flows.

Cash and cash equivalents subject to contractual restrictions and are therefore not readily available are classified as restricted cash. Restricted cash includes cash the company is contractually obligated to maintain in accordance with the terms of its U.K. business process outsourcing joint venture agreement and other cash that is restricted from withdrawal.

Note 17 - Segment Information

The ~~company has 2 business segments: Services and Technology. Revenue classifications within the Services and Technology~~company’s reportable segments are as follows:

•Digital Workplace Services (DWS), which provides services and IP-led solutions that support clients’ employees’ productivity, satisfaction and ability to securely work anywhere, any time;

•Cloud & ~~infrastructure services. This represents revenue from helping clients apply cloud~~Infrastructure Services (C&I), which provides hybrid and ~~as-a-service delivery models~~multi-cloud solutions in select markets to ~~capitalize on business opportunities, make their end users more productive~~accelerate innovation and ~~manage~~increase efficiency of our clients’ businesses; and ~~secure their IT infrastructure~~

•ClearPath Forward® (CPF), which provides server systems and ~~operations more economically.~~

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~~CPF segment records intersegment revenue and manufacturing profit on hardware and software shipments to customers under ~~Services contracts. The Services segment,~~contracts of other segments. These segments, in turn, ~~records~~record 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 of income, the manufacturing costs of products sourced from the ~~Technology~~CPF segment and sold to ~~Services~~other segments’ customers are reported in cost of revenue for ~~Services.~~

these other segments. Also included in the ~~Technology~~CPF segment’s sales and ~~operating~~gross profit are sales of hardware and software sold to ~~the Services segment~~other segments for internal use in ~~Services~~their engagements. The amount of such profit included in ~~operating income~~gross profit of the ~~Technology~~CPF segment for the three months ended ~~June 30,~~March 31, 2021 and 2020 was $0.7 million and ~~2019 was~~ 0, ~~in both periods. The amount for the six months ended June 30, 2020 and 2019 was 0 and $0.2 million,~~ respectively. The sales and profit on these transactions are eliminated in Corporate.

The company evaluates ~~business~~ segment performance based on ~~operating income~~gross profit exclusive of the service cost component of postretirement income or expense, restructuring charges, amortization of purchased intangibles and unusual and nonrecurring items, which are included in Corporate. ~~All other corporate and centrally incurred costs are allocated~~During the first quarter of 2021, the company also changed its internal measurement of segment profitability. Prior period amounts have therefore been reclassified to be comparable to the ~~business segments based principally on revenue, employees, square footage or usage.~~current period’s presentation.

A summary of the company’s operations by ~~business~~ segment ~~for the three and six month periods ended June 30, 2020 and 2019~~ is presented below:

Presented below is a reconciliation of total segment revenue to total consolidated revenue:


	Three Months Ended March 31,
		2021		2020
Total segment revenue		$	433.0	$	436.0
Other revenue		77.8		79.5
Elimination of intercompany revenue		(1.0)		(0.1)
Total consolidated revenue		$	509.8	$	515.4

Other revenue and, in the table below, other gross profit, is comprised of an aggregation of a number of immaterial business activities that principally provide for the management of critical processes and functions for clients in select industries, helping them improve performance and reduce costs.

Presented below is a reconciliation of total segment ~~operating income (loss)~~gross profit to consolidated ~~income (loss)~~loss from continuing operations before income taxes:

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Total segment operating income (loss) $ (0.6 ) $ 60.3
$ 27.6
$ 87.2
Interest expense (4.6 ) (16.2 ) (18.5 ) (31.7 )
Other expense, net (53.7 ) (28.9 ) (101.8 ) (59.3 )
Cost-reduction charges (8.5 ) (2.6 ) (17.0 ) (5.2 )
Corporate and eliminations 0.6
(4.7 ) 1.0
(3.8 )
Total income (loss) from continuing operations before income taxes $ (66.8 ) $ 7.9
$ (108.7 ) $ (12.8 )


	Three Months Ended March 31,
		2021		2020
Total segment gross profit		$	133.6	$	104.5
Other gross profit		5.6		8.6
Total gross profit		139.2		113.1
Selling, general and administrative expense		(90.0)		(86.8)
Research and development expense		(5.6)		(6.2)
Interest expense		(10.1)		(13.9)
Other (expense), net		(182.6)		(48.1)
Total loss from continuing operations before income taxes		$	(149.1)	$	(41.9)

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

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Services
Cloud & infrastructure services $ 275.7
$ 320.5
$ 570.9
$ 642.2
Application services 82.4
95.1
167.5
185.6
Business process outsourcing services 37.9
65.4
83.5
127.2
396.0
481.0
821.9
955.0
Technology 42.8
88.4
132.3
168.9
Total $ 438.8
$ 569.4
$ 954.2
$ 1,123.9

Geographic information about the company’s revenue, which is principally based on location of the selling organization, is presented below:


	Three Months Ended March 31,
		2021		2020
United States		$	234.5	$	215.6
United Kingdom		68.0		64.5
Other foreign		207.3		235.3
Total		$	509.8	$	515.4

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
United States $ 174.8
$ 208.6
$ 390.4
$ 399.9
United Kingdom 53.8
104.3
118.3
199.6
Other foreign 210.2
256.5
445.5
524.4
Total $ 438.8
$ 569.4
$ 954.2
$ 1,123.9

Note 18 - Remaining Performance Obligations

Remaining performance obligations represent the transaction price of firm orders for which work has not been performed and excludes (1) contracts with an original expected length of one year or less and (2) contracts for which the company recognizes revenue at the amount to which it has the right to invoice for services performed. At ~~June 30, 2020,~~March 31, 2021, the company had approximately $0.8 billion of remaining performance obligations of which approximately ~~22%~~29% is estimated to be recognized as revenue by the end of ~~2020~~2021 and an additional ~~34%~~35% by the end of ~~2021.~~2022.

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 II, Item 1A. 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.

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, which continues to impact the U.S. and the world. The impact from the rapidly changing market and economic conditions due to the COVID-19 outbreak is uncertain, disrupting the business of our customers and partners, and has impacted our business and consolidated results of operations and could impact our financial condition in the future. ForDuring the three months ended ~~June 30, 2020, revenue declined~~March 31, 2021, the company continued to remove gross defined benefit pension plan liabilities by ~~22.9% from the prior-year quarter. The decline was largely due~~either removing or announcing plans to ~~expected declines~~remove approximately $930 million. This is in addition to approximately $276 million removed in the ~~company’s U.K. check-processing joint venture; impacts~~fourth quarter of COVID-19, including declines in field services, travel and entertainment and volume-based BPO contracts; as well as the timing of technology contract renewals. The company is unable to accurately predict the full extent of the impact that COVID-19 will have due to numerous uncertainties, including the severity of the disease, the duration of the outbreak, actions that may be taken by governmental authorities, the impact to the business of our customers and partners and other factors identified in Part II, Item 1A “Risk Factors” in this Form 10-Q. The company has taken steps to minimize the impact of COVID-19 on its business such as temporary salary reductions for the senior leadership team, reduction of third-party spend such as contractors, re-deploying its workforce based on shifting needs of the business, limiting travel and unnecessary expenses and reducing discretionary capital expenditures where possible. The company will continue to evaluate the nature and extent of the impact to its business, consolidated results of operations, and financial condition.

~~On March 13, 2020,~~2020. When completed, the company ~~completed~~would have removed approximately $1.2 billion of gross pension liabilities.

In January of 2021, the ~~sale of its U.S. Federal business~~company purchased a group annuity contract for $279 million to ~~Science Applications International Corporation for a cash purchase price of $1.2 billion.~~

~~Beginning January 1, 2020, the historical results~~transfer projected benefit obligations related to approximately 11,600 retirees of the company’s U.S. ~~Federal business have been reflected~~defined benefit pension plans. This action resulted in the company’s consolidated financial statements as discontinued operations. Prior-periods financial statements have been reclassified to reflect the company’s U.S. Federal business as discontinued operations. Depreciation, amortization, capital expenditures, and significant non-cash operating and investing activities related to the U.S. Federal business were immaterial for all periods.a first quarter 2021 settlement loss of $158.0 million.

As a result of the sale of the company’s U.S. Federal business, the company’s results of operations have been negatively impacted by certain costs that had previously been allocated to the U.S. Federal business that now must be absorbed by the remaining businesses. Therefore, in addition to the cost-reduction charges recorded in the six months ended June 30, 2020, the company expects to record an additional approximately $10 million of charges in the remainder of 2020.

As part of the company’s cost reduction program, the company is closing and has closed certain international subsidiaries. This creates non-cash currency translation adjustment write-offs. In connection with this, the company expects to record a one-time non-cash charge of approximately $20 million in the third quarter of this year. In addition, in the second half of 2020, the company expects to take a charge associated with reassessing its real estate portfolio.

On April 15, 2020, the company redeemed all $440.0 million in aggregate principal amount of its outstanding 10.750% Senior Secured Notes due 2022 (the Notes) for a redemption price equal to 105.375% of the aggregate principal amount of the Notes to be redeemed plus accrued, but unpaid interest, to, but not including, the redemption date. The redemption price paid was $487.3 million and is made up of the following: $440.0 million principal amount due, $23.65 million call premium and $23.65 million of accrued interest through April 14, 2020. In the second quarter of 2020, the company recorded a loss on debt extinguishment in other expense, net of $28.5 million consisting of the premium of $23.65 million and write off of $4.8 million of unamortized discount and fees related to the issuance of the Notes.

~~As of June 30, 2020, the company had contributed $315.1 million to its U.S. qualified pension plans. During 2020,~~2021, the company expects the primary pension plan related to ~~contribute an aggregate~~its Dutch subsidiary to transfer to a multi-client circle within a multi-employer fund. This will result in removing all of the plan’s projected benefit obligations, valued at approximately $553 million, from the company’s balance sheet. This action is expected to result in a second quarter 2021 settlement loss of approximately ~~$600~~$186 million.

In the second quarter of 2021, the company’s Swiss subsidiary expects to complete the transfer of its defined benefit pension plan to a multi-employer collective foundation. This is expected to result in removing the projected benefit obligations related to retirees under the Swiss plan, valued at approximately $100 million, from the company’s balance sheet. The transfer required a one-time additional contribution of approximately $10 million to the Swiss plan during the first quarter of 2021. This action is expected to result in a second quarter 2021 settlement loss of approximately $29 million.

The American Rescue Plan Act, which was signed into law on March 11, 2021, includes a provision for pension relief that extends the amortization period for required contributions from 7 to 15 years and provides for the stabilization of interest rates used to calculate future required contributions. As a result, based on year-end 2020 pension data and assumptions, current projections indicate that the company will not be required to make future cash contributions to its U.S. qualified defined benefit pension ~~plans. These contributions are expected~~plans and the company has determined that it will not make the previously-contemplated voluntary $200 million contribution to ~~be applied toward~~its U.S. pension plans in 2021.

Any future material deterioration in the value of the company’s ~~required minimum~~U.S. qualified defined benefit pension plan assets, as well as changes in pension legislation, discount rate changes, asset return changes, or changes in economic or demographic trends, could require the company to make cash contributions to ~~these plans in~~its U.S. defined benefit pension plans.

In 2021, the company expects to make cash contributions of approximately $50.3 million primarily for the company’s international defined benefit pension plans. In 2020, the company made cash contributions of $826.2 million to its worldwide defined benefit pension plans. For the three months ended March 31, 2021 and ~~2022.~~2020, the company made cash contributions of $20.2 million and $325.6 million, respectively.

On March 3, 2021, the company completed the conversion of $84.2 million aggregate principal amount of Convertible Senior Notes due 2021 (the 2021 Notes) that remained outstanding for a combination of cash and shares of the company’s common stock. As a result of the conversion of the outstanding 2021 Notes, the company delivered to the holders (i) cash payments totaling approximately $86.5 million, which included an aggregate cash payment for outstanding principal of approximately $84.2 million, an aggregate cash payment for accrued interest of approximately $2.3 million and a nominal cash payment in lieu of fractional shares, and (ii) the issuance of 4,537,123 shares of the company’s common stock. The issuance of the common stock was made in exchange for the 2021 Notes pursuant to an exemption from the registration requirements provided by Section 3(a)(9) of the Securities Act of 1933, as amended.

The company also received 1,251,460 shares of its common stock, now held in treasury stock, from the settlement of the capped call transactions that the company had entered into with the initial purchasers and/or affiliates of the initial purchasers of the 2021 Notes in connection with the issuance of the 2021 Notes. As a result, the net number of outstanding shares of the company’s common stock following the conversion of the 2021 Notes increased by 3,285,663 shares.

During the three months ended ~~June 30, 2020,~~March 31, 2021, the company recognized cost-reduction charges and other costs of ~~$7.9~~$8.5 million. The charges (credits) related to work-force reductions were ~~$(3.0)~~$(1.6) million, principally related to severance costs, and were comprised of: (a) a charge of ~~$1.6~~$2.9 million ~~for 19 employees~~ and (b) a credit of ~~$4.6~~$(4.5) million for changes in estimates. In addition, the company recorded a credit of ~~$0.6~~$2.3 million for net foreign currency gains related to exiting foreign countries, ~~and~~ a charge of ~~$11.5~~$2.4 million for asset ~~impairments. The charges (credits) were recorded in the following statement~~impairments and $5.4 million of ~~income classifications: cost of revenue - services, $6.9 million; selling, general and administrative expenses, $1.5 million; research and development expenses, $0.1 million; and~~ other ~~expense, net, $(0.6) million.~~

During the three months ended June 30, 2019, the company recognized cost-reduction charges and other costs of $2.6 million. Charges were comprised of $0.8 million for lease abandonment costs and $1.8 million for changes in estimates principally related to work-force reductions. The charges (credits) were recorded in the following statement of income classifications: cost of revenue - services, $(1.0) million and selling, general and administrative expenses, $3.6 million.

During the six months ended June 30, 2019, the company recognized cost-reduction charges and other costs of $5.2 million. Charges were comprised of $4.3 million for lease abandonment costs and asset write-offs and $0.9 million for changes in estimates principally related to work-force reductions. The charges were recorded in the following statement of income classifications: cost of revenue - services, $(4.7) million; selling, general and administrative expenses, $8.6 million; and research and development expenses, $1.3 million.


	Three Months Ended March 31,
	2021		2020
Cost of revenue	$	(1.7)	$	5.9
Selling, general and administrative	6.2		2.5
Research and development	1.7		0.1
Other (expenses), net	2.3		19.0
Total	$	8.5	$	27.5

Results of operations

Three months ended ~~June 30, 2020~~March 31, 2021 compared with the three months ended ~~June 30, 2019~~March 31, 2020

Revenue for the ~~quarter~~three months ended ~~June 30, 2020~~March 31, 2021 was ~~$438.8~~$509.8 million compared with ~~$569.4~~$515.4 million for the ~~second quarter~~three months of ~~2019,~~2020, a decrease of ~~22.9%~~1.1% from the prior year. Foreign currency fluctuations had a 32 percentage-point ~~negative~~positive impact on revenue in the current period compared with the year-ago period.

~~Services~~U.S. revenue ~~decreased 17.7% and Technology revenue decreased 51.6%~~increased 8.8% in the current ~~quarter~~period compared with the year-ago period. ~~U.S. revenue decreased 16.2% in the second quarter compared with the prior-year quarter.~~ International revenue decreased ~~26.8%~~8.2% in the current ~~quarter~~period compared with the prior-year period principally due to decreases in ~~all regions.~~Latin America. Foreign currency had a 53 percentage-point ~~negative~~positive impact on international revenue in the three months ended ~~June 30, 2020~~March 31, 2021 compared with the three months ended June 30, 2019. The declines in revenue were largely due to expected declines in the company’s U.K. check-processing joint venture; impacts of COVID-19, including declines in field services, travel and entertainment and volume-based BPO contracts; as well as the timing of technology contract renewals.March 31, 2020.

~~Total gross~~Gross profit margin was ~~17.1%~~27.3% in the three months ended ~~June 30, 2020~~March 31, 2021 compared with ~~26.8%~~21.9% in the three months ended ~~June 30, 2019.~~March 31, 2020. The ~~decline~~increase was ~~principally~~ due in part by improvements in the company’s DWS and C&I segments driven by improvements to ~~a lower mix of higher margin software sales.~~efficiency and related cost-reduction initiatives.

Selling, general and administrative expense in the three months ended ~~June 30, 2020~~March 31, 2021 was ~~$80.2~~$90.0 million ~~(18.3%~~(17.7% of revenue) compared with ~~$92.4~~$86.8 million ~~(16.2%~~(16.8% of revenue) in the year-ago period.

Research and development (R&D) expense infor the ~~second quarter of 2020~~three months ended March 31, 2021 was ~~$3.2~~$5.6 million compared with ~~$7.2~~$6.2 million infor the ~~second quarter of 2019.~~three months ended March 31, 2020.

For the ~~second quarter of 2020,~~three months ended March 31, 2021, the company reported an operating ~~loss~~profit of ~~$8.5~~$43.6 million compared with an operating profit of ~~$53.0~~$20.1 million ~~in the second quarter of 2019.~~for prior year period. The ~~decline~~increase was principally ~~due~~driven by improvements to ~~the flow-through effect of lower Technology revenue, due to the timing of technology contract renewals, on a relatively fixed base of software development~~efficiency and ~~support costs.~~related cost-reduction initiatives.

Interest expense for the three months ended ~~June 30, 2020~~March 31, 2021 was ~~$4.6~~$10.1 million compared with ~~$16.2~~$13.9 million for the three months ended ~~June 30, 2019.~~March 31, 2020. The decline from the prior-year ~~quarter~~period was principally due to the redemption of the company’s Senior Secured Notes on April 14, 2020, ~~as well as~~offset in part by interest on the ~~convertible notes exchange~~company’s Senior Secured Notes due 2027 issued in ~~2019.~~October of 2020.

Other ~~expense,~~(expense), net was expense of ~~$53.7~~$182.6 million infor the ~~second quarter of 2020~~three months ended March 31, 2021 compared with expense of ~~$28.9~~$48.1 million infor the second quarter of 2019. The increase in expense was principally due to a $28.5 million loss on the redemption of all $440 million aggregate principal amount of the company’s outstanding 10.750% Senior Secured Notes due 2022.three months ended March 31, 2020. Other ~~expense,~~(expense), net for the three months ended ~~June 30, 2020~~March 31, 2021 includes ~~postretirement expense~~$158.0 million of ~~$24.1 million,~~ a ~~debt extinguishment charge~~U.S. pension settlement loss. See Note 6 for details of ~~$28.5 million and~~ other ~~of $1.1 million. Other expense, net for the three months ended June 30, 2019 includes postretirement expense of $22.8 million and other of $6.1 million.~~

The loss from continuing operations before income taxes for the three months ended ~~June 30, 2020~~March 31, 2021 was ~~$66.8~~$149.1 million compared with ~~income~~a loss of ~~$7.9~~$41.9 million for the three months ended ~~June 30, 2019.~~March 31, 2020. The decline was principally due to the ~~items~~U.S. pension settlement loss discussed above.

The provision for income taxes was ~~$9.7~~$8.4 million in the current ~~quarter~~period compared with ~~$3.6~~$10.8 million in the year-ago period. In March 2020, the U.K. published a budget proposal that would eliminate the previously enacted income tax rate reduction to 17%, scheduled to become effective April 1, 2020 therefore maintaining the current rate of 19%. The proposal was enacted on July 22, 2020 and is expected to result in an estimated deferred tax benefit of approximately $5.7 million in the third quarter of 2020.

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 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 from continuing operations attributable to Unisys Corporation for the three months ended ~~June 30, 2020~~March 31, 2021 was ~~$76.5~~$157.8 million, or a loss of ~~$1.21~~$(2.45) per diluted share, compared with ~~income~~a loss of ~~$0.7~~$53.2 million, or ~~$0.01~~a loss of $0.85 per diluted share, for the three months ended ~~June 30, 2019.~~

~~Six months ended June 30, 2020 compared with the six months ended June 30, 2019~~

Revenue for the six months ended June 30, 2020 was $954.2 million compared with $1,123.9 millions for the six months of 2019, a decrease of 15.1% from the prior year. Foreign currency fluctuations had a 2 percentage-point negative impact on revenue in the current period compared with the year-ago period.

Services revenue decreased 13.9% and Technology revenue decreased 21.7% in the first half of 2020 compared with the year-ago period. U.S. revenue decreased 2.4% in the first half of 2020 compared with the year-ago period. International revenue decreased 22.1% in the current period compared with the prior-year period primarily due to decreases in all regions. Foreign currency had a 4 percentage-point negative impact on international revenue in the six months ended June 30, 2020 compared with the six months ended June 30, 2019. The declines in revenue were largely due to expected declines in the company’s U.K. check-processing joint venture; impacts of COVID-19, including declines in field services, travel and entertainment and volume-based BPO contracts; as well as the timing of technology contract renewals.

~~Total gross profit margin was 19.7% in the six months ended June 30, 2020 compared with 24.7% in the six months ended June 30, 2019.~~

~~Selling, general and administrative expense in the six months ended June 30, 2020 was $167.0 million (17.5% of revenue) compared with $183.3 million (16.3% of revenue) in the year-ago period.~~

~~Research and development (R&D) expense in the first half of 2020 was $9.4 million compared with $16.2 million in the first half of 2019.~~

For the first half of 2020, the company reported an operating profit of $11.6 million compared with an operating profit of $78.2 million in the first half of 2019. The decline was principally due to the flow-through effect of lower Technology revenue, due to the timing of technology contract renewals, on a relatively fixed base of software development and support costs.

Interest expense for the six months ended June 30, 2020 was $18.5 million compared with $31.7 million for the six months ended June 30, 2019. The decline from the prior-year period was principally due to the redemption of the company’s Senior Secured Notes on April 14, 2020 as well as the convertible notes exchange in 2019.

Other expense, net was expense of $101.8 million in the first half of 2020 compared with expense of $59.3 million in the first half of 2019. The increase in expense was principally due a $28.5 million loss on the redemption of all $440 million aggregate principal amount of the company’s outstanding 10.750% Senior Secured Notes due 2022 and the write off of accumulated translation losses related to subsidiaries that were substantially liquidated during the first half ofMarch 31, 2020. Other expense, net for the six months ended June 30, 2020 includes postretirement expense of $46.8 million, a loss on debt extinguishment of $28.5 million, foreign currency losses of $24.6 million and other of $1.9 million. Other expense, net for the six months ended June 30, 2019 includes postretirement expense of $45.5 million, foreign exchange losses of $5.2 million and other of $8.6 million.

The loss from continuing operations before income taxes for the six months ended June 30, 2020 was $108.7 million compared with a loss of $12.8 million for the six months ended June 30, 2019. The decline was principally due to the items discussed above.

The provision for income taxes was $20.5 million in the current quarter compared with $13.0 million in the year-ago period. In March 2020, the U.K. published a budget proposal that would eliminate the previously enacted income tax rate reduction to 17%, scheduled to become effective April 1, 2020 therefore maintaining the current rate of 19%. The proposal was enacted on July 22, 2020 is expected to result in an estimated deferred tax benefit of approximately $5.7 million in the third quarter of 2020.

Net loss from continuing operations attributable to Unisys Corporation for the six months ended June 30, 2020 was $129.7 million, or a loss of $(2.06) per diluted share, compared with a loss of $32.0 million, or a loss of $0.62 per diluted share, for the six months ended June 30, 2019.

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

•Digital Workplace Services (DWS), which provides services and IP-led solutions that support clients’ employees’ productivity, satisfaction and ability to securely work anywhere, any time;

•Cloud & ~~infrastructure services. This represents revenue from helping clients apply cloud~~Infrastructure Solutions (C&I), which provides hybrid and ~~as-a-service delivery models~~multi-cloud solutions in select markets to ~~capitalize on business opportunities, make their end users more productive~~accelerate innovation and ~~manage~~increase efficiency of our clients’ businesses; and ~~secure their IT infrastructure~~

•ClearPath Forward® (CPF), which provides server systems and ~~operations more economically.~~

these other segments. Also included in the ~~Technology~~CPF segment’s sales and ~~operating~~gross profit are sales of hardware and software sold to ~~the Services segment~~other segments for internal use in ~~Services~~their engagements. The amount of such profit included in ~~operating income~~gross profit of the ~~Technology~~CPF segment for the three months ended ~~June 30,~~March 31, 2021 and 2020 was $0.7 million and ~~2019 was~~ zero, ~~in both periods. The amount for the six months ended June 30, 2020 and 2019 was zero and $0.2 million,~~ respectively. The sales and profit on these transactions are eliminated in Corporate.

The company evaluates ~~business~~ segment performance based on ~~operating income~~gross profit exclusive of the service cost component of ~~pension~~postretirement income or expense, restructuring charges, amortization of purchased intangibles and unusual and nonrecurring items, which are included in Corporate. ~~All other corporate and centrally incurred costs are allocated~~During the first quarter of 2021, the company also changed its internal measurement of segment profitability. Prior period amounts have therefore been reclassified to be comparable to the ~~business segments based principally on revenue, employees, square footage or usage.~~

current period’s presentation.

Three months ended ~~June 30, 2020~~March 31, 2021 compared with the three months ended ~~June 30, 2019~~March 31, 2020

~~Information~~A summary of the company’s operations by ~~business~~ segment is presented below:


	Six Months Ended June 30,							Three Months Ended March 31,
	2020			2019				2021			2020
Weighted-average fair value of grant	$	28.33		$	16.58		Weighted-average fair value of grant	$	40.02		$	28.33
Risk-free interest rate⁽ⁱ⁾	1.35		%	2.49		%	Risk-free interest rate(i)	0.27		%	1.35		%
Expected volatility⁽ⁱⁱ⁾	51.81		%	47.91		%	Expected volatility(ii)	57.08		%	51.81		%
Expected life of restricted stock units in years⁽ⁱⁱⁱ⁾	2.86			2.87			Expected life of restricted stock units in years(iii)	2.84			2.86
Expected dividend yield	—		%	—		%	Expected dividend yield	0		%	0		%



	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020*		2019
Revenue	$	—		$	184.4	$	149.5	$	325.7
Income (loss):
Operations	0.1			34.0		9.1		51.7
Gain on sale	(0.9		)	—		1,060.8		—
	(0.8		)	34.0		1,069.9		51.7
Income tax provision	1.3			8.5		3.5		12.9
Income (loss) from discontinued operations, net of tax	$	(2.1	)	$	25.5	$	1,066.4	$	38.8



	Six Months Ended June 30, 2020									Six Months Ended June 30, 2019
	Total			U.S. Plans			International Plans			Total			U.S. Plans			International Plans
Service cost⁽ⁱ⁾	$	1.4		$	—		$	1.4		$	1.4		$	—		$	1.4
Interest cost	107.6			81.2			26.4			133.2			98.5			34.7
Expected return on plan assets	(149.0		)	(104.3		)	(44.7		)	(162.1		)	(109.0		)	(53.1		)
Amortization of prior service benefit	(2.5		)	(1.3		)	(1.2		)	(2.5		)	(1.3		)	(1.2		)
Recognized net actuarial loss	89.0			67.8			21.2			75.2			57.9			17.3
Net periodic pension expense (benefit)	$	46.5		$	43.4		$	3.1		$	45.2		$	46.1		$	(0.9	)



	Restricted Stock Units		Weighted- Average Grant-Date Fair Value
Outstanding at December 31, 2019	2,040		$	14.17
Granted	746		22.50
Vested	(910	)	13.86
Forfeited and expired	(89	)	15.58
Outstanding at June 30, 2020	1,787		17.75


													Total Segments		DWS		C&I		CPF
	Total			Corporate			Services			Technology
Three Months Ended June 30, 2020
Three Months Ended March 31, 2021												Three Months Ended March 31, 2021
Customer revenue	$	438.8		$	—		$	396.0		$	42.8	Customer revenue	$	432.0	$	141.1	$	123.3	$	167.6
Intersegment	—			(2.4		)	—			2.4		Intersegment	1.0		0		0		1.0
Total revenue	$	438.8		$	(2.4	)	$	396.0		$	45.2	Total revenue	$	433.0	$	141.1	$	123.3	$	168.6
Operating income (loss)	$	(8.5	)	$	(7.9	)	$	(1.6	)	$	1.0
Gross profit												Gross profit	$	133.6	$	18.5	$	12.0	$	103.1

Three Months Ended June 30, 2019
Three Months Ended March 31, 2020												Three Months Ended March 31, 2020
Customer revenue	$	569.4		$	—		$	481.0		$	88.4	Customer revenue	$	435.9	$	160.2	$	104.0	$	171.7
Intersegment	—			(2.1		)	—			2.1		Intersegment	0.1		0		0		0.1
Total revenue	$	569.4		$	(2.1	)	$	481.0		$	90.5	Total revenue	$	436.0	$	160.2	$	104.0	$	171.8
Operating income (loss)	$	53.0		$	(7.3	)	$	9.0		$	51.3
Gross profit												Gross profit	$	104.5	$	7.2	$	(2.8)	$	100.1

Six Months Ended June 30, 2020
Customer revenue	$	954.2		$	—		$	821.9		$	132.3
Intersegment	—			(4.9		)	—			4.9
Total revenue	$	954.2		$	(4.9	)	$	821.9		$	137.2
Operating income (loss)	$	11.6		$	(16.0	)	$	(15.6	)	$	43.2

Six Months Ended June 30, 2019
Customer revenue	$	1,123.9		$	—		$	955.0		$	168.9
Intersegment	—			(4.5		)	—			4.5
Total revenue	$	1,123.9		$	(4.5	)	$	955.0		$	173.4
Operating income (loss)	$	78.2		$	(9.0	)	$	7.6		$	79.6



	Total			Eliminations			Services			Technology
Three Months Ended June 30, 2020
Customer revenue	$	438.8		$	—		$	396.0		$	42.8
Intersegment	—			(2.4		)	—			2.4
Total revenue	$	438.8		$	(2.4	)	$	396.0		$	45.2
Gross profit percent	17.1		%				15.5		%	42.0		%
Operating profit (loss) percent	(1.9		)%				(0.4		)%	2.2		%

Three Months Ended June 30, 2019
Customer revenue	$	569.4		$	—		$	481.0		$	88.4
Intersegment	—			(2.1		)	—			2.1
Total revenue	$	569.4		$	(2.1	)	$	481.0		$	90.5
Gross profit percent	26.8		%				16.5		%	78.1		%
Operating profit (loss) percent	9.3		%				1.9		%	56.7		%



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



	Three Months Ended June 30,				Percent Change
	2020		2019		Percent Change
Services
Cloud & infrastructure services	$	275.7	$	320.5	(14.0	)%
Application services	82.4		95.1		(13.4	)%
Business process outsourcing services	37.9		65.4		(42.0	)%
	396.0		481.0		(17.7	)%
Technology	42.8		88.4		(51.6	)%
Total	$	438.8	$	569.4	(22.9	)%



Exhibit Number			Description
~~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 May 10, 2019 (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on May 15, 2019)

~~4.1~~10.1			~~Amendment No. 1 to the Tax Asset Protection Plan, dated as~~Form of ~~August 4, 2020, between Unisys Corporation and Computershare Inc., as Rights Agent~~TSR-Based Cash Award Agreement

~~31.1~~10.2			Form of TSR-Based Restricted Stock Unit Agreement

10.3			Form of Performance Growth TSR-Based Restricted Stock Unit Agreement

10.4			Form of Performance Growth Time-Based Restricted Stock Unit Agreement

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

31.2			Certification of Michael M. Thomson 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 Michael M. Thomson 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			The following financial information from Unisys Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2020~~2021 formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Deficit, and (vi) Notes to Consolidated Financial Statements

104			Cover page Interactive Data File (the cover page XBRL tags are embedded within the iXBRL (Inline Extensible Business Reporting Language) document)



			UNISYS CORPORATION
	~~UNISYS CORPORATION~~

Date: ~~August 4, 2020~~May 6, 2021	By:	/s/ Michael M. Thomson
		Michael M. Thomson
		~~Senior~~Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)