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 September 30, 2020March 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
(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
(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 classTrading
Symbol(s)		Name of each exchange on which registered
Common Stock, par value $.01UISNew 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 ☐
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 September 30, 2020: 63,037,852.March 31, 2021: 67,022,500



UNISYS CORPORATION
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATIONPage Number
Item 1.Consolidated Financial Statements (Unaudited)
Consolidated Statements of Income (Loss)
2
Consolidated Statements of Comprehensive Income (Loss)
3
Consolidated Balance Sheets
4
Consolidated Statements of Cash Flows
5
Consolidated Statements of Deficit
6
Notes to Consolidated Financial Statements
7
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
2123
Item 3.Quantitative and Qualitative Disclosures about Market Risk
3028
Item 4.Controls and Procedures
3028
PART II - OTHER INFORMATION
Item 1.Legal Proceedings
3129
Item 1A.Risk Factors
3129
Item 6.Exhibits
3630
Exhibit Index
3731
Signatures
3832




Part I - FINANCIAL INFORMATION
Item 1. Financial Statements

UNISYS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited)
(Millions, except per share data)
 
Three Months Ended
September 30,		Nine Months Ended
September 30,		 Three Months Ended
March 31,
2020201920202019 20212020
RevenueRevenueRevenue
ServicesServices$426.0 $478.8 $1,247.9 $1,433.8 Services$420.4 $425.9 
TechnologyTechnology69.2 73.3 201.5 242.2 Technology89.4 89.5 
495.2 552.1 1,449.4 1,676.0 509.8 515.4 
Costs and expensesCosts and expensesCosts and expenses
Cost of revenue:
Cost of revenueCost of revenue
ServicesServices345.9 389.3 1,061.6 1,185.2 Services338.7 375.7 
TechnologyTechnology29.4 22.8 79.9 73.1 Technology31.9 26.6 
375.3 412.1 1,141.5 1,258.3 370.6 402.3 
Selling, general and administrativeSelling, general and administrative85.5 84.7 252.5 268.0 Selling, general and administrative90.0 86.8 
Research and developmentResearch and development6.7 5.9 16.1 22.1 Research and development5.6 6.2 
467.5 502.7 1,410.1 1,548.4 466.2 495.3 
Operating incomeOperating income27.7 49.4 39.3 127.6 Operating income43.6 20.1 
Interest expenseInterest expense2.4 15.2 20.9 46.9 Interest expense10.1 13.9 
Other expense, net(32.5)(49.2)(134.3)(108.5)
Other (expense), netOther (expense), net(182.6)(48.1)
Loss from continuing operations before income taxesLoss from continuing operations before income taxes(7.2)(15.0)(115.9)(27.8)Loss from continuing operations before income taxes(149.1)(41.9)
Provision for income taxesProvision for income taxes6.1 10.4 26.6 23.4 Provision for income taxes8.4 10.8 
Consolidated net loss from continuing operationsConsolidated net loss from continuing operations(13.3)(25.4)(142.5)(51.2)Consolidated net loss from continuing operations(157.5)(52.7)
Net income attributable to noncontrolling interestsNet income attributable to noncontrolling interests0 3.8 0.5 10.0 Net income attributable to noncontrolling interests0.3 0.5 
Net loss from continuing operations attributable to Unisys CorporationNet loss from continuing operations attributable to Unisys Corporation(13.3)(29.2)(143.0)(61.2)Net loss from continuing operations attributable to Unisys Corporation(157.8)(53.2)
Income from discontinued operations, net of taxIncome from discontinued operations, net of tax0.4 16.0 1,066.8 54.8 Income from discontinued operations, net of tax0 1,068.5 
Net income (loss) attributable to Unisys CorporationNet income (loss) attributable to Unisys Corporation$(12.9)$(13.2)$923.8 $(6.4)Net income (loss) attributable to Unisys Corporation$(157.8)$1,015.3 
Earnings (loss) per share attributable to Unisys CorporationEarnings (loss) per share attributable to Unisys CorporationEarnings (loss) per share attributable to Unisys Corporation
BasicBasicBasic
Continuing operations Continuing operations$(0.21)$(0.50)$(2.27)$(1.14) Continuing operations$(2.45)$(0.85)
Discontinued operations Discontinued operations0.01 0.27 16.96 1.02  Discontinued operations0 17.06 
Total Total$(0.20)$(0.23)$14.69 $(0.12) Total$(2.45)$16.21 
DilutedDilutedDiluted
Continuing operations Continuing operations$(0.21)$(0.50)$(2.27)$(1.14) Continuing operations$(2.45)$(0.85)
Discontinued operations Discontinued operations0.01 0.27 16.96 1.02  Discontinued operations0 17.06 
Total Total$(0.20)$(0.23)$14.69 $(0.12) Total$(2.45)$16.21 
See notes to consolidated financial statements

2



UNISYS CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited)
(Millions)
 
Three Months Ended
September 30,		Nine Months Ended
September 30,		 Three Months Ended
March 31,
2020201920202019 20212020
Consolidated net loss from continuing operationsConsolidated net loss from continuing operations$(13.3)$(25.4)$(142.5)$(51.2)Consolidated net loss from continuing operations$(157.5)$(52.7)
Income from discontinued operations, net of taxIncome from discontinued operations, net of tax0.4 16.0 1,066.8 54.8 Income from discontinued operations, net of tax0 1,068.5 
Total Total(12.9)(9.4)924.3 3.6  Total(157.5)1,015.8 
Other comprehensive incomeOther comprehensive incomeOther comprehensive income
Foreign currency translationForeign currency translation40.1 (51.7)(41.1)(99.7)Foreign currency translation(17.1)(87.6)
Postretirement adjustments, net of tax of $(7.8) and $6.4 in 2020 and $8.8 and $11.9 in 20198.2 63.4 139.4 182.3 
Postretirement adjustments, net of tax of $3.1 in 2021 and $13.9 in 2020Postretirement adjustments, net of tax of $3.1 in 2021 and $13.9 in 2020202.2 91.2 
Total other comprehensive incomeTotal other comprehensive income48.3 11.7 98.3 82.6 Total other comprehensive income185.1 3.6 
Comprehensive incomeComprehensive income35.4 2.3 1,022.6 86.2 Comprehensive income27.6 1,019.4 
Less comprehensive income attributable to noncontrolling interests2.0 2.6 0.5 5.8 
Comprehensive income (loss) attributable to Unisys Corporation$33.4 $(0.3)$1,022.1 $80.4 
Less comprehensive income (loss) attributable to noncontrolling interestsLess comprehensive income (loss) attributable to noncontrolling interests1.1 (1.8)
Comprehensive income attributable to Unisys CorporationComprehensive income attributable to Unisys Corporation$26.5 $1,021.2 
See notes to consolidated financial statements
3



UNISYS CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
(Millions)
September 30, 2020December 31, 2019March 31, 2021December 31, 2020
AssetsAssetsAssets
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents$774.0 $538.8 Cash and cash equivalents$716.6 $898.5 
Accounts receivable, netAccounts receivable, net364.1 417.7 Accounts receivable, net410.3 460.5 
Contract assetsContract assets47.0 38.4 Contract assets45.1 44.3 
InventoriesInventories14.5 16.4 Inventories9.6 13.4 
Prepaid expenses and other current assetsPrepaid expenses and other current assets103.0 100.7 Prepaid expenses and other current assets99.0 89.3 
Current assets of discontinued operations0 109.3 
Total current assetsTotal current assets1,302.6 1,221.3 Total current assets1,280.6 1,506.0 
PropertiesProperties755.6 784.0 Properties704.6 727.0 
Less-accumulated depreciation and amortizationLess-accumulated depreciation and amortization648.7 668.0 Less-accumulated depreciation and amortization597.7 616.5 
Properties, netProperties, net106.9 116.0 Properties, net106.9 110.5 
Outsourcing assets, netOutsourcing assets, net177.3 202.1 Outsourcing assets, net163.6 173.9 
Marketable software, netMarketable software, net191.5 186.8 Marketable software, net195.5 193.6 
Operating lease right-of-use assetsOperating lease right-of-use assets67.8 71.4 Operating lease right-of-use assets70.8 79.3 
Prepaid postretirement assetsPrepaid postretirement assets144.2 136.2 Prepaid postretirement assets188.2 187.5 
Deferred income taxesDeferred income taxes121.6 114.0 Deferred income taxes134.1 136.2 
GoodwillGoodwill108.6 110.4 Goodwill108.6 108.6 
Restricted cashRestricted cash10.1 13.0 Restricted cash9.9 8.2 
Other long-term assetsOther long-term assets176.8 198.9 Other long-term assets198.5 204.1 
Long-term assets of discontinued operations0 133.9 
Total assetsTotal assets$2,407.4 $2,504.0 Total assets$2,456.7 $2,707.9 
Liabilities and deficitLiabilities and deficitLiabilities and deficit
Current liabilities:Current liabilities:Current liabilities:
Current maturities of long-term-debtCurrent maturities of long-term-debt$100.0 $13.5 Current maturities of long-term-debt$19.9 $102.8 
Accounts payableAccounts payable183.4 204.3 Accounts payable172.7 223.2 
Deferred revenueDeferred revenue197.4 246.4 Deferred revenue248.0 257.1 
Other accrued liabilitiesOther accrued liabilities272.4 316.7 Other accrued liabilities289.3 352.0 
Current liabilities of discontinued operations0 146.4 
Total current liabilitiesTotal current liabilities753.2 927.3 Total current liabilities729.9 935.1 
Long-term debtLong-term debt48.4 565.9 Long-term debt521.2 527.1 
Long-term postretirement liabilitiesLong-term postretirement liabilities1,563.6 1,960.2 Long-term postretirement liabilities1,230.0 1,286.1 
Long-term deferred revenueLong-term deferred revenue122.5 147.0 Long-term deferred revenue138.3 137.9 
Long-term operating lease liabilitiesLong-term operating lease liabilities49.3 56.0 Long-term operating lease liabilities57.5 62.4 
Other long-term liabilitiesOther long-term liabilities70.7 47.6 Other long-term liabilities65.6 71.4 
Long-term liabilities of discontinued operations0 28.3 
Commitments and contingencies (see note 14)Commitments and contingencies (see note 14)Commitments and contingencies (see note 14)00
Deficit:Deficit:Deficit:
Common stock, shares issued: 2020; 66.8, 2019; 65.90.7 0.7 
Common stock, shares issued: 2021; 72.3, 2020; 66.8Common stock, shares issued: 2021; 72.3, 2020; 66.80.7 0.7 
Accumulated deficitAccumulated deficit(787.4)(1,711.2)Accumulated deficit(1,118.3)(960.5)
Treasury stock, shares at cost: 2020; 3.8, 2019; 3.5(114.4)(109.6)
Treasury stock, shares at cost: 2021; 5.3, 2020; 3.8Treasury stock, shares at cost: 2021; 5.3, 2020; 3.8(151.9)(114.4)
Paid-in capitalPaid-in capital4,653.5 4,643.3 Paid-in capital4,693.1 4,656.9 
Accumulated other comprehensive lossAccumulated other comprehensive loss(3,990.3)(4,088.6)Accumulated other comprehensive loss(3,755.2)(3,939.5)
Total Unisys Corporation stockholders’ deficitTotal Unisys Corporation stockholders’ deficit(237.9)(1,265.4)Total Unisys Corporation stockholders’ deficit(331.6)(356.8)
Noncontrolling interestsNoncontrolling interests37.6 37.1 Noncontrolling interests45.8 44.7 
Total deficitTotal deficit(200.3)(1,228.3)Total deficit(285.8)(312.1)
Total liabilities and deficitTotal liabilities and deficit$2,407.4 $2,504.0 Total liabilities and deficit$2,456.7 $2,707.9 
See notes to consolidated financial statements
4



UNISYS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Millions) 
Nine Months Ended
September 30,		 Three Months Ended
March 31,
20202019 20212020
Cash flows from operating activitiesCash flows from operating activitiesCash flows from operating activities
Consolidated net loss from continuing operationsConsolidated net loss from continuing operations$(142.5)$(51.2)Consolidated net loss from continuing operations$(157.5)$(52.7)
Income from discontinued operations, net of taxIncome from discontinued operations, net of tax1,066.8 54.8 Income from discontinued operations, net of tax0 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:Adjustments to reconcile consolidated net loss to net cash used for operating activities:
Gain on sale of U.S. Federal businessGain on sale of U.S. Federal business(1,057.7)0 Gain on sale of U.S. Federal business0 (1,059.5)
Loss on debt extinguishment28.5 20.2 
Foreign currency translation lossesForeign currency translation losses14.3 7.2 Foreign currency translation losses2.9 15.8 
Non-cash interest expenseNon-cash interest expense3.5 7.5 Non-cash interest expense0.9 1.5 
Employee stock compensationEmployee stock compensation11.1 10.1 Employee stock compensation3.3 5.1 
Depreciation and amortization of propertiesDepreciation and amortization of properties22.0 26.7 Depreciation and amortization of properties7.6 8.2 
Depreciation and amortization of outsourcing assetsDepreciation and amortization of outsourcing assets48.9 47.3 Depreciation and amortization of outsourcing assets16.1 16.0 
Amortization of marketable softwareAmortization of marketable software50.2 35.0 Amortization of marketable software15.5 13.6 
Other non-cash operating activitiesOther non-cash operating activities0.6 (0.8)Other non-cash operating activities(0.6)0.2 
Loss on disposal of capital assetsLoss on disposal of capital assets3.3 1.3 Loss on disposal of capital assets0.8 0.8 
Postretirement contributionsPostretirement contributions(344.5)(82.3)Postretirement contributions(21.6)(327.7)
Postretirement expensePostretirement expense72.8 71.5 Postretirement expense169.0 23.5 
Deferred income taxes, netDeferred income taxes, net(16.9)1.0 Deferred income taxes, net(2.0)(5.6)
Changes in operating assets and liabilities:
Receivables, net12.4 (17.4)
Changes in operating assets and liabilitiesChanges in operating assets and liabilities
Receivables, net and contract assetsReceivables, net and contract assets48.8 (18.6)
InventoriesInventories1.5 (1.7)Inventories3.7 5.6 
Other assetsOther assets(15.2)(14.2)
Accounts payable and current liabilitiesAccounts payable and current liabilities(127.7)(173.4)Accounts payable and current liabilities(124.8)(58.0)
Other liabilitiesOther liabilities27.2 33.1 Other liabilities10.2 (0.4)
Other assets0.4 9.3 
Net cash used for operating activitiesNet cash used for operating activities(325.8)(1.8)Net cash used for operating activities(42.9)(377.9)
Cash flows from investing activitiesCash flows from investing activitiesCash flows from investing activities
Net proceeds from sale of U.S. Federal businessNet proceeds from sale of U.S. Federal business1,162.9 0 Net proceeds from sale of U.S. Federal business0 1,164.7 
Proceeds from investmentsProceeds from investments2,550.2 2,824.9 Proceeds from investments1,229.5 828.8 
Purchases of investmentsPurchases of investments(2,561.7)(2,835.8)Purchases of investments(1,235.5)(870.5)
Investment in marketable softwareInvestment in marketable software(54.8)(56.2)Investment in marketable software(17.4)(17.3)
Capital additions of propertiesCapital additions of properties(16.7)(29.1)Capital additions of properties(5.1)(5.6)
Capital additions of outsourcing assetsCapital additions of outsourcing assets(23.6)(44.4)Capital additions of outsourcing assets(5.0)(4.8)
Net proceeds from sale of properties0 (0.2)
OtherOther(0.5)(0.9)Other(0.4)(1.5)
Net cash provided by (used for) investing activities1,055.8 (141.7)
Net cash (used for) provided by investing activitiesNet cash (used for) provided by investing activities(33.9)1,093.8 
Cash flows from financing activitiesCash flows from financing activitiesCash flows from financing activities
Cash paid in connection with debt extinguishment(23.7)(56.3)
Proceeds from capped call transactions0 7.2 
Net proceeds from short-term borrowingsNet proceeds from short-term borrowings0 59.5 
Proceeds from issuance of long-term debtProceeds from issuance of long-term debt7.1 28.6 Proceeds from issuance of long-term debt1.5 2.1 
Payments of long-term debtPayments of long-term debt(451.0)(12.2)Payments of long-term debt(91.6)(6.1)
Proceeds from exercise of stock optionsProceeds from exercise of stock options2.7 0 
OtherOther(4.8)(4.6)Other(7.4)(4.7)
Net cash used for financing activities(472.4)(37.3)
Net cash (used for) provided by financing activitiesNet cash (used for) provided by financing activities(94.8)50.8 
Effect of exchange rate changes on cash, cash equivalents and restricted cashEffect of exchange rate changes on cash, cash equivalents and restricted cash(25.3)(10.0)Effect of exchange rate changes on cash, cash equivalents and restricted cash(8.6)(31.0)
Increase (decrease) in cash, cash equivalents and restricted cashIncrease (decrease) in cash, cash equivalents and restricted cash232.3 (190.8)Increase (decrease) in cash, cash equivalents and restricted cash(180.2)735.7 
Cash, cash equivalents and restricted cash, beginning of periodCash, cash equivalents and restricted cash, beginning of period551.8 624.1 Cash, cash equivalents and restricted cash, beginning of period906.7 551.8 
Cash, cash equivalents and restricted cash, end of periodCash, cash equivalents and restricted cash, end of period$784.1 $433.3 Cash, cash equivalents and restricted cash, end of period$726.5 $1,287.5 
See notes to consolidated financial statements

5



UNISYS CORPORATION
CONSOLIDATED STATEMENTS OF DEFICIT (Unaudited)
(Millions)
 Unisys Corporation 
 Unisys Corporation 
TotalTotal Unisys CorporationCommon Stock Par ValueAccumu-lated DeficitTreasury Stock At CostPaid-in CapitalAccumu-lated Other Compre-hensive LossNon-controlling InterestsTotalTotal Unisys CorporationCommon Stock Par ValueAccumu-lated DeficitTreasury Stock At CostPaid-in CapitalAccumu-lated Other Compre-hensive LossNon-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)$37.1 
Balance at December 31, 2020Balance at December 31, 2020$(312.1)$(356.8)$0.7 $(960.5)$(114.4)$4,656.9 $(3,939.5)$44.7 
Consolidated net incomeConsolidated net income1,015.8 1,015.3 1,015.3 0.5 Consolidated net income(157.5)(157.8)(157.8)0.3 
Capped call on conversion of notesCapped call on conversion of notes— — (30.8)30.8 
Stock-based activityStock-based activity(0.5)(0.5)(4.6)4.1 Stock-based activity(1.3)(1.3)(6.7)5.4 
Translation adjustmentsTranslation adjustments(87.6)(81.6)(81.6)(6.0)Translation adjustments(17.1)(17.9)(17.9)0.8 
Postretirement plansPostretirement plans91.2 87.5   87.5 3.7 Postretirement plans202.2 202.2   202.2 0 
Balance at March 31, 2020$(209.4)$(244.7)$0.7 $(695.9)$(114.2)$4,647.4 $(4,082.7)$35.3 
Consolidated net loss(78.6)(78.6)(78.6)
Stock-based activity2.9 2.9 (0.1)3.0 
Translation adjustments6.4 6.5     6.5 (0.1)
Postretirement plans40.0 39.6     39.6 0.4 
Balance at June 30, 2020$(238.7)$(274.3)$0.7 $(774.5)$(114.3)$4,650.4 $(4,036.6)$35.6 
Consolidated net loss(12.9)(12.9)(12.9)
Stock-based activity3.0 3.0 (0.1)3.1 
Translation adjustments40.1 38.6 38.6 1.5 
Postretirement plans8.2 7.7    7.7 0.5 
Balance at September 30, 2020$(200.3)$(237.9)$0.7 $(787.4)$(114.4)$4,653.5 $(3,990.3)$37.6 
Balance at March 31, 2021Balance at March 31, 2021$(285.8)$(331.6)$0.7 $(1,118.3)$(151.9)$4,693.1 $(3,755.2)$45.8 

 Unisys Corporation 
 Unisys Corporation 
TotalTotal Unisys CorporationCommon Stock Par ValueAccumu-lated DeficitTreasury Stock At CostPaid-in CapitalAccumu-lated Other Compre-hensive LossNon-controlling InterestsTotalTotal Unisys CorporationCommon Stock Par ValueAccumu-lated DeficitTreasury Stock At CostPaid-in CapitalAccumu-lated Other Compre-hensive LossNon-controlling Interests
Balance at December 31, 2018$(1,299.6)$(1,343.5)$0.5 $(1,694.0)$(105.0)$4,539.8 $(4,084.8)$43.9 
Consolidated net income (loss)(16.8)(19.4)(19.4)2.6 
Stock-based activity(0.4)(0.4)0.1 (4.4)3.9 
Translation adjustments(34.2)(32.8)(32.8)(1.4)
Postretirement plans68.5 69.2   69.2 (0.7)
Balance at March 31, 2019$(1,282.5)$(1,326.9)$0.6 $(1,713.4)$(109.4)$4,543.7 $(4,048.4)$44.4 
Balance at December 31, 2019Balance at December 31, 2019$(1,228.3)$(1,265.4)$0.7 $(1,711.2)$(109.6)$4,643.3 $(4,088.6)$37.1 
Consolidated net incomeConsolidated net income29.8 26.2 26.2 3.6 Consolidated net income1,015.8 1,015.3 1,015.3 0.5 
Stock-based activityStock-based activity2.4 2.4 (0.1)2.5 Stock-based activity(0.5)(0.5)0(4.6)4.1 
Translation adjustmentsTranslation adjustments(13.8)(11.6)    (11.6)(2.2)Translation adjustments(87.6)(81.6)(81.6)(6.0)
Postretirement plansPostretirement plans50.4 49.1     49.1 1.3 Postretirement plans91.2 87.5   87.5 3.7 
Balance at June 30, 2019$(1,213.7)$(1,260.8)$0.6 $(1,687.2)$(109.5)$4,546.2 $(4,010.9)$47.1 
Consolidated net income (loss)(9.4)(13.2)(13.2)3.8 
Stock-based activity2.9 2.9 (0.1)3.0 
Debt exchange83.9 83.9 0.1 83.8 
Capped call on debt exchange7.2 7.2 7.2 
Translation adjustments(51.7)(49.0)(49.0)(2.7)
Postretirement plans63.4 61.9    61.9 1.5 
Balance at September 30, 2019$(1,117.4)$(1,167.1)$0.7 $(1,700.4)$(109.6)$4,640.2 $(3,998.0)$49.7 
Balance at March 31, 2020Balance at March 31, 2020$(209.4)$(244.7)$0.7 $(695.9)$(114.2)$4,647.4 $(4,082.7)$35.3 

See notes to consolidated financial statements
6


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 September 30, 2020March 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 September 30, 2020March 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, 20192020 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 reportNet cash proceeds of the U.S. Federal business as discontinued operations. As a result, all items relating to the business within the consolidated statementssale 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.
7



transaction costs).
The results of the U.S. Federal business discontinued operations for the three and nine months ended September 30, 2020 and 2019 were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
202020192020*2019
Revenue$0 $205.5 $149.5 $531.2 
Income (loss)
Operations0 21.5 9.1 73.2 
Gain on sale(0.2)0 1,060.6 0 
(0.2)21.5 1,069.7 73.2 
Income tax provision (benefit)(0.6)5.5 2.9 18.4 
Income from discontinued operations, net of tax$0.4 $16.0 $1,066.8 $54.8 
Three Months Ended
March 31, 2020*
Revenue$149.5 
Income
Operations9.0 
Gain on sale1,061.7 
1,070.7 
Income tax provision2.2 
Income from discontinued operations, net of tax$1,068.5 
* Includes results of operations through the March 13, 2020 closing date.
7


Note 3 - Accounting Standards
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 September 30, 2020,March 31, 2021, the company recognized cost-reduction charges and other costs of $13.2$8.5 million. The charges (credits) related to work-force reductions were $0.7$(1.6) million, principally related to severance costs, and were comprised of: (a) a charge of $2.7$2.9 million and (b) a credit of $(2.0)$(4.5) million for changes in estimates. In addition, the company recorded a creditcharges of $(0.6)$10.1 million comprised of $2.3 million for net foreign currency gainslosses related to exiting foreign countries, a charge of $7.5$2.4 million for asset impairments and $5.6$5.4 million of other expenses. The charges (credits) were recorded inexpenses related to the following statement of income classifications: cost of revenue - services, $2.9 million; selling, general and administrative expenses, $10.8 million; research and development expenses, $0.1 million; and other expense, net, $(0.6) million.cost-reduction effort.
During the three months ended September 30, 2019, the company recognized cost-reduction charges and other costs of $0.2 million. Charges (credits) were comprised of $0.7 million for lease abandonment costs and $(0.5) 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, $(1.9) million and selling, general and administrative expenses, $2.1 million.
During the nine months ended September 30,March 31, 2020, the company recognized cost-reduction charges and other costs of $48.6$27.5 million. The charges related to work-force reductions were $6.2$8.5 million, principally related to severance costs, and were comprised of: (a) a charge of $14.0$9.7 million and (b) a credit of $(7.8)$(1.2) million for changes in estimates. In addition, the company recorded charges of $17.8$19.0 million for net foreign currency losses related to exiting foreign countries, $19.0 million for asset impairments and $5.6 million of other expenses. countries.
The charges (credits) were recorded in the following statement of income classifications: cost of revenue - services, $15.7 million; selling, general and administrative expenses, $14.8 million; research and development expenses, $0.3 million; and other expense, net, $17.8 million.
8



During the nine months ended September 30, 2019, the company recognized cost-reduction charges and other costs of $5.4 million. Charges were comprised of $5.0 million for lease abandonment costs and asset write-offs and $0.4 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, $(6.6) million; selling, general and administrative expenses, $10.7 million; and research and development expenses, $1.3 million.
Three Months Ended March 31,
20212020
Cost of revenue$(1.7)$5.9 
Selling, general and administrative6.2 2.5 
Research and development1.7 0.1 
Other (expense), net2.3 19.0 
Total$8.5 $27.5 
Liabilities and expected future payments related to the company’s work-force reduction actions are as follows:
TotalU.S.International
Balance at December 31, 2019$49.8 $5.2 $44.6 
Additional provisions14.0 4.0 10.0 
Payments(17.7)(2.3)(15.4)
Changes in estimates(7.8)0 (7.8)
Translation adjustments0.7 — 0.7 
Balance at September 30, 2020$39.0 $6.9 $32.1 
Expected future utilization on balance at September 30, 2020:
2020 remaining three months$9.1 $5.6 $3.5 
Beyond 2020$29.9 $1.3 $28.6 
TotalU.S.International
Balance at December 31, 2020$55.9 $13.1 $42.8 
Additional provisions2.9 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 
8


Note 54 - Pension and Postretirement Benefits
Net periodic pension expense for the three and nine months ended September 30, 2020 and 2019 is presented below:
Three Months Ended
September 30, 2020		Three Months Ended
September 30, 2019		 Three Months Ended
March 31, 2021
TotalU.S.
Plans		International
Plans		TotalU.S.
Plans		International
Plans		 TotalU.S.
Plans		International
Plans
Service cost(i)
Service cost(i)
$0.8 $0 $0.8 $0.7 $0 $0.7 
Service cost(i)
$1.2 $0 $1.2 
Interest costInterest cost54.1 40.6 13.5 66.1 49.6 16.5 Interest cost39.6 29.4 10.2 
Expected return on plan assetsExpected return on plan assets(75.0)(52.1)(22.9)(80.1)(54.7)(25.4)Expected return on plan assets(74.1)(51.4)(22.7)
Amortization of prior service benefitAmortization of prior service benefit(1.3)(0.6)(0.7)(1.2)(0.6)(0.6)Amortization of prior service benefit(1.3)(0.6)(0.7)
Recognized net actuarial lossRecognized net actuarial loss44.8 33.8 11.0 37.9 29.6 8.3 Recognized net actuarial loss46.2 33.2 13.0 
Net periodic pension expense (benefit)$23.4 $21.7 $1.7 $23.4 $23.9 $(0.5)
Settlement lossSettlement loss158.0 158.0 0 
Net periodic pension expenseNet periodic pension expense$169.6 $168.6 $1.0 
 Nine Months Ended
September 30, 2020		Nine Months Ended
September 30, 2019
 TotalU.S.
Plans		International
Plans		TotalU.S.
Plans		International
Plans
Service cost(i)
$2.2 $0 $2.2 $2.1 $0 $2.1 
Interest cost161.7 121.8 39.9 199.3 148.1 51.2 
Expected return on plan assets(224.0)(156.4)(67.6)(242.2)(163.7)(78.5)
Amortization of prior service benefit(3.8)(1.9)(1.9)(3.7)(1.9)(1.8)
Recognized net actuarial loss133.8 101.6 32.2 113.1 87.5 25.6 
Net periodic pension expense (benefit)$69.9 $65.1 $4.8 $68.6 $70.0 $(1.4)

 Three Months Ended
March 31, 2020
 TotalU.S.
Plans		International
Plans
Service cost(i)
$0.7 $0 $0.7 
Interest cost53.8 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 loss44.3 33.5 10.8 
Net periodic pension expense$22.5 $21.0 $1.5 
(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).
For the nine months ended September 30, 2020 and 2019,In January of 2021, the company madepurchased 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 of $340.2 million and $78.8 million, respectively. For the remainder of 2020, the company expects to make additional cash contributions of approximately $485.6 million resulting in total 2020 cash contributions of approximately $825.8 million to its worldwideU.S. qualified defined benefit pension plans which are comprisedand 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 $793.1 million for the company’s U.S. qualified defined benefit pension plans and $32.7plan 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 2021, the company expects to make cash contributions of approximately $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 three months ended March 31, 2021 and 2020, the company made cash contributions of $20.2 million and $325.6 million, respectively.
9


Net periodic postretirement benefit (income) expense for the three and nine months ended September 30, 2020 and 2019 is presented below:
Three Months Ended
September 30,		Nine Months Ended
September 30,		 Three Months Ended
March 31,
2020201920202019 20212020
Service cost(i)
Service cost(i)
$0.1 $0.1 $0.3 $0.3 
Service cost(i)
$0.1 $0.1 
Interest costInterest cost1.1 1.2 3.3 3.6 Interest cost0.4 1.1 
Expected return on assetsExpected return on assets(0.1)(0.1)(0.3)(0.3)Expected return on assets(0.1)(0.1)
Recognized net actuarial loss0.3 0.2 0.8 0.5 
Recognized net actuarial (gain) lossRecognized net actuarial (gain) loss(0.6)0.3 
Amortization of prior service costAmortization of prior service cost(0.4)(0.4)(1.2)(1.2)Amortization of prior service cost(0.4)(0.4)
Net periodic postretirement benefit expense$1.0 $1.0 $2.9 $2.9 
Net periodic postretirement benefit (income) expenseNet periodic postretirement benefit (income) expense$(0.6)$1.0 
(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 $6.0$5.0 million to its postretirement benefit plan in 20202021 compared to $5.5$6.0 million in 2019.2020. For the ninethree months ended September 30,March 31, 2021 and 2020, and 2019, the company made cash contributions of $4.3$1.4 million and $3.5$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 September 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 ninethree months ended September 30,March 31, 2021 and 2020, and 2019, the company recorded $11.1$3.3 million and $10.1$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 ninethree months ended September 30, 2020March 31, 2021 follows (shares in thousands):
Restricted
Stock
Units		Weighted-
Average
Grant-Date
Fair Value		Restricted
Stock
Units		Weighted-
Average
Grant-Date
Fair Value
Outstanding at December 31, 20192,040 $14.17 
Outstanding at December 31, 2020Outstanding at December 31, 20201,726 $17.87 
GrantedGranted747 22.45 Granted963 28.32 
VestedVested(940)13.80 Vested(839)16.75 
Forfeited and expiredForfeited and expired(116)15.88 Forfeited and expired(73)18.18 
Outstanding at September 30, 20201,731 17.84 
Outstanding at March 31, 2021Outstanding at March 31, 20211,777 22.38 
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The aggregate weighted-average grant-date fair value of restricted stock units granted during the ninethree months ended September 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:
Nine Months Ended
September 30,		Three Months Ended
March 31,
2020201920212020
Weighted-average fair value of grantWeighted-average fair value of grant$28.33 $16.58 Weighted-average fair value of grant$40.02 $28.33 
Risk-free interest rate(i)
Risk-free interest rate(i)
1.35 %2.49 %
Risk-free interest rate(i)
0.27 %1.35 %
Expected volatility(ii)
Expected volatility(ii)
51.81 %47.91 %
Expected volatility(ii)
57.08 %51.81 %
Expected life of restricted stock units in years(iii)
Expected life of restricted stock units in years(iii)
2.862.87
Expected life of restricted stock units in years(iii)
2.842.86
Expected dividend yieldExpected dividend yield0 %0 %Expected dividend yield0 %0 %
(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 September 30, 2020,March 31, 2021, there was $16.1$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 2.12.6 years. The aggregate weighted-average grant-date fair value of restricted stock units vested during the ninethree months ended September 30,March 31, 2021 and 2020 and 2019 was $13.0$14.0 million and $14.8$11.8 million, respectively.
Common stock issued upon the lapse of restrictions on restricted stock units are newly issued shares. In light of its tax position, the company is currently not recognizing any tax benefits from the issuance of stock upon lapse of restrictions on restricted stock units.
Note 6 - Other (expense), net
Other (expense), net is comprised of the following:
Three Months Ended
March 31,
20212020
Postretirement expense*$(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
11



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.
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Note 8 - Earnings Per Share
The following table shows how earnings (loss) per share attributable to Unisys Corporation was computed for the three and nine months ended September 30, 2020 and 2019 (shares in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,		 Three Months Ended
March 31,
2020201920202019 20212020
Basic earnings (loss) per common share computation:Basic earnings (loss) per common share computation:Basic earnings (loss) per common share computation:
Net loss from continuing operations attributable to Unisys CorporationNet loss from continuing operations attributable to Unisys Corporation$(13.3)$(29.2)$(143.0)$(61.2)Net loss from continuing operations attributable to Unisys Corporation$(157.8)$(53.2)
Income from discontinued operations, net of taxIncome from discontinued operations, net of tax0.4 16.0 1,066.8 54.8 Income from discontinued operations, net of tax0 1,068.5 
Net income (loss) attributable to Unisys CorporationNet income (loss) attributable to Unisys Corporation$(12.9)$(13.2)$923.8 $(6.4)Net income (loss) attributable to Unisys Corporation$(157.8)$1,015.3 
Weighted average sharesWeighted average shares63,032 58,245 62,897 53,815 Weighted average shares64,423 62,650 
Basic earnings (loss) per share attributable to Unisys CorporationBasic earnings (loss) per share attributable to Unisys CorporationBasic earnings (loss) per share attributable to Unisys Corporation
Continuing operationsContinuing operations$(0.21)$(0.50)$(2.27)$(1.14)Continuing operations$(2.45)$(0.85)
Discontinued operationsDiscontinued operations0.01 0.27 16.96 1.02 Discontinued operations0 17.06 
TotalTotal$(0.20)$(0.23)$14.69 $(0.12)Total$(2.45)$16.21 
Diluted earnings (loss) per common share computation:Diluted earnings (loss) per common share computation:Diluted earnings (loss) per common share computation:
Net loss from continuing operations attributable to Unisys CorporationNet loss from continuing operations attributable to Unisys Corporation$(13.3)$(29.2)$(143.0)$(61.2)Net loss from continuing operations attributable to Unisys Corporation$(157.8)$(53.2)
Add interest expense on convertible senior notes, net of tax of 0Add interest expense on convertible senior notes, net of tax of 00 0 0 0 Add interest expense on convertible senior notes, net of tax of 00 0 
Net loss from continuing operations attributable to Unisys Corporation for diluted earnings per shareNet loss from continuing operations attributable to Unisys Corporation for diluted earnings per share(13.3)(29.2)(143.0)(61.2)Net loss from continuing operations attributable to Unisys Corporation for diluted earnings per share(157.8)(53.2)
Income from discontinued operations, net of taxIncome from discontinued operations, net of tax0.4 16.0 1,066.8 54.8 Income from discontinued operations, net of tax0 1,068.5 
Net income (loss) attributable to Unisys Corporation for diluted earnings per shareNet income (loss) attributable to Unisys Corporation for diluted earnings per share$(12.9)$(13.2)$923.8 $(6.4)Net income (loss) attributable to Unisys Corporation for diluted earnings per share$(157.8)$1,015.3 
Weighted average sharesWeighted average shares63,032 58,245 62,897 53,815 Weighted average shares64,423 62,650 
Plus incremental shares from assumed conversions:Plus incremental shares from assumed conversions:Plus incremental shares from assumed conversions:
Employee stock plansEmployee stock plans0 0 0 0 Employee stock plans0 0 
Convertible senior notesConvertible senior notes0 0 0 0 Convertible senior notes0 0 
Adjusted weighted average sharesAdjusted weighted average shares63,032 58,245 62,897 53,815 Adjusted weighted average shares64,423 62,650 
Diluted earnings (loss) per share attributable to Unisys CorporationDiluted earnings (loss) per share attributable to Unisys CorporationDiluted earnings (loss) per share attributable to Unisys Corporation
Continuing operationsContinuing operations$(0.21)$(0.50)$(2.27)$(1.14)Continuing operations$(2.45)$(0.85)
Discontinued operationsDiscontinued operations0.01 0.27 16.96 1.02 Discontinued operations0 17.06 
TotalTotal$(0.20)$(0.23)$14.69 $(0.12)Total$(2.45)$16.21 
Anti-dilutive weighted-average stock options and restricted stock units(i)
Anti-dilutive weighted-average stock options and restricted stock units(i)
998 1,462 892 1,394 
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)
Anti-dilutive weighted-average common shares issuable upon conversion of the 5.50% convertible senior notes(i)
8,625 13,951 8,625 19,229 
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.
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Note 9 - Contract Assets and Contract LiabilitiesDeferred 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 September 30, 2020 and December 31, 2019 are as follows:
September 30, 2020December 31, 2019March 31, 2021December 31, 2020
Contract assets - currentContract assets - current$47.0 $38.4 Contract assets - current$45.1 $44.3 
Contract assets - long-term(i)
Contract assets - long-term(i)
21.3 21.6 
Contract assets - long-term(i)
18.8 20.7 
Deferred revenue - currentDeferred revenue - current(197.4)(246.4)Deferred revenue - current(248.0)(257.1)
Deferred revenue - long-termDeferred revenue - long-term(122.5)(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 nine months ended September 30, 2020 and 2019 in the above contract asset and liability balances were as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2020201920202019
Revenue recognized that was included in deferred revenue at the beginning of the period$48.1 $30.1 $197.3 $202.1 
Three Months Ended
March 31,
20212020
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 September 30, 2020March 31, 2021 and December 31, 2019,2020, the company had $9.2$7.9 million and $9.1$8.7 million, respectively, of deferred commissions.
Amortization expense related to deferred commissions for the three and nine months ended September 30, 2020 and 2019 was as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2020201920202019
Deferred commissions - amortization expense(i)
$0.8 $0.7 $2.3 $2.4 
Three Months Ended
March 31,
20212020
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 September 30, 2020March 31, 2021 and December 31, 20192020 was $74.2$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 nine months ended September 30, 2020 and 2019, amortizationAmortization expense related to costs to fulfill a contract was as follows:
Three Months Ended
September 30,		Nine Months Ended September 30,
2020201920202019
Costs to fulfill a contract - amortization expense$7.9 $5.9 $20.6 $17.8 
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Three Months Ended
March 31,
20212020
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.
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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 September 30, 2020March 31, 2021 and December 31, 2019,2020, the notional amount of these contracts was $360.9$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 September 30, 2020 and December 31, 2019.contracts.
September 30, 2020December 31, 2019March 31, 2021December 31, 2020
Balance Sheet LocationBalance Sheet LocationBalance Sheet Location
Prepaid expenses and other current assetsPrepaid expenses and other current assets$3.2 $2.1 Prepaid expenses and other current assets$0.4 $1.4 
Other accrued liabilitiesOther accrued liabilities0.5 0.1 Other accrued liabilities2.8 1.0 
Total fair valueTotal fair value$2.7 $2.0 Total fair value$(2.4)$0.4 

The following table summarizes the location and amount of gains and losses recognized on foreign exchange forward contracts for the three and nine months ended September 30, 2020 and 2019.contracts.
Three Months Ended
September 30,		Nine Months Ended
September 30,		Three Months Ended
March 31,
202020192020201920212020
Statement of Income LocationStatement of Income LocationStatement of Income Location
Other expense, net$13.7 $(11.9)$(10.9)$(17.1)
Other (expense), netOther (expense), net$(8.8)$(28.5)

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 September 30, 2020March 31, 2021 and December 31, 2019.2020.
September 30, 2020December 31, 2019
Carrying AmountFair ValueCarrying AmountFair Value
Long-term debt:
5.50% convertible senior notes due 2021$82.7 $100.9 $80.0 $115.8 

March 31, 2021December 31, 2020
Carrying AmountFair ValueCarrying AmountFair Value
Long-term debt:
6.875% senior secured notes due November 1, 2027$477.2 $531.9 $476.9 $532.3 
5.50% convertible senior notes due March 1, 20210 0 83.6 169.8 

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.
Note 12 - Goodwill
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 March 31, 2021, the amount of goodwill allocated to reporting units with negative net assets within Other was $10.3 million.
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Note 12 - Goodwill
At September 30, 2020, the amount of goodwill allocated to reporting units with negative net assets was as follows: Business Process Outsourcing Services, $10.3 million.
Changes in the carrying amount of goodwill by segment at September 30, 2020 was as follows:
TotalServicesTechnology
Balance at December 31, 2019$110.4 $10.3 $100.1 
Translation adjustments(1.8)0 (1.8)
Balance at September 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:
September 30, 2020December 31, 2019March 31, 2021December 31, 2020
10.75% senior secured notes ($440.0 million face value less unamortized discount and fees of $5.5 million at December 31, 2019)$0 $434.5 
5.50% convertible senior notes due March 1, 2021 (Face value of $84.2 million less unamortized discount and fees of $1.5 million and $4.2 million at September 30, 2020 and December 31, 2019, respectively)82.7 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 leasesFinance leases6.0 5.3 Finance leases4.7 5.5 
Other debtOther debt59.7 59.6 Other debt59.2 63.9 
TotalTotal148.4 579.4 Total541.1 629.9 
Less – current maturitiesLess – current maturities100.0 13.5 Less – current maturities19.9 102.8 
Total long-term debtTotal long-term debt$48.4 $565.9 Total long-term debt$521.2 $527.1 
See Note 11 for the fair value of the notes.
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.
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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 costs0.3 
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 10.75% 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 nine month periods ended September 30, 2020 and 2019 was as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2020201920202019
Contractual interest coupon$0 $11.9 $13.8 $35.5 
Amortization of debt issuance costs0 0.6 0.7 1.8 
Total$0 $12.5 $14.5 $37.3 
Three Months Ended
March 31, 2020
Contractual interest coupon$11.8 
Amortization of issuance costs0.6 
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). TheFollowing 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 rateremained outstanding.

On March 3, 2021, the company completed the conversion of 5.50% (or 9.5% effective interest rate) per year until maturity, payable semiannually in arrears on March 1 and September 1$84.2 million aggregate principal amount of each year. Thethe 2021 Notes are not redeemable bythat 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 priordelivered to maturity.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 are convertiblepursuant to an exemption from the registration requirements provided by Section 3(a)(9) of the holdersSecurities 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 if certain conditions set forth infollowing 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 principal amount of the 2021 Notes (or a total amount at issuance date of 21,867,716 shares), which is equivalentincreased by 3,285,663 shares.
Interest expense related 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 conversion2021 Notes was as follows:
Three Months Ended
March 31,
20212020
Contractual interest coupon$0.8 $1.2 
Amortization of debt discount0.5 0.8 
Amortization of debt issuance costs0.1 0.1 
Total$1.4 $2.1 


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obligation in cash, shares of its common stock, or a combination of cash and shares of its common stock, at its election. On the maturity date, 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 also paid $27.3 million to enter into privately negotiated capped call transactions with the initial purchasers and/or affiliates of the initial purchasers. The capped call transactions will cover, subject to customary anti-dilution adjustments, the number of shares of the company’s common stock that will initially underlie 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.
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. As a result of the exchange, the company recognized a charge of $20.2 million in other expense, net in the three months ended September 30, 2019.
Interest expense related to the 2021 Notes for the three and nine month periods ended September 30, 2020 and 2019 was as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2020201920202019
Contractual interest coupon$1.2 $1.8 $3.5 $7.7 
Amortization of debt discount0.7 1.2 2.3 4.7 
Amortization of debt issuance costs0.2 0.2 0.4 0.8 
Total$2.1 $3.2 $6.2 $13.2 
Other Debt
On March 27,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 September 30, 2020, $6.3March 31, 2021, $6.6 million was reported in current maturities of long-term debt.
On September 5,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 itsour 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 September 30, 2020, $3.6March 31, 2021, $3.8 million was reported in current maturities of long-term debt.
RevolvingABL Credit Facility
TheContemporaneously with the issuance of the 2027 Notes, the company has aand 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 thecredit 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 September 30, 2020,March 31, 2021, the company had 0 borrowings and $5.8$5.7 million of letters of credit outstanding, and availability under the facility was $71.2$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 isAmended and Restated ABL Credit Facility will immediately mature 91 days prior to any date on which contributions to pension funds in the maturity dateUnited 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 facilityAmended and Restated ABL Credit Facility is guaranteed by Unisys Holding Corporation, Unisys NPL, Inc., Unisys AP Investment Company Ithe 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.
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The company is required to maintain a minimum fixed charge coverage ratio if the availability under the credit facilityAmended 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 AgreementFacility 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 AgreementFacility includes limitationsrestrictions 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.
At September 30, 2020,March 31, 2021, the company has met all covenants and conditions under its various lending and funding agreements. TheFor at least the next twelve months, the company expects to continue to meet these covenants and conditions.
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.
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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 September 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 $75$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 $48 million for the period July 1, 1989 through September 4, 2012, plus interest. The company believes that it has valid defenses to Louisiana’s claims and is asserting them in the pending litigation.
With respect to the specific legal proceedings and claims described above, except as otherwise noted, either (i) the amount or range of possible losses in excess of amounts accrued, if any, is not reasonably estimable or (ii) the company believes that the amount or range of possible losses in excess of amounts accrued that are estimable would not be material.
Litigation is inherently unpredictable and unfavorable resolutions could occur. Accordingly, it is possible that an adverse outcome from such matters could exceed the amounts accrued in an amount that could be material to the company’s financial condition, results of operations and cash flows in any particular reporting period.
Notwithstanding that the ultimate results of the lawsuits, claims, investigations and proceedings that have been brought or asserted against the company are not currently determinable, the company believes that at September 30, 2020,March 31, 2021, it has adequate provisions for any such matters.
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Note 15 - Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss as of September 30, 2020 is as follows:
TotalTranslation
Adjustments		Postretirement
Plans
Balance at December 31, 2019$(4,088.6)$(872.9)$(3,215.7)
Other comprehensive income (loss) before reclassifications(8.2)(18.7)10.5 
Amounts reclassified from accumulated other comprehensive income106.5 (17.8)124.3 
Current period other comprehensive income98.3 (36.5)134.8 
Balance at September 30, 2020$(3,990.3)$(909.4)$(3,080.9)
TotalTranslation
Adjustments		Postretirement
Plans
Balance at December 31, 2020$(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 loss for the three and nine months ended September 30, 2020 and 2019 are as follows:
Three Months Ended
September 30,		Nine Months Ended
September 30,		 Three Months Ended
March 31,
2020201920202019 20212020
Translation Adjustments:
Translation adjustments:Translation adjustments:
Adjustment for substantial completion of liquidation of foreign subsidiaries(i)
Adjustment for substantial completion of liquidation of foreign subsidiaries(i)
$0.6 $0 $(17.8)$0 
Adjustment for substantial completion of liquidation of foreign subsidiaries(i)
$(2.3)$(19.0)
Postretirement Plans(ii):
Postretirement plans(ii):
Postretirement plans(ii):
Amortization of prior service costAmortization of prior service cost(1.5)(1.4)(4.4)(4.4)Amortization of prior service cost(1.5)(1.5)
Amortization of actuarial lossesAmortization of actuarial losses44.5 37.6 132.8 112.3 Amortization of actuarial losses44.8 43.9 
Settlement lossSettlement loss158.0 0 
Total before taxTotal before tax43.6 36.2 110.6 107.9 Total before tax199.0 23.4 
Income tax benefitIncome tax benefit(1.4)(1.0)(4.1)(3.0)Income tax benefit(1.7)(1.3)
Total reclassifications for the periodTotal reclassifications for the period$42.2 $35.2 $106.5 $104.9 Total reclassifications for the period$197.3 $22.1 
(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).
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Note 16 - Supplemental Cash Flow Information
Nine Months Ended
September 30,		Three Months Ended
March 31,
2020201920212020
Cash paid during the period for:Cash paid during the period for:Cash paid during the period for:
Income taxes, net of refundsIncome taxes, net of refunds$14.8 $44.7 Income taxes, net of refunds$14.4 $16.7 
InterestInterest$31.9 $36.3 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.
September 30, 2020December 31, 2019March 31, 2021December 31, 2020
Cash and cash equivalentsCash and cash equivalents$774.0 $538.8 Cash and cash equivalents$716.6 $898.5 
Restricted cashRestricted cash10.1 13.0 Restricted cash9.9 8.2 
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flowsTotal cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows$784.1 $551.8 Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows$726.5 $906.7 

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.
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Note 17 - Segment Information
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, but this did not impact the consolidated financial statements as of December 31, 2020.
The company has 2 business segments: Services and Technology. Revenue classifications within the Services and Technologycompany’s reportable segments are as follows:
•Cloud & infrastructure services. This represents revenue from helping clients apply cloudDigital Workplace Services (DWS), which provides services and as-a-service delivery modelsIP-led solutions that support clients’ employees’ productivity, satisfaction and ability to capitalize on business opportunities, make their end users more productive and manage and secure their IT infrastructure and operations more economically.securely work anywhere, any time;
•Application services. This represents revenue from helping clients transform their business processes by developingCloud & Infrastructure Services (C&I), which provides hybrid and managing new leading-edge applications formulti-cloud solutions in select industries, offering advanced data analyticsmarkets to accelerate innovation and modernizing existing enterprise applications.increase efficiency of our clients’ businesses; and
•Business process outsourcing (BPO) services. This represents revenue from the management of critical processesClearPath Forward® (CPF), which provides server systems and functions for clients in target industries, helping them improve performance and reduce costs.
•Technology. This represents revenue from designing and developingoperating system software and offering hardwareservices that are secure, innovative, and other related products to help clients improve security and flexibility, reduce costs and improve the efficiency of their data-center environments.reliable for mission-critical processing.
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 TechnologyCPF 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, recordsrecord 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 TechnologyCPF segment and sold to Servicesother segments’ customers are reported in cost of revenue for Services.
these other segments. Also included in the TechnologyCPF segment’s sales and operatinggross profit are sales of hardware and software sold to the Services segmentother segments for internal use in Servicestheir engagements. The amount of such profit included in operating incomegross profit of the TechnologyCPF segment for the three months ended September 30,March 31, 2021 and 2020 and 2019 was $5.3$0.7 million and 0, respectively. The amount for the nine months ended September 30, 2020 and 2019 was $5.3 million 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 incomegross 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 allocatedDuring 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.
A summary of the company’s operations by business segment for the three and nine month periods ended September 30, 2020 and 2019 is presented below:
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TotalCorporateServicesTechnology
Three Months Ended September 30, 2020    
Customer revenue$495.2 $— $426.0 $69.2 
Intersegment— (6.0)0 6.0 
Total revenue$495.2 $(6.0)$426.0 $75.2 
Operating income (loss)$27.7 $(17.9)$20.7 $24.9 
Three Months Ended September 30, 2019    
Customer revenue$552.1 $— $478.8 $73.3 
Intersegment— (2.3)0 2.3 
Total revenue$552.1 $(2.3)$478.8 $75.6 
Operating income (loss)$49.4 $(0.1)$17.7 $31.8 
Nine Months Ended September 30, 2020    
Customer revenue$1,449.4 $— $1,247.9 $201.5 
Intersegment— (10.9)0 10.9 
Total revenue$1,449.4 $(10.9)$1,247.9 $212.4 
Operating income (loss)$39.3 $(33.9)$5.1 $68.1 
Nine Months Ended September 30, 2019    
Customer revenue$1,676.0 $— $1,433.8 $242.2 
Intersegment— (6.8)0 6.8 
Total revenue$1,676.0 $(6.8)$1,433.8 $249.0 
Operating income (loss)$127.6 $(9.1)$25.3 $111.4 
Presented below is a reconciliation of total business segment operating income (loss) to consolidated loss from continuing operations before income taxes:
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2020201920202019
Total segment operating income$45.6 $49.5 $73.2 $136.7 
Interest expense(2.4)(15.2)(20.9)(46.9)
Other expense, net(32.5)(49.2)(134.3)(108.5)
Cost-reduction charges(13.8)(0.2)(30.8)(5.4)
Corporate and eliminations(4.1)0.1 (3.1)(3.7)
Total loss from continuing operations before income taxes$(7.2)$(15.0)$(115.9)$(27.8)
Customer revenue by classes of similar products or services, by segment, is presented below:
 Three Months Ended
September 30,		Nine Months Ended
September 30,
 2020201920202019
Services
Cloud & infrastructure services$294.1 $325.4 $865.0 $967.6 
Application services91.1 93.5 258.6 279.1 
Business process outsourcing services40.8 59.9 124.3 187.1 
426.0 478.8 1,247.9 1,433.8 
Technology69.2 73.3 201.5 242.2 
Total$495.2 $552.1 $1,449.4 $1,676.0 
current period’s presentation.
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A summary of the company’s operations by segment is presented below:
Total SegmentsDWSC&ICPF
Three Months Ended March 31, 2021   
Customer revenue$432.0 $141.1 $123.3 $167.6 
Intersegment1.0 0 0 1.0 
Total revenue$433.0 $141.1 $123.3 $168.6 
Gross profit$133.6 $18.5 $12.0 $103.1 
Three Months Ended March 31, 2020   
Customer revenue$435.9 $160.2 $104.0 $171.7 
Intersegment0.1 0 0 0.1 
Total revenue$436.0 $160.2 $104.0 $171.8 
Gross profit$104.5 $7.2 $(2.8)$100.1 

Presented below is a reconciliation of total segment revenue to total consolidated revenue:
 Three Months Ended
March 31,
 20212020
Total segment revenue$433.0 $436.0 
Other revenue77.8 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 gross profit to consolidated loss from continuing operations before income taxes:
 Three Months Ended
March 31,
 20212020
Total segment gross profit$133.6 $104.5 
Other gross profit5.6 8.6 
Total gross profit139.2 113.1 
Selling, general and administrative expense(90.0)(86.8)
Research and development expense(5.6)(6.2)
Interest expense(10.1)(13.9)
Other (expense), net(182.6)(48.1)
Total loss from continuing operations before income taxes$(149.1)$(41.9)

Geographic information about the company’s revenue, which is principally based on location of the selling organization, is presented below:
Three Months Ended
September 30,		Nine Months Ended
September 30,		 Three Months Ended
March 31,
2020201920202019 20212020
United StatesUnited States$193.6 $213.4 $584.0 $613.3 United States$234.5 $215.6 
United KingdomUnited Kingdom58.6 72.4 176.9 272.0 United Kingdom68.0 64.5 
Other foreignOther foreign243.0 266.3 688.5 790.7 Other foreign207.3 235.3 
TotalTotal$495.2 $552.1 $1,449.4 $1,676.0 Total$509.8 $515.4 
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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 September 30, 2020,March 31, 2021, the company had approximately $0.8 billion of remaining performance obligations of which approximately 13%29% is estimated to be recognized as revenue by the end of 20202021 and an additional 37%35% by the end of 2021.2022.
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Note 19 - Subsequent Events

On October 22, 2020, the company announced the pricing of $485.0 million aggregate principal amount of Senior Secured Notes due 2027 (the notes) through a private offering. The offering of the notes is expected to close on October 29, 2020, subject to customary closing conditions. The notes will be priced at par and will bear interest at a rate of 6.875% per year until maturity, payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2021. The company intends to use all of the net proceeds from the offering of the notes to fund a portion of its underfunded U.S. pension liability.
In addition, the company has received commitments from lenders, subject to customary conditions, to amend and restate its ABL Credit Facility (the Amendment and Restatement). The Amendment and Restatement will maintain the ABL Credit Facility at $145 million, with an accordion provision allowing for an increase to $175 million, and will extend the maturity from October 2022 to October 2025 and modify certain other terms and covenants, to be mutually agreed between the company, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent thereunder. There is no assurance that the company will be successful in entering into the Amendment and Restatement or that the Amendment and Restatement will be completed on the terms set forth in such commitments.
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.
Overview
OnDuring the three months ended March 31, 2021, the company continued to remove gross defined benefit pension plan liabilities by either removing or announcing plans to remove approximately $930 million. This is in addition to approximately $276 million removed in the fourth quarter of 2020. When completed, the company would have removed approximately $1.2 billion of gross pension liabilities.
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.
In the second quarter of 2021, the company expects the primary pension plan related to 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 $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 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 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 World Health Organization declared the outbreakcompany made cash contributions of COVID-19 as a pandemic, which continues$826.2 million 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.its worldwide defined benefit pension plans. For the three months ended September 30,March 31, 2021 and 2020, revenue declined by 10.3%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 prior-year quarter. The decline was 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. The company is unable to accurately predict the full extentregistration requirements provided by Section 3(a)(9) of the impact that COVID-19 willSecurities Act of 1933, as amended.
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have due to numerous uncertainties, includingThe company also received 1,251,460 shares of its common stock, now held in treasury stock, from the severitysettlement of the disease,capped call transactions that the durationcompany had entered into with the initial purchasers and/or affiliates 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 needsinitial purchasers 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, the company completed the sale of its U.S. Federal business to Science Applications International Corporation for a cash purchase price of $1.2 billion. Beginning January 1, 2020, the historical results of the company’s U.S. Federal business have been reflected2021 Notes 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.

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 $20.0 million in the fourth quarter of this year. In addition, in the fourth quarter of 2020, the company expects to take a charge of approximately $5 to $10 million 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 2021 Notes.

As a result, the net number of September 30, 2020, the company had contributed $315.1 million to its U.S. qualified pension plans. During the fourth quarter, the company expects to contribute an additional $478.0 million for an aggregate in 2020outstanding shares of approximately $793.1 million to its U.S. qualified defined benefit pension plans. These contributions are expected to be applied toward the company’s required minimum contributions to these plans in 2020,common stock following the conversion of the 2021 and 2022.Notes increased by 3,285,663 shares.
During the three months ended September 30, 2020,March 31, 2021, the company recognized cost-reduction charges and other costs of $13.2$8.5 million. The charges (credits) related to work-force reductions were $0.7$(1.6) million, principally related to severance costs, and were comprised of: (a) a charge of $2.7$2.9 million and (b) a credit of $(2.0)$(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, a charge of $7.5$2.4 million for asset impairments and $5.6$5.4 million of other expenses. The charges (credits) were recorded in the following statement of income classifications: cost of revenue - services, $2.9 million; selling, general and administrative expenses, $10.8 million; research and development expenses, $0.1 million; and other expense, net, $(0.6) million.
During the three months ended September 30, 2019, the company recognized cost-reduction charges and other costs of $0.2 million. Charges (credits) were comprised of $0.7 million for lease abandonment costs and $(0.5) 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, $(1.9) million and selling, general and administrative expenses, $2.1 million.
During the nine months ended September 30,March 31, 2020, the company recognized cost-reduction charges and other costs of $48.6$27.5 million. The charges related to work-force reductions were $6.2$8.5 million, principally related to severance costs, and were comprised of: (a) a charge of $14.0$9.7 million and (b) a credit of $(7.8)$(1.2) million for changes in estimates. In addition, the company recorded charges of $17.8$19.0 million for net foreign currency losses related to exiting foreign countries, $19.0 million for asset impairments and $5.6 million of other expenses. countries.
The charges (credits) were recorded in the following statement of income classifications: cost of revenue - services, $15.7 million; selling, general and administrative expenses, $14.8 million; research and development expenses, $0.3 million; and other expense, net, $17.8 million.
During the nine months ended September 30, 2019, the company recognized cost-reduction charges and other costs of $5.4 million. Charges were comprised of $5.0 million for lease abandonment costs and asset write-offs and $0.4 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, $(6.6) million; selling, general and administrative expenses, $10.7 million; and research and development expenses, $1.3 million.
Three Months Ended March 31,
20212020
Cost of revenue$(1.7)$5.9 
Selling, general and administrative6.2 2.5 
Research and development1.7 0.1 
Other (expenses), net2.3 19.0 
Total$8.5 $27.5 
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Results of operations
Company results
Three months ended September 30, 2020March 31, 2021 compared with the three months ended September 30, 2019March 31, 2020
Revenue for the quarterthree months ended September 30, 2020March 31, 2021 was $495.2$509.8 million compared with $552.1$515.4 million for the third quarterthree months of 2019,2020, a decrease of 10.3%1.1% from the prior year. Foreign currency fluctuations had a negligible2 percentage-point positive impact on revenue in the current period compared with the year-ago period.
ServicesU.S. revenue decreased 11.0% and Technology revenue decreased 5.6%increased 8.8% in the current quarterperiod compared with the year-ago period. U.S. revenue decreased 9.3% in the third quarter compared with the prior-year quarter. International revenue decreased 11.0%8.2% in the current quarterperiod compared with the prior-year period principally due to decreases in all regions.Latin America. Foreign currency had a 23 percentage-point negativepositive impact on international revenue in the three months ended September 30, 2020March 31, 2021 compared with the three months ended September 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.March 31, 2020.
Total grossGross profit margin was 24.2%27.3% in the three months ended September 30, 2020March 31, 2021 compared with 25.4%21.9% in the three months ended September 30, 2019.March 31, 2020. The increase was due in part by improvements in the company’s DWS and C&I segments driven by improvements to efficiency and related cost-reduction initiatives.
Selling, general and administrative expense in the three months ended September 30, 2020March 31, 2021 was $85.5$90.0 million (17.3%(17.7% of revenue) compared with $84.7$86.8 million (15.3%(16.8% of revenue) in the year-ago period.
Research and development (R&D) expense infor the third quarter of 2020three months ended March 31, 2021 was $6.7$5.6 million compared with $5.9$6.2 million infor the third quarter of 2019.three months ended March 31, 2020.
For the third quarter of 2020,three months ended March 31, 2021, the company reported an operating profit of $27.7$43.6 million compared with an operating profit of $49.4$20.1 million in the third quarter of 2019.for prior year period. The declineincrease was principally duedriven by improvements to higherefficiency and related cost-reduction charges in the current period compared with the prior-year period.initiatives.
Interest expense for the three months ended September 30, 2020March 31, 2021 was $2.4$10.1 million compared with $15.2$13.9 million for the three months ended September 30, 2019.March 31, 2020. The decline from the prior-year quarterperiod was principally due to the redemption of the company’s Senior Secured Notes on April 14, 2020, as well asoffset in part by interest on the convertible notes exchangecompany’s Senior Secured Notes due 2027 issued in 2019.October of 2020.
Other expense,(expense), net was expense of $32.5$182.6 million infor the third quarter of 2020three months ended March 31, 2021 compared with expense of $49.2$48.1 million infor the third quarter of 2019.three months ended March 31, 2020. Other expense,(expense), net for the three months ended September 30, 2020March 31, 2021 includes postretirement expense$158.0 million of $23.5 million, $7.5 milliona U.S. pension settlement loss. See Note 6 for environmental matters anddetails of other of $1.5 million. Other expense, net for the three months ended September 30, 2019 includes postretirement expense of $23.5 million, a loss on debt exchange of $20.2 million, and other of $5.5 million.(expense), net.
24



The loss from continuing operations before income taxes for the three months ended September 30, 2020March 31, 2021 was $7.2$149.1 million compared with a loss of $15.0$41.9 million for the three months ended September 30, 2019.March 31, 2020. The decline was principally due to the itemsU.S. pension settlement loss discussed above.
The provision for income taxes was $6.1$8.4 million in the current quarterperiod compared with $10.4$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 resulted in a deferred tax benefit of approximately $5.5 million in the third quarter of 2020. In addition in the current quarter, the company recognized $3.5 million of tax expense related to a non-U.S. tax case.
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 September 30, 2020March 31, 2021 was $13.3$157.8 million, or a loss of $0.21$(2.45) per diluted share, compared with a loss of $29.2$53.2 million, or $0.50a loss of $0.85 per diluted share, for the three months ended September 30, 2019.
23



Nine months ended September 30, 2020 compared with the nine months ended September 30, 2019
Revenue for the nine months ended September 30, 2020 was $1,449.4 million compared with $1,676.0 millions for the nine months of 2019, a decrease of 13.5% 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 13.0% and Technology revenue decreased 16.8% for the nine months ended September 30, 2020 compared with the year-ago period. U.S. revenue decreased 4.8% in the current period compared with the year-ago period. International revenue decreased 18.6% in the current period compared with the prior-year period due to decreases in all regions. Foreign currency had a 3 percentage-point negative impact on international revenue in the nine months ended September 30, 2020 compared with the nine months ended September 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 21.2% in the nine months ended September 30, 2020 compared with 24.9% in the nine months ended September 30, 2019.
Selling, general and administrative expense in the nine months ended September 30, 2020 was $252.5 million (17.4% of revenue) compared with $268.0 million (16.0% of revenue) in the year-ago period.
Research and development (R&D) expense for the nine months ended September 30, 2020 was $16.1 million compared with $22.1 million for the nine months ended September 30, 2019.
For the nine months ended September 30, 2020, the company reported an operating profit of $39.3 million compared with an operating profit of $127.6 million for the nine months ended September 30, 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, as well as higher cost reduction charges in the current period compared with the prior-year period.
Interest expense for the nine months ended September 30, 2020 was $20.9 million compared with $46.9 million for the nine months ended September 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 $134.3 million for the nine months ended September 30, 2020 compared with expense of $108.5 million for the nine months ended September 30, 2019. Other expense, net for the nine months ended September 30, 2020 includes postretirement expense of $70.3 million, $15.8 million related to environmental matters, a loss on debt extinguishment of $28.5 million, $17.8 million for the write off of accumulated translation losses related to subsidiaries that were substantially liquidated during the period and other of $1.9 million. Other expense, net for the nine months ended September 30, 2019 includes postretirement expense of $69.0 million, a loss on debt exchange of $20.2 million, foreign exchange losses of $6.3 million, $10.3 million for environmental matters and $2.7 million for other expenses.
The loss from continuing operations before income taxes for the nine months ended September 30, 2020 was $115.9 million compared with a loss of $27.8 million for the nine months ended September 30, 2019. The decline was principally due to the items discussed above.
The provision for income taxes was $26.6 million in the current period compared with $23.4 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 resulted in a deferred tax benefit of approximately $5.5 million in the third quarter of31, 2020. In addition in the current period, the company recognized $3.5 million of tax expense related to a non-U.S. tax case.
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 nine months ended September 30, 2020 was $143.0 million, or a loss of $(2.27) per diluted share, compared with a loss of $61.2 million, or a loss of $1.14 per diluted share, for the nine months ended September 30, 2019.
Segment results
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, but this did not impact the consolidated financial statements as of December 31, 2020.
The company has two business segments: Services and Technology. Revenue classifications within the Services and Technologycompany’s reportable segments are as follows:
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•

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 cloudInfrastructure Solutions (C&I), which provides hybrid and as-a-service delivery modelsmulti-cloud solutions in select markets to capitalize on business opportunities, make their end users more productiveaccelerate innovation and manageincrease efficiency of our clients’ businesses; and secure their IT infrastructure and operations more economically.
•Application services. This represents revenue from helping clients transform their business processes by developingClearPath Forward® (CPF), which provides server systems and managing new leading-edge applications for select industries, offering advanced data analytics and modernizing existing enterprise applications.
•Business process outsourcing (BPO) services. This represents revenue from the management of critical processes and functions for clients in target industries, helping them improve performance and reduce costs.
•Technology. This represents revenue from designing and developingoperating system software and offering hardwareservices that are secure, innovative, and other related products to help clients improve security and flexibility, reduce costs and improve the efficiency of their data-center environments.reliable for mission-critical processing.
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 TechnologyCPF 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, recordsrecord 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 TechnologyCPF segment and sold to Servicesother segments’ customers are reported in cost of revenue for Services.
these other segments. Also included in the TechnologyCPF segment’s sales and operatinggross profit are sales of hardware and software sold to the Services segmentother segments for internal use in Servicestheir engagements. The amount of such profit included in operating incomegross profit of the TechnologyCPF segment for the three months ended September 30,March 31, 2021 and 2020 and 2019 was $5.3$0.7 million and zero, respectively. The amount for the nine months ended September 30, 2020 and 2019 was $5.3 million 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 incomegross profit exclusive of the service cost component of pensionpostretirement 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 allocatedDuring 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.
Three months ended September 30, 2020 compared with the three months ended September 30, 2019
Information by business segment is presented below:
TotalEliminationsServicesTechnology
Three Months Ended September 30, 2020    
Customer revenue$495.2 $— $426.0 $69.2 
Intersegment— (6.0)— 6.0 
Total revenue$495.2 $(6.0)$426.0 $75.2 
Gross profit percent24.2 %19.0 %59.7 %
Operating profit (loss) percent5.6 %4.9 %33.1 %
Three Months Ended September 30, 2019    
Customer revenue$552.1 $— $478.8 $73.3 
Intersegment— (2.3)— 2.3 
Total revenue$552.1 $(2.3)$478.8 $75.6 
Gross profit percent25.4 %18.2 %66.4 %
Operating profit (loss) percent8.9 %3.7 %42.1 %
Gross profit and operating profit percent are as a percent of total revenue.
Customer revenue by classes of similar products or services, by segment, is presented below:current period’s presentation.
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 Three Months Ended
September 30,		Percent
Change
 20202019
Services
Cloud & infrastructure services$294.1 $325.4 (9.6)%
Application services91.1 93.5 (2.6)%
Business process outsourcing services40.8 59.9 (31.9)%
426.0 478.8 (11.0)%
Technology69.2 73.3 (5.6)%
Total$495.2 $552.1 (10.3)%
In the Services segment, customer revenue was $426.0 million forThree months ended March 31, 2021 compared with the three months ended September 30,March 31, 2020 down 11.0% from the three months ended September 30, 2019. Foreign currency translation had a negligible impact on Services revenue in the current quarter compared with the year-ago quarter. The decline in revenue was largely due to expected declines in
A summary of the company’s U.K. check-processing joint venture as well as the impacts of COVID-19, including declines in field services, travel and entertainment and volume-based BPO contracts.operations by segment is presented below:
Total SegmentsDWSC&ICPF
Three Months Ended March 31, 2021   
Customer revenue$432.0 $141.1 $123.3 $167.6 
Intersegment1.0 — — 1.0 
Total revenue$433.0 $141.1 $123.3 $168.6 
Gross profit percent30.9 %13.1 %9.7 %61.2 %
Three Months Ended March 31, 2020   
Customer revenue$435.9 $160.2 $104.0 $171.7 
Intersegment0.1 — — 0.1 
Total revenue$436.0 $160.2 $104.0 $171.8 
Gross profit percent24.0 %4.5 %(2.7)%58.3 %
Gross profit percent is as a percent of total revenue.
Revenue from cloud & infrastructure servicesDWS was $294.1$141.1 million in the current quarter down 9.6%a decline of 11.9% compared with the prior-year quarter. The decline was due in part to reduced field services volumes. Foreign currency fluctuations had a negligible2 percentage-point positive impact on cloud & infrastructure servicesDWS revenue in the current period compared with the year-ago period. Gross profit percent was 13.1% in the current period compared with 4.5% in the year ago period. The increase in gross profit was due in part by improvements driven by efficiency and related cost-reduction initiatives.
Application servicesC&I revenue decreased 2.6%was $123.3 million for the three-month period ended September 30, 2020March 31, 2021, an increase of 18.6% compared with the three-month period ended September 30, 2019.March 31, 2020. The increase was driven by continued momentum with public sector clients. Foreign currency fluctuations had a 3 percentage-point positive impact on C&I revenue in the current period compared with the year-ago period. Gross profit percent was 9.7% in the current period compared with (2.7)% in the year ago period. The increase in gross profit was due in part by improvements driven by efficiency and related cost-reduction initiatives.
CPF revenue was $167.6 million for the three-month period ended March 31, 2021, a decline of 2.4% compared with the three-month period ended March 31, 2020. Foreign currency fluctuations had a 1 percentage-point negative impact on application servicesC&I revenue in the current period compared with the year-ago period.
Business process outsourcing services revenue decreased 31.9% in the current quarter compared with the prior-year quarter. Foreign currency fluctuations had a 3 percentage-point positive impact on business process outsourcing services revenue Gross profit percent was 61.2% in the current period compared with the year-ago period. The decline was due to reduction in volumes at the company’s check-processing operations.
Services gross profit percent was 19.0% in the third quarter of 2020 compared with 18.2% in the year-ago period. Services operating profit percent was 4.9% in the three months ended September 30, 2020 compared with 3.7% in the three months ended September 30, 2019. The increase in the Services margins was due to cost reduction efforts undertaken earlier58.3% in the year following the U.S. Federal business sale.
In the Technology segment, customer revenue decreased 5.6% to $69.2 million in the current quarter compared with $73.3 million in the year-agoago period. Foreign currency translation had a 4 percentage-point negative impact on Technology revenue in the current quarter compared with the year-ago period.
Technology gross profit percent was 59.7% in the current quarter compared with 66.4% in the year-ago quarter. Technology operating profit percent was 33.1% in the three months ended September 30, 2020 compared with 42.1% in the three months ended September 30, 2019. The decreases in gross profit percent and operating profit percent in 2020 was primarily due to a lower mix of higher margin software sales.
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Nine months ended September 30, 2020 compared with the nine months ended September 30, 2019
Information by business segment is presented below:
TotalEliminationsServicesTechnology
Nine Months Ended September 30, 2020    
Customer revenue$1,449.4 $— $1,247.9 $201.5 
Intersegment— (10.9)— 10.9 
Total revenue$1,449.4 $(10.9)$1,247.9 $212.4 
Gross profit percent21.2 %15.8 %59.7 %
Operating profit (loss) percent2.7 %0.4 %32.1 %
Nine Months Ended September 30, 2019    
Customer revenue$1,676.0 $— $1,433.8 $242.2 
Intersegment— (6.8)— 6.8 
Total revenue$1,676.0 $(6.8)$1,433.8 $249.0 
Gross profit percent24.9 %16.6 %67.9 %
Operating profit (loss) percent7.6 %1.8 %44.7 %
Gross profit and operating profit percent are as a percent of total revenue.
Customer revenue by classes of similar products or services, by segment, is presented below:
 Nine Months Ended September 30, 2020Percent
Change
 20202019
Services
Cloud & infrastructure services$865.0 $967.6 (10.6)%
Application services258.6 279.1 (7.3)%
Business process outsourcing services124.3 187.1 (33.6)%
1,247.9 1,433.8 (13.0)%
Technology201.5 242.2 (16.8)%
Total$1,449.4 $1,676.0 (13.5)%
In the Services segment, customer revenue was $1,247.9 million for the nine months ended September 30, 2020, down 13.0% from the nine months ended September 30, 2019. Foreign currency translation had a 2 percentage-point negative impact on Services revenue in the current period compared with the year-ago period. The decline in revenue was largely due to expected declines in the company’s U.K. check-processing joint venture as well as the impacts of COVID-19, including declines in field services, travel and entertainment and volume-based BPO contracts.
Revenue from cloud & infrastructure services was $865.0 million for the nine months ended September 30, 2020, down 10.6% compared with the prior-year period. Foreign currency fluctuations had a 2 percentage-point negative impact on cloud & infrastructure services revenue in the current period compared with the year-ago period.
Application services revenue decreased 7.3% for the nine-month period ended September 30, 2020 compared with the nine-month period ended September 30, 2019. Foreign currency fluctuations had a 3 percentage-point negative impact on application services revenue in the current period compared with the year-ago period.
Business process outsourcing services revenue decreased 33.6% in the current period compared with the prior-year period. Foreign currency fluctuations had a negligible impact on business process outsourcing services revenue in the current period compared with the year-ago period. The decline was due to reduction in volumes at the company’s check-processing operations.
Services gross profit percent was 15.8% in the current period of 2020 compared with 16.6% in the year-ago period. Services operating profit percent was 0.4% in the nine months ended September 30, 2020 compared with an operating profit percent of 1.8% in the nine months ended September 30, 2019. The decline in the Services margins was negatively impacted by the flow-through impact of lower revenues related to the COVID-19 impact.
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In the Technology segment, customer revenue decreased 16.8% to $201.5 million in the current period compared with $242.2 million in the year-ago period due to lower software license revenue. Foreign currency translation had a 2 percentage-point negative impact on Technology revenue in the current period compared with the year-ago period.
Technology gross profit percent was 59.7% in the current period compared with 67.9% in the year-ago period. Technology operating profit percent was 32.1% in the nine months ended September 30, 2020 compared with 44.7% in the nine months ended September 30, 2019. The decreases in gross profit percent and operating profit percent in 2020 was primarily due to a lower mix of higher margin software sales.
New accounting pronouncements
See Note 3 of the Notes to Consolidated Financial Statements for a full description of recent adopted accounting pronouncements.
Financial condition
The company’s principal sources of liquidity are cash on hand, cash from operations and its revolving credit facility, discussed below. The company and certain international subsidiaries have access to uncommitted lines of credit from various banks. The company believes that it will have adequate sources of liquidity to meet its expected cash requirements for at least the next twelve months.
Cash and cash equivalents at September 30, 2020March 31, 2021 were $774.0$716.6 million compared to $538.8$898.5 million at December 31, 2019. The increase was due to the proceeds from the sale of the company’s U.S. Federal business.2020.
As of September 30, 2020, $284.2March 31, 2021, $284.4 million of cash and cash equivalents were held by the company’s foreign subsidiaries and branches operating outside of the U.S. The company may not be able to readily transfer up to one-third of these funds out of the country in which they are located as a result of local restrictions, contractual or other legal arrangements or commercial considerations. Additionally, any transfers of these funds to the U.S. in the future may require the company to accrue or pay withholding or other taxes on a portion of the amount transferred.
During the ninethree months ended September 30, 2020,March 31, 2021, cash used for operations was $325.8$42.9 million compared to cash usage of $1.8$377.9 million for the ninethree months ended September 30, 2019.March 31, 2020. The increasedecrease in cash usage was principally due to higherlower cash contributions to the company’s U.S. qualified defined benefit pension plans discussed above.in the current period.
Cash provided byused for investing activities during the ninethree months ended September 30, 2020March 31, 2021 was $1,055.8$33.9 million compared to cash usageprovided of $141.7$1,093.8 million during the ninethree months ended September 30, 2019.March 31, 2020. On March 13, 2020, the company sold its U.S. Federal business and received net cash proceeds of $1,162.9$1,164.7 million. Net purchases of investments were $11.5$6.0 million for the ninethree months ended September 30, 2020March 31, 2021 compared with net purchases of $10.9$41.7 million in the prior-year period. Proceeds from investments and purchases of investments represent derivative financial instruments used to reduce the company’s currency
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exposure to market risks from changes in foreign currency exchange rates. In the current period, the investment in marketable software was $54.8$17.4 million compared with $56.2$17.3 million in the year-ago period, capital additions of properties were $16.7$5.1 million in 20202021 compared with $29.1$5.6 million in 20192020 and capital additions of outsourcing assets were $23.6$5.0 million in 20202021 compared with $44.4$4.8 million in 2019. Capital additions for outsourcing assets were down compared with the prior-year period since last year included a large amount of additions due to new business in the prior-year period.2020.
Cash used for financing activities during the ninethree months ended September 30, 2020March 31, 2021 was $472.4$94.8 million compared to cash usedprovided of $37.3$50.8 million during the ninethree months ended September 30, 2019.March 31, 2020. The increase in cash used was principally due to the redemption of all $84.2 million of the company’s 10.750%Convertible Senior Secured Notes due 2022.2021 (the 2021 Notes). See below.
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 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 2020, the company made cash contributions of $20.2 million and $325.6 million, respectively.
At September 30, 2020,March 31, 2021, total debt was $148.4$541.1 million compared to $579.4$629.9 million at December 31, 2019,2020. The reduction was principally due to the redemptionconversion of the company’s 10.750% Notes, discussed below.2021 Notes.
On April 15, 2020,March 3, 2021, the company redeemed all $440.0completed the conversion of $84.2 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 2021 Notes redeemed plusthat 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) 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 but unpaid interest to, but not including, the redemption date. The redemption price paid was $487.3of approximately $2.3 million and is made upa nominal cash payment in lieu of fractional shares, and (ii) the issuance of 4,537,123 shares of the following: $440.0 millioncompany’s common stock. The issuance of principal amount due, $23.65 millionthe 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 premium and $23.65 million of accrued interest through April 14, 2020. In the second quarter of 2020,transactions that the company recorded a loss on debt extinguishment in other expense, net of $28.5 million consistinghad entered into with the initial purchasers and/or affiliates of the premiuminitial purchasers of $23.65 million and write off of $4.8 million of unamortized discount and fees related tothe 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.
The company has a secured revolving credit facility (the “Credit Agreement”)Amended and Restated ABL Credit Facility) that expires on October 29, 2025 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 thecredit facility up to $150.0 million.$175.0 million upon the satisfaction of certain conditions specified in the Amended and Restated ABL Credit Facility. Availability under the credit facility is subject to a borrowing base calculated by reference to the company’s receivables. At September 30, 2020,March 31, 2021, the
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company had no borrowings and $5.8$5.7 million of letters of credit outstanding, and availability under the facility was $71.2$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 isAmended and Restated ABL Credit Facility will immediately mature 91 days prior to any date on which contributions to pension funds in the maturity dateUnited 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 facilityAmended and Restated ABL Credit Facility is guaranteed by Unisys Holding Corporation, Unisys NPL, Inc., Unisys AP Investment Company Ithe 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 new credit facility.
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The company is required to maintain a minimum fixed charge coverage ratio if the availability under the credit facilityAmended 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 AgreementFacility 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 AgreementFacility includes limitationsrestrictions 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.
At September 30, 2020,March 31, 2021, the company has met all covenants and conditions under its various lending and funding agreements. TheFor at least the next twelve months, the company expects to continue to meet these covenants and conditions.
On October 22, 2020, the company announced the pricing of $485.0 million aggregate principal amount of Senior Secured Notes due 2027 (the notes) through a private offering. The offering of the notes is expected to close on October 29, 2020, subject to customary closing conditions. The notes will be priced at par and will bear interest at a rate of 6.875% per year until maturity, payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2021. The company intends to use all of the net proceeds from the offering of the notes to fund a portion of its underfunded U.S. pension liability.
In addition, the company has received commitments from lenders, subject to customary conditions, to amend and restate its ABL Credit Facility (the Amendment and Restatement). The Amendment and Restatement will maintain the ABL Credit Facility at $145 million, with an accordion provision allowing for an increase to $175 million, and will extend the maturity from October 2022 to October 2025 and modify certain other terms and covenants, to be mutually agreed between the company, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent thereunder. There is no assurance that the company will be successful in entering into the Amendment and Restatement or that the Amendment and Restatement will be completed on the terms set forth in such commitments.
For the nine months ended September 30, 2020, the company made cash contributions of $340.2 million to its worldwide defined benefit pension plans. For the remainder of 2020, the company expects to make additional cash contributions of approximately $485.6 million resulting in total 2020 cash contributions of approximately $825.8 million to its worldwide defined benefit pension plans, which are comprised of approximately $793.1 million for the company’s U.S. qualified defined benefit pension plans and approximately $32.7 million primarily for international defined benefit pension plans. The contributions to the company’s U.S. pension plans are expected to be applied toward the company’s required minimum contributions to these plans in 2020, 2021 and 2022. Estimates for future cash contributions are likely to change based on a number of factors including market conditions and changes in discount rates. The company currently anticipates that it may need to obtain additional funding in order to make future contributions beyond 2022. There is no assurance that the company will be able to obtain such funding or that the company will have enough cash on hand to pay the required cash contributions.
The company intends to continue to explore ways in which it can significantly reduce its defined benefit pension plans liabilities. The company is targeting approximately $1.0 billion of global pension liability reduction over the next six months. The company intends to accomplish this through a combination of bulk lump sum buyouts, annuity purchases and other actions. The company has started the process to execute on these targets. These actions are expected to result in significant one-time non-cash settlement charges.
The company maintains a shelf registration statement with the Securities and Exchange Commission which expires in June of 2021, that covers the offer and sale of up to $700.0 million of debt or equity securities. Subject to the company’s ongoing compliance with securities laws, the company may offer and sell debt and equity securities from time to time under the shelf registration statement. In addition, from time to time, the company may explore a variety of institutional debt and equity sources to fund its liquidity and capital needs.
The company may, from time to time, redeem, tender for, or repurchase its securities in the open market or in privately negotiated transactions depending upon availability, market conditions and other factors.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
There has been no material change in the company’s assessment of its sensitivity to market risk since its disclosure in its 20192020 Form 10-K.
Item 4. Controls and Procedures
The company’s management, with the participation of the company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based on this evaluation, the company’s Chief Executive Officer and Chief Financial Officer concluded that, as of the end of such period, the company’s disclosure controls and procedures are effective. Such evaluation did not identify any change in the company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting.
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Part II - OTHER INFORMATION

Item 1. Legal Proceedings
Information with respect to litigation is set forth in Note 14 of the Notes to Consolidated Financial Statements, and such information is incorporated herein by reference.
Item 1A. Risk Factors
Factors that could affect future results includeThere have been no significant changes to the following:

The company’s business and results of operations will be, and our financial condition may be, impacted by the outbreak of COVID-19 and such impact could be materially adverse.

On March 11, 2020, the World Health Organization declared COVID-19 a pandemic. The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains and workforce participation due to “shelter-in-place” restrictions by various governments worldwide and created significant volatility and disruption of financial markets. The full extent of the impact of the COVID-19 pandemic on our operational and financial performance, including our ability to execute our business strategies and initiatives“Risk Factors” in the expected time frame, will depend on future developments, including the duration and spread of the pandemic and related restrictions on travel and transports, the effect on our customers and clients and demand for our products and services; our ability to sell and provide our products and services, including as a result of travel restrictions and people working from home; the ability of our clients to pay for our services and solutions; and any closures of our and our customers’ and clients’ offices and facilities all of which are uncertain and cannot be predicted. Continued impacts of the pandemic could materially adversely impact global economic conditions, our business, results of operations and financial condition, including our cash flow and liquidity, our potential to conduct financings on terms acceptable to us, if at all, and may require significant actions in response, including but not limited to expense reductions or discounting of pricing of our products, in an effort to mitigate such impacts. The full extent of the impact of the pandemic on our business and financial results will depend largely on future developments, including the duration of the spread of the outbreak, the impact on capital and financial markets and the related impact on the financial circumstances of our customers, all of which are highly uncertain and cannot be predicted. This situation is changing rapidly, and additional impacts may arise that we are not aware of currently.
Future results may be adversely impacted if the company is unable to continue revenue growth and margin expansion in its Services business.
The company’s strategy places an emphasis on an industry go-to-market approach with a focus within the company’s Services business on growing revenue, including specifically on higher value and higher margin offerings. The company’s ability to grow revenue and profitability in this business will depend on the level of demand for projects and the portfolio of solutions the company offers. It will also depend on an efficient utilization of services delivery personnel. Revenue and profit margins in this business are a function of both the portfolio of solutions sold in a given period and the rates the company is able to charge for services and the chargeability of its professionals. If the company is unable to attain sufficient rates and chargeability for its professionals, revenue and profit margins will be adversely affected. The rates the company is able to charge for services are affected by a number of factors, including clients’ perceptionPart I, Item 1A of the company’s ability to add value through its services; introduction of new services or products by the company or its competitors; pricing policies of competitors; and general economic conditions. Chargeability is also affected by a number of factors, including the company’s ability to transition resources from completed projects to new engagements and across geographies, and its ability to forecast demand for services and thereby maintain appropriate resource levels. The company’s results of operations and financial condition may be adversely impacted if sales of higher margin offerings do not offset declines in revenue and profitability resulting from lower margin offerings.
Future results may be adversely impacted if the company is unable to maintain its installed base and sell new solutions.
The company continues to invest in its ClearPath Forward operating system software in order to retain existing clients in its Technology business. If clients do not believe in the value proposition provided by ClearPath Forward or choose not to renew their contracts for any other reason, there may not be a meaningful return on these investments, and revenue could decline meaningfully. Furthermore, if ClearPath Forward is sold as a Software as a Service (SaaS) at an accelerated pace, this would have a negative impact on the company’s short- and medium-term cash position and could adversely impact the company’s operations, financial condition and liquidity. The company also continues to invest in its Stealth family of software, as well as in other software and solutions. If the company is unsuccessful in selling these Stealth products or other solutions and related services, there may not be a meaningful return on these investments. Further, the revenues generated by Stealth and other new
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solutions and related services may be insufficient to offset any revenue declines caused if the company is unable to retain its installed base.
The company faces aggressive competition in the information services and technology marketplace, which could lead to reduced demand2020 Form 10-K except for the company’s services and products and could have an adverse effect on the company’s business.risk factor relating to defined benefit pension plans which has been changed as follows:
The information services and technology markets in which the company operates include a large number of companies vying for customers and market share both domestically and internationally. The company’s competitors include systems integrators, consulting and other professional services firms, outsourcing providers, infrastructure services providers, computer hardware manufacturers and software providers. Some of the company’s competitors may develop competing services and products that offer better price-performance or that reach the market in advance of the company’s offerings. Some competitors also have or may develop greater financial and other resources than the company, with enhanced ability to compete for market share, in some instances through significant economic incentives to secure contracts. Some also may be better able to compete for skilled professionals. Any of these factors could lead to reduced demand for the company’s services and products and could have an adverse effect on the company’s business. Future results will depend on the company’s ability to mitigate the effects of aggressive competition on revenues, pricing and margins and on the company’s ability to attract and retain talented people.DEFINED BENEFIT PENSION PLANS
The company has significant underfunded pension obligations and required cash contributions and may be required to make additional significant cash contributions to its defined benefit pension plans.obligations.
The company has significant unfunded obligations under its U.S. and non-U.S. 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. Based on current legislation, global regulations, recent interest rates and expected returns, in 2020 the company estimates that it will make cash contributions to its worldwide defined benefit pension plans, of approximately $826 million, which arewere comprised of approximately $793$791.1 million for the company’s U.S. qualified defined benefit pension plans and approximately $33$35.1 million primarily for non-U.S. defined benefit pension plans. TheBased on current contribution agreements, legislation, global regulations, recent interest rates and expected returns, in 2021 the company estimates that it will make cash contributions to the company’s U.S.of approximately $50.3 million primarily for non-U.S. defined benefit pension plans are expected to be applied toward the company’s required minimum contributions to these plans in 2020, 2021 and 2022.plans. Estimates for future cash contributions are likely to change based on a number of factors including market conditions and changes in discount rates. If estimates for future contributions change materially, the company may need to obtain additional funding in order to make future contributions. In this event, there is no assurance that the company would be able to obtain such funding or that the company will have enough cash on hand to pay the required cash contributions.
Deterioration in the value of the company’s worldwide defined benefit pension plan assets, as well as discount rate changes, asset return changes, or changes in economic or demographic trends, could require the company to make cash contributions to its defined benefit pension plans in the future in an amount larger than currently anticipated. Increased cash contribution requirements or an acceleration in the due date of such cash contributions would further reduce the cash available for working capital, capital expenditures and other corporate uses and may worsen the adverse impact on the company’s operations, financial condition and liquidity.
TheCAUTIONARY STATEMENT PURSUANT TO THE U.S. PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Risks and uncertainties that could cause the company’s future results may be adversely impacted ifto differ materially from those expressed in “forward-looking” statements include:
COVID-19
•uncertainty of the magnitude, duration and spread of the novel coronavirus (COVID-19) pandemic and the impact of COVID-19 and governments’ responses to it is unableon the global economy and our business, growth, reputation, projections, financial condition, operations, cash flows and liquidity;
Implementation of Business Strategy in Information Technology Marketplace
•our ability to attract, motivate and retain experienced personnel in key positions;
•our ability to grow revenue and expand margin in our Digital Workplace Services and Cloud and Infrastructure businesses;
•our ability to maintain our installed base and sell new solutions;
•the potential adverse effects of aggressive competition in the information services and technology marketplace;
•our ability to effectively anticipate and respond to volatility and rapid technological innovation in its industry.our industry;
The company operates in a highly volatile industry characterized by rapid technological innovation, evolving technology standards, short product life cycles and continually changing customer demand patterns. Future success will depend in part on the company’s ability to anticipate and respond to these market trends and to design, develop, introduce, deliver or obtain new and innovative services and products on a timely and cost-effective basis using new delivery models such as cloud computing. Additionally, the company may not be successful in anticipating or responding to changes in technology, industry standards or customer preferences, and the market may not demand or accept its services and product offerings. In addition, services and products developed by competitors may make the company’s offerings less competitive.
The company’s future results will depend on its•our ability to retain significant clients.
The company has a number of significant long-term contracts with clients including governmental entities, and its future success will depend, in part, on retaining its relationships with these clients. The company could lose clients for reasons such as contract expiration, conversion to a competing service provider, disputes with clients or a decision to in-source services, including contracts with governmental entities as part of the rebid process. The company could also lose clients as a result of their merger, acquisition or business failure. The company may not be able to replace the revenue and earnings from any such lost client.attract new clients;
The company’s•our contracts may not be as profitable as expected or provide the expected level of revenues.revenues;
In a number•our ability to develop or acquire the capabilities to enhance the company’s solutions;
•the potential adverse effects of the concentration of the company’s long-term services contracts,business in the company’s revenue is based onglobal commercial sector of the volume of services and products provided. As a result, revenue levels anticipated at contract inception are not guaranteed. In addition, some of theseinformation technology industry;
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contracts may permit termination at the customer’s discretion before the end of the contract term or may permit termination or imposeDefined Benefit Pension Plans
•we have significant underfunded pension obligations;
Tax Assets
•our ability to use our net operating loss carryforwards and certain other penalties if the company does not meet the performance levels specified in the contracts.
The company’s contracts with governmental entities are subject to the availability of appropriated funds. These contracts also contain provisions allowing the governmental entity to terminate the contract at the governmental entity’s discretion before the end of the contracts term. In addition, if the company’s performance is unacceptable to the customer under a government contract, the government retains the right to pursue remedies under the affected contract, which remedies could include termination.
Certain of the company’s services agreements require that the company’s prices be benchmarked if the customer requests it and provide that those pricestax attributes may be adjusted downward if the pricing for similar services in the market has changed. As a result, revenues anticipated at the beginning of the terms of these contracts may decline in the future.limited;
Some of the company’s services contracts are fixed-price contracts under which the company assumes the risk for delivery of the contracted services and products at an agreed-upon fixed price. Should the company experience problems in performing fixed-price contracts on a profitable basis, adjustments to the estimated cost to complete may be required. Future results will depend on the company’s ability to perform these services contracts profitably.General Business Risks
A significant portion of the company’s revenue is derived from operations outside of the United States, and the company is subject to •the risks of doing business internationally.
Approximately 60%internationally when a significant portion of the company’s totalour revenue is derived from international operations. The risks of doing business internationally include foreign currency exchange rate fluctuations, currency restrictions and devaluations, changes in political or economic conditions, trade protection measures, import or export licensing requirements, multiple and possibly overlapping and conflicting tax laws, new tax legislation, weaker intellectual property protections in some jurisdictions and additional legal and regulatory compliance requirements applicable to businesses that operate internationally, including the U.S. Foreign Corrupt Practices Act, economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control, regulations in the European Union such as the General Data Protection Regulation, the U.K. Bribery Act and other U.S. and non-U.S. laws and regulations.operations;
The company could face•the business and financial risk in implementing future acquisitions or dispositions.dispositions;
As part of the company’s business strategy, it may from time to time consider acquiring complementary technologies, products and businesses, or disposing of existing technologies, products and businesses, including transactions of a material size such as the sale of the U.S. Federal business. Any acquisitions may•cybersecurity breaches could result in significant costs and could harm our business and reputation;
•the incurrenceperformance and capabilities of substantial additional indebtedness or contingent liabilities. Acquisitions could also result in potentially dilutive issuances of equity securities and an increase in amortization expenses related to intangible assets. Additional potential risks associatedthird parties with acquisitions include integration difficulties; difficulties in maintaining or enhancing the profitability of any acquired business; risks of entering markets in which the company has no or limited prior experience; potential loss of employees orwhom we have commercial relationships;
•a failure to maintainmeet standards or renew any contracts of any acquired business; and expenses of any undiscovered or potential liabilities of the acquired product or business, including relating to employee benefits contribution obligations or environmental requirements. Potential risks with respect to dispositions include difficulty finding buyers or alternative exit strategies on acceptable terms in a timely manner; potential loss of employees or clients; dispositions at unfavorable prices or on unfavorable terms, including relating to retained liabilities; and post-closing indemnity claims. Further, with respect to both acquisitions and dispositions, management’s attention could be diverted from other business concerns. Adverse credit conditions could also affect the company’s ability to consummate acquisitions or dispositions. The risks associated with acquisitions and dispositions could have a material adverse effect upon the company’s business, financial condition and results of operations. There can be no assurance that the company will be successful in consummating future acquisitions or dispositions on favorable terms or at all.
If the company is unable to access the financing markets, it may adversely impact the company’s business and liquidity.
Market conditions may impact the company’s ability to access the financing markets on terms acceptable to the company or at all. Based on the most recent estimates for the required cash contributions to the company’s worldwide defined benefit pension plans, the company anticipates that it may need to obtain additional financing in order to fund some future contributions. If the company is unable to access the financing markets, the company would be required to use cash on hand to fund operations and the company’s required pension contributions and repay outstanding debt as it comes due. There is no assurance that the company will generate sufficient cash to fund its operations and required pension contributions and refinance such debt. A failure by the company to generate such cash would have a material adverse effect on its business if the company were unable to access financing markets and may result in a defaultexpectations with respect to the company’s pension obligationenvironmental, social and under the company’s debt agreements. Market conditions may also impact the company’sgovernance practices;
•our ability to utilize surety bonds, letters of credit, foreign exchange derivatives or other financial instruments the company uses to conduct its business.access financing markets;
A•a reduction in the company’sour credit rating could adversely affect its business and/or the holders of its securities.
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rating;

•
The credit rating agencies rating the company’s indebtedness regularly evaluate the company, and credit ratings are based on a numberadverse effects of factors, including the company’s financial strength and ability to generate earnings, as well as factors not entirely within the company’s control, including conditions affecting the information technology industry and the economy and changes in rating methodologies. There can be no assurance that the company will maintain its current credit ratings. A downgrade of the company’s credit ratings could adversely affect its access to liquidity and capital, and could significantly increase its cost of funds, decrease the number of investors and counterparties willing to lend to the company or purchase its securities and impact the company’s ability to utilize surety bonds or other financial instruments the company uses to conduct its business. This could affect the company’s growth, profitability, and financial condition, including liquidity.
Cybersecurity breaches could result in the company incurring significant costs and could harm the company’s business and reputation.
The company’s business includes managing, processing, storing and transmitting proprietary and confidential data, including personal information, intellectual property and proprietary business information, within the company’s own IT systems and those that the company designs, develops, hosts or manages for clients. Cybersecurity breaches involving these systems by hackers, other third parties or the company’s employees, despite established security controls, could disrupt these systems or result in the loss or corruption of data or the unauthorized disclosure or misuse of information of the company, its clients or others. This could result in claims, investigations, litigation and legal liability for the company, lead to the loss of existing or potential clients and adversely affect the market’s perception of the security and reliability of the company’s services and products. In addition, such breaches could subject the company to fines and penalties for violations of laws and result in the company incurring other significant costs. This may negatively impact the company’s reputation and financial results.
The company may not achieve the operational and financial results that it anticipates in the future from the sale of its U.S. Federal business.
The company’s operational and financial profile has changed upon the separation of the U.S. Federal business from the company’s other businesses. As a result, the company’s diversification of revenue sources will diminish, and the company’s results of operations, cash flows, working capital and financing requirements may be subject to increased volatility and greater risk as a result of the concentration of its business in the global commercial sector of the information technology industry. Moreover, the shares of the company’s common stock will represent an investment in a smaller company than in existence prior to the sale of the U.S. Federal business and the company’s exposure to the risks inherent in its remaining businesses will increase. Additionally, the company’s ability to return to the U.S. Federal business is restricted by the terms of the non-competition commitments made to Science Applications International Corporation pursuant to the terms of the asset purchase agreement governing the sale.
While the company’s cash flows will decrease as a result of the sale, the company still has a substantial amount of outstanding pension obligations, even after the company applies a portion of the proceeds of the sale to reduce U.S. pension obligations. There is no certainty that the company will have the cash on hand to make the required cash contributions to the company’s worldwide defined benefit pension plans in the future without additional funding.
Following the closing of the sale of the U.S. Federal business, the company has used a significant portion of the net proceeds from the sale to pay down debt and reduce U.S. pension obligations, which may not improve the company’s results of operations or cash flows. Further, the anticipated benefits to the company of the sale are based on a number of assumptions, some of which may prove incorrect. Any such incorrect assumptions could adversely affect the company’s business, results of operations or financial condition.
The company’s business may be adversely affected by global economic conditions, acts of war, terrorism, natural disasters or the widespread outbreak of infectious diseases.diseases;
If global economic conditions deteriorate, •the company could see reductions in demand and increased pressure on revenue and profit margins. The company could also see a further consolidation of clients, which could also result in a decrease in demand. The company’s business could also be affected by acts of war, terrorism, natural disasters and the widespread outbreak of infectious diseases. Current world tensions could escalate, and this could have unpredictable consequences on the world economy and on the company’s business. If, as a result of such an event, the company’s clients in a particular industry were to suffer material adverse impacts, the company may experience a reduction in demand for its services and products from such clients, which may materially and adversely affect the company’s business, results of operations and financial condition.
The impact of Brexit could adversely affect the company’s operations in the United Kingdom as well as the funded status of the company’s U.K. pension plans.
The impact of the decision by the United Kingdom to withdraw from the European Union, commonly referred to as “Brexit”, and the resulting effect on the political and economic future of the U.K. and the European Union is uncertain. Depending on the outcome, the company may decide to alter its European operations to respond to the new business, legal, regulatory, tax and trade environments that may result, which may adversely affect the company’s financial results. In addition, uncertainty
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plans;

•
regarding Brexit could cause a slowdown in economic activity in the U.K., the European Union or globally. As a result of these possible effects, among others, Brexit could adversely impact the company’s operations in the U.K., cause increased volatility in the measurement of the pension assets or benefit obligations in the company’s U.K. pension plans, as well as adversely affect the funded status of the company’s U.K. pension plans.
If the company is unable to attract, motivate and retain experienced and knowledgeable personnel in key positions, its future results could be adversely impacted.
The success of the company’s business is dependent upon its ability to employ and train individuals with the requisite knowledge, skills and experience to execute the company’s business model and achieve its business objectives. The failure of the company to retain key personnel or implement an appropriate succession plan could adversely impact the company’s ability to successfully carry out its business strategy and retain other key personnel.
A significant disruption in the company’sour IT systems could adversely affect the company’s business and reputation.
We rely extensively on our IT systems to conduct our business and perform services for our clients. Our systems are subject to damage or interruption from power outages, telecommunications failures, computer viruses and malicious attacks, cybersecurity breaches and catastrophic events. If our systems are accessed without our authorization, damaged or fail to function properly, we could incur substantial repair or replacement costs, experience data loss and impediments to our ability to conduct our business, and damage the market’s perception of our services and products. In addition, a disruption could result in the company failing to meet performance standards and obligations in its client contracts, which could subject the company to liability, penalties and contract termination. This may adversely affect the company’s reputation and financial results.reputation;
The company•we may face damage to itsour reputation or legal liability if itsour clients are not satisfied with itsour services or products.
The success of the company’s business is dependent on strong, long-term client relationships and on its reputation for responsiveness and quality. As a result, if a client is not satisfied with the company’s services or products, its reputation could be damaged and its business adversely affected. Allegations by private litigants or regulators of improper conduct, as well as negative publicity and press speculation about the company, whatever the outcome and whether or not valid, may harm its reputation. In addition to harm to reputation, if the company fails to meet its contractual obligations, it could be subject to legal liability, which could adversely affect its business, operating results and financial condition.
Future results will depend in part on the performance and capabilities of third parties with whom the company has commercial relationships.
The company maintains business relationships with suppliers, channel partners and other parties that have complementary products, services or skills. Future results will depend, in part, on the performance and capabilities of these third parties, on the ability of external suppliers to deliver components at reasonable prices and in a timely manner, and on the financial condition of, and the company’s relationship with, distributors and other indirect channel partners, which can affect the company’s capacity to effectively and efficiently serve current and potential customers and end users.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
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 our ability to utilize our NOL carryforwards and other tax attributes.
An involuntary termination of the company’s U.S. qualified defined benefit pension plans would adversely affect the company’s financial condition and results of operations.
As of December 31, 2019, the company had approximately $1.3 billion of underfunded pension obligations under its U.S. qualified defined benefit pension plans. The Pension Benefit Guaranty Corporation (the PBGC) has authority under the Employment Retirement Income Security Act of 1974, as amended, to terminate an underfunded defined benefit pension plan under certain circumstances, including when (1) the plan has not met the minimum funding requirements, (2) the plan cannot pay current benefits when due, or (3) the loss to the PBGC is reasonably expected to increase unreasonably over time if the plan is not terminated. If the PBGC were to terminate the company’s U.S. qualified defined benefit pension plans, the company’s obligations with respect to such plans would become due and payable in full. Any such event or the failure by the company to pay its pension plan insurance premiums with respect to its U.S. qualified defined benefit pension plans could result in the PBGC obtaining a lien on the company’s assets. Such an event would result in an event of default under the company’s debt agreements and would materially and adversely affect the company’s financial condition and results of operations.
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products;

•
The company’s services or products may infringe upon the potential for intellectual property rights of others.
The company cannot be sure that its services and products do not infringe on the intellectual property rights of third parties, and it may have infringement claims to be asserted against itus or against its clients. These claims could cost our clients; and
•the company money, prevent it from offering some services or products, or damage its reputation.
Legalpossibility that legal proceedings could affect the company’sour results of operations or cash flow or may adversely affect the company’sour business or reputation.
Various lawsuits, claims, investigations and proceedings that have been brought or asserted against the company in the past relating to matters arising 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. See Note 14, “Litigation and contingencies,” of the Notes to Consolidated Financial Statements for more information on pending litigation. The company believes that it has valid defenses with respect to legal matters pending against it. Litigation is inherently unpredictable, however, and it is possible that the company’s results of operations or cash flows could be materially affected in any particular period as a result of future developments of the legal matters pending against it, including the resolution of any such matters. Additional legal proceedings may arise in the future with respect to the company’s existing and legacy operations that may adversely affect the company’s business or reputation.
Other factors discussed in this report, although not listed here, also could materially affect our future results.

Item 6. Exhibits
 
See Exhibit Index
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EXHIBIT INDEX
 
Exhibit NumberDescription
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)
10.1
Form of TSR-Based Cash Award Agreement
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
101The following financial information from Unisys Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 20202021 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
104Cover page Interactive Data File (the cover page XBRL tags are embedded within the iXBRL (Inline Extensible Business Reporting Language) document)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
UNISYS CORPORATION
Date: October 27, 2020May 6, 2021By:/s/ Michael M. Thomson
Michael M. Thomson
SeniorExecutive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

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