Unisys Corp 10-Q for FY2022 Q2

Unisys Corp (UIS)

10-Q 2022-08-03 For: 2022-06-30

Added on April 08, 2026

About this 10-Q

Unisys Corp filed this 10-Q on August 3, 2022, covering the quarter ended June 30, 2022 (FY2022 Q2).

Headline figures

Quarter ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $515M; down 0.4% from $517.3M a year earlier
Net loss: $17.1M; compared with a net loss of $140.8M a year earlier
Diluted EPS: -$0.25; compared with -$2.10 a year earlier

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


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


PART I - FINANCIAL INFORMATION		Page 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	24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30
Item 4.	Controls and Procedures	31
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 6.	Exhibits	33

Exhibit Index		34
Signatures		35


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenue
Services	$	400.3	$	430.5	$	792.4	$	850.9
Technology	114.7		86.8		169.3		176.2
	515.0		517.3		961.7		1,027.1
Costs and expenses
Cost of revenue
Services	322.1		337.9		643.4		676.6
Technology	44.8		37.2		82.8		69.1
	366.9		375.1		726.2		745.7
Selling, general and administrative	109.6		94.6		214.0		184.6
Research and development	4.8		6.8		11.3		12.4
	481.3		476.5		951.5		942.7
Operating income	33.7		40.8		10.2		84.4
Interest expense	8.3		8.4		16.7		18.5
Other (expense), net	(21.9)		(227.8)		(42.9)		(410.4)
Earnings (loss) before income taxes	3.5		(195.4)		(49.4)		(344.5)
Provision for (benefit from) income taxes	20.3		(53.1)		24.4		(44.7)
Consolidated net loss	(16.8)		(142.3)		(73.8)		(299.8)
Net income (loss) attributable to noncontrolling interests	0.3		(1.5)		0.6		(1.2)
Net loss attributable to Unisys Corporation	$	(17.1)	$	(140.8)	$	(74.4)	$	(298.6)


Loss per share attributable to Unisys Corporation



Basic	$	(0.25)	$	(2.10)	$	(1.10)	$	(4.54)



Diluted	$	(0.25)	$	(2.10)	$	(1.10)	$	(4.54)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021


Consolidated net loss	(16.8)		(142.3)		$	(73.8)	$	(299.8)
Other comprehensive income (loss)
Foreign currency translation	(95.6)		16.8		(113.3)		(0.3)
Postretirement adjustments, net of tax of $14.1 and $20.8 in 2022 and $34.7 and $37.8 in 2021	88.4		143.0		145.7		345.2
Total other comprehensive (loss) income	(7.2)		159.8		32.4		344.9
Comprehensive (loss) income	(24.0)		17.5		(41.4)		45.1
Less comprehensive income (loss) attributable to noncontrolling interests	0.3		(0.8)		(0.6)		0.3
Comprehensive (loss) income attributable to Unisys Corporation	$	(24.3)	$	18.3	$	(40.8)	$	44.8


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


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


	June 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	380.1	$	552.9
Accounts receivable, net	427.3		451.7
Contract assets	39.9		42.0
Inventories	12.7		7.6
Prepaid expenses and other current assets	94.1		78.8
Total current assets	954.1		1,133.0
Properties	462.6		468.0
Less-accumulated depreciation and amortization	381.9		381.5
Properties, net	80.7		86.5
Outsourcing assets, net	92.8		124.6
Marketable software, net	170.1		176.2
Operating lease right-of-use assets	56.7		62.7
Prepaid postretirement assets	160.5		159.7
Deferred income taxes	109.9		125.3
Goodwill	286.8		315.0
Intangible assets, net	57.2		34.9
Restricted cash	9.2		7.7
Assets held-for-sale	20.0		20.0
Other long-term assets	156.4		173.9
Total assets	$	2,154.4	$	2,419.5
Liabilities and deficit
Current liabilities:
Current maturities of long-term-debt	$	17.8	$	18.2
Accounts payable	149.2		180.2
Deferred revenue	227.5		253.2
Other accrued liabilities	251.3		300.9

Total current liabilities	645.8		752.5
Long-term debt	501.8		511.2
Long-term postretirement liabilities	884.5		976.2
Long-term deferred revenue	137.4		150.7
Long-term operating lease liabilities	40.4		46.1
Other long-term liabilities	43.0		47.2
Commitments and contingencies (see Note 15)
Deficit:
Common stock, shares issued: 2022; 73.3, 2021; 72.5	0.7		0.7
Accumulated deficit	(1,483.4)		(1,409.0)
Treasury stock, shares at cost: 2022; 5.5, 2021; 5.3	(155.9)		(152.2)
Paid-in capital	4,721.9		4,710.9
Accumulated other comprehensive loss	(3,230.5)		(3,264.1)
Total Unisys Corporation stockholders’ deficit	(147.2)		(113.7)
Noncontrolling interests	48.7		49.3
Total deficit	(98.5)		(64.4)
Total liabilities and deficit	$	2,154.4	$	2,419.5


			Unisys Corporation
	Total		Total Unisys Corporation		Common Stock Par Value		Accumu-lated Deficit		Treasury Stock At Cost		Paid-in Capital		Accumu-lated Other Compre-hensive Loss		Non-controlling Interests
Balance at December 31, 2021	$	(64.4)	$	(113.7)	$	0.7	$	(1,409.0)	$	(152.2)	$	4,710.9	$	(3,264.1)	$	49.3
Consolidated net (loss) income	(57.0)		(57.3)				(57.3)								0.3


Stock-based activity	2.2		2.2						(3.5)		5.7
Translation adjustments	(17.7)		(14.9)										(14.9)		(2.8)
Postretirement plans	57.3		55.7										55.7		1.6
Balance at March 31, 2022	$	(79.6)	$	(128.0)	$	0.7	$	(1,466.3)	$	(155.7)	$	4,716.6	$	(3,223.3)	$	48.4
Consolidated net income (loss)	(16.8)		(17.1)				(17.1)								0.3
Stock-based activity	5.1		5.1						(0.2)		5.3
Translation adjustments	(95.6)		(92.3)										(92.3)		(3.3)
Postretirement plans	88.4		85.1										85.1		3.3
Balance at June 30, 2022	$	(98.5)	$	(147.2)	$	0.7	$	(1,483.4)	$	(155.9)	$	4,721.9	$	(3,230.5)	$	48.7



Receivables	$	7.8
Prepaid expenses and other current assets	0.7
Properties and other long-term assets	0.2
Operating lease right-of-use assets	0.2
Accounts payable and accruals	(7.4)

Long-term operating lease liabilities	(0.1)
Intangible assets	45.9
Goodwill	38.0
Total	$	85.3


	Weighted Average Amortization Period in Years	Fair Value

Customer relationships	12.0	$	44.6
Trademark	4.0	1.3
Total		$	45.9


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Cost of revenue	$	0.8	$	2.8	$	3.5	$	1.1
Selling, general and administrative	0.5		2.6		(0.2)		8.8
Research and development	—		0.4		(0.1)		2.1
Other (expense), net	1.8		(0.7)		2.9		1.6
Total	$	3.1	$	5.1	$	6.1	$	13.6


	Total		U.S.		International
Balance at December 31, 2021	$	16.3	$	5.7	$	10.6

Payments	(6.4)		(2.8)		(3.6)
Changes in estimates	(0.9)		(0.9)		—
Translation adjustments	(0.7)		—		(0.7)
Balance at June 30, 2022	$	8.3	$	2.0	$	6.3
Expected future utilization on balance at June 30, 2022:
Short-term	$	8.3	$	2.0	$	6.3


	Three Months Ended June 30, 2022						Three Months Ended June 30, 2021
	Total		U.S. Plans		International Plans		Total		U.S. Plans		International Plans
Service cost(i)	$	0.5	$	—	$	0.5	$	0.5	$	—	$	0.5
Interest cost	39.1		29.0		10.1		38.4		29.4		9.0
Expected return on plan assets	(67.3)		(47.4)		(19.9)		(68.4)		(48.5)		(19.9)
Amortization of prior service benefit	(1.3)		(0.7)		(0.6)		(1.4)		(0.6)		(0.8)
Recognized net actuarial loss	41.9		32.3		9.6		46.6		34.6		12.0
Settlement losses (ii)	—		—		—		210.7		—		210.7
Net periodic pension expense (income)	$	12.9	$	13.2	$	(0.3)	$	226.4	$	14.9	$	211.5


	Six Months Ended June 30, 2022						Six Months Ended June 30, 2021
	Total		U.S. Plans		International Plans		Total		U.S. Plans		International Plans
Service cost(i)	$	1.0	$	—	$	1.0	$	1.7	$	—	$	1.7
Interest cost	78.0		57.3		20.7		78.0		58.8		19.2
Expected return on plan assets	(135.7)		(94.9)		(40.8)		(142.5)		(99.9)		(42.6)
Amortization of prior service benefit	(2.6)		(1.3)		(1.3)		(2.7)		(1.2)		(1.5)
Recognized net actuarial loss	82.8		63.0		19.8		92.8		67.8		25.0
Settlement losses (ii) (iii)	—		—		—		368.7		158.0		210.7
Net periodic pension expense (income)	$	23.5	$	24.1	$	(0.6)	$	396.0	$	183.5	$	212.5


	Six Months Ended June 30,
	2022		2021
Cash flows from operating activities
Consolidated net loss	$	(73.8)	$	(299.8)

Adjustments to reconcile consolidated net loss to net cash used for operating activities:


Foreign currency losses	0.4		1.2
Non-cash interest expense	0.7		1.2
Employee stock compensation	10.3		7.0
Depreciation and amortization of properties	19.2		15.2
Depreciation and amortization of outsourcing assets	36.0		33.2
Amortization of marketable software	29.6		34.4
Amortization of intangible assets	5.3		0.5
Other non-cash operating activities	0.2		(0.2)
Loss on disposal of capital assets	0.6		1.2
Postretirement contributions	(25.1)		(32.1)
Postretirement expense	22.7		394.7
Deferred income taxes, net	3.1		(65.2)
Changes in operating assets and liabilities, excluding the effect of acquisitions:
Receivables, net and contract assets	22.7		96.1
Inventories	(5.4)		7.4
Other assets	(9.3)		(5.5)
Accounts payable and current liabilities	(108.2)		(207.2)
Other liabilities	4.3		16.9
Net cash used for operating activities	(66.7)		(1.0)
Cash flows from investing activities
Purchase of businesses, net of cash acquired	(0.3)		(150.1)

Proceeds from investments	1,668.0		2,261.6
Purchases of investments	(1,697.6)		(2,262.4)
Investment in marketable software	(23.6)		(29.7)
Capital additions of properties	(14.0)		(12.0)
Capital additions of outsourcing assets	(6.5)		(8.7)
Other	(0.4)		(0.4)
Net cash used for investing activities	(74.4)		(201.7)
Cash flows from financing activities
Payments of long-term debt	(11.2)		(95.4)


(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).
(ii)In the second quarter of 2021, the company’s primary pension plan related to its Dutch subsidiary was transferred to a multi-client circle within a multi-employer fund. This action resulted in a pre-tax settlement loss of $182.6 million for both the three and six months ended June 30, 2021. Additionally, the company’s Swiss subsidiary transferred its defined benefit pension plans to a multiple-employer collective foundation. This action resulted in a pre-tax settlement loss of $28.1 million for both the three and six months ended June 30, 2021.
(iii)In January 2021, the company purchased a group annuity contract to transferred projected benefit obligations related to its U.S. defined benefit pension plans. This action resulted in a pre-tax settlement loss of $158.0 million.


	Restricted Stock and RSU	Weighted- Average Grant-Date Fair Value
Outstanding at December 31, 2021	2,124	$	22.73
Granted	1,159	24.75
Vested	(785)	22.22
Forfeited and expired	(126)	24.75
Outstanding at June 30, 2022	2,372	23.78


	Six Months Ended June 30,
	2022			2021
Weighted-average fair value of grant	$	34.14		$	40.02
Risk-free interest rate(i)	1.72		%	0.27		%
Expected volatility(ii)	57.71		%	57.08		%
Expected life of restricted stock units in years(iii)	2.85			2.84
Expected dividend yield	—		%	—		%


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


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


	June 30, 2022		December 31, 2021
Contract assets - current	$	39.9	$	42.0
Contract assets - long-term(i)	15.0		17.4
Deferred revenue - current	(227.5)		(253.2)
Deferred revenue - long-term	(137.4)		(150.7)


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


	June 30, 2022		December 31, 2021
Balance Sheet Location
Prepaid expenses and other current assets	$	0.4	$	3.6
Other accrued liabilities	9.5		2.1
Total fair value	$	(9.1)	$	1.5


	June 30, 2022				December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt:
6.875% senior secured notes due November 1, 2027	$	478.7	$	427.9	$	478.1	$	527.0


	Total		DWS		CA&I		ECS		Other
Balance at December 31, 2021	$	315.0	$	140.9	$	65.5	$	98.3	$	10.3
Acquisition - Measurement period adjustment (see Note 3)	(27.5)		—		(27.5)		—		—
Translation adjustments	(0.7)		(0.7)		—		—		—
Balance at June 30, 2022	$	286.8	$	140.2	$	38.0	$	98.3	$	10.3


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Technology (i)	$	10.0	$	3.4	$	6.6
Customer relationships (ii)	54.2		4.7		49.5
Marketing (ii)	1.3		0.2		1.1
Total	$	65.5	$	8.3	$	57.2


	Future Amortization Expense
Remainder of 2022	$	4.8
2023	9.7
2024	7.2
2025	4.3
2026	4.0
Thereafter	27.2
Total	$	57.2


	Six Months Ended June 30,
	2021
Contractual interest coupon	$	0.8
Amortization of debt discount	0.5
Amortization of debt issuance costs	0.1
Total	$	1.4


	Total		Translation Adjustments		Postretirement Plans
Balance at December 31, 2021	$	(3,264.1)	$	(866.2)	$	(2,397.9)
Other comprehensive (loss) income before reclassifications	(43.7)		(110.1)		66.4
Amounts reclassified from accumulated other comprehensive loss	77.3		2.9		74.4
Current period other comprehensive income (loss)	33.6		(107.2)		140.8
Balance at June 30, 2022	$	(3,230.5)	$	(973.4)	$	(2,257.1)


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


	Total Segments		DWS		CA&I		ECS
Three Months Ended June 30, 2022
Customer revenue	$	443.1	$	127.2	$	130.1	$	185.8
Intersegment	—		—		—		—
Total revenue	$	443.1	$	127.2	$	130.1	$	185.8
Gross profit	$	146.6	$	16.5	$	7.1	$	123.0

Three Months Ended June 30, 2021
Customer revenue	$	441.6	$	148.4	$	121.7	$	171.5
Intersegment	0.4		—		—		0.4
Total revenue	$	442.0	$	148.4	$	121.7	$	171.9
Gross profit	$	142.3	$	22.9	$	13.5	$	105.9


	Total Segments		DWS		CA&I		ECS
Six Months Ended June 30, 2022
Customer revenue	$	817.6	$	252.0	$	259.2	$	306.4
Intersegment	—		—		—		—
Total revenue	$	817.6	$	252.0	$	259.2	$	306.4
Gross profit	$	232.4	$	32.5	$	14.1	$	185.8

Six Months Ended June 30, 2021
Customer revenue	$	874.5	$	291.3	$	242.4	$	340.8
Intersegment	1.4		—		—		1.4
Total revenue	$	875.9	$	291.3	$	242.4	$	342.2
Gross profit	$	276.1	$	42.0	$	23.4	$	210.7



Exhibit Number			Description

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

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

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

3.4			Bylaws of Unisys Corporation, as amended through May 10, 2019 (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on May 15, 2019)

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

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

101			The following financial information from Unisys Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Statements of Income (Loss), (ii) Consolidated Statements of Comprehensive Income (Loss), (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Deficit, and (vi) Notes to Consolidated Financial Statements

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



	UNISYS CORPORATION

Date: August 3, 2022	By:	/s/ Debra McCann
		Debra McCann
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)



			By:			/s/ Erin Mannix
						Erin Mannix
						Vice President and Chief Accounting Officer
						(Principal Accounting Officer)



						/s/ Peter A. Altabef
			Name:			Peter A. Altabef
			Title:			Chair and Chief Executive Officer