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What changed in UNISYS CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of UNISYS CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+386 added−301 removedSource: 10-K (2024-02-26) vs 10-K (2023-03-01)

Top changes in UNISYS CORP's 2023 10-K

386 paragraphs added · 301 removed · 213 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

71 edited+43 added−28 removed10 unchanged
Biggest change(2011 - 2012) and held the roles of Senior Vice President and Corporate Treasurer (2007 - 2011), Vice President and Assistant Treasurer (2005 - 2007) and Managing Director, Capital Markets, Pensions, Foreign Exchange (2004 - 2005) at Sara Lee Corporation. Mr. Gupta also held treasury roles at Delphi Corporation and General Motors Corporation. Mr.
Biggest changeHe also served as Treasurer for Evraz North America, Inc., a manufacturer of engineered steel products for rail, energy and industrial end markets, from 2011 to 2012 and held the roles of Senior Vice President and Corporate Treasurer from 2007 to 2011, Vice President and Assistant Treasurer from 2005 to 2007 and Managing Director, Capital Markets, Pensions, Foreign Exchange from 2004 to 2005 at Sara Lee Corporation.
Go-to-Market We market our products and solutions primarily through a direct sales force and a central marketing department focused on increasing awareness and visibility for our portfolio of services and solutions within the industry, including managing our relationships with industry analysts and consultants who can influence client decisions.
Go-to-Market We market our products and solutions primarily through a direct sales force and a central marketing department focused on increasing awareness and visibility for our portfolio of solutions and services within the industry, including managing our relationships with industry analysts and consultants who can influence client decisions.
He is also a member of the President’s National Security Telecommunications Advisory Committee, where he has served as co-chair of its Cybersecurity Moonshot subcommittee, and a trustee of the Committee for Economic Development (CED) of The Conference Board, where he serves as co-chair of the CED’s Technology and Innovation Committee.
He is also a member of the President’s National Security Telecommunications Advisory Committee, where he served as co-chair of its Cybersecurity Moonshot subcommittee, and a trustee of the Committee for Economic Development (CED) of The Conference Board, where he serves as co-chair of the CED’s Technology and Innovation Committee.
Our organizational structure aligns with our clients’ evolving needs, reflected in the following reportable segments: • Digital Workplace Solutions • Cloud, Applications & Infrastructure Solutions • Enterprise Computing Solutions Digital Workplace Solutions (DWS) We help clients shape the future of their workplace – in-office, remote, or hybrid – to help employees be more efficient and productive, which improves retention, collaboration, and company performance.
Our organizational structure aligns with our clients’ evolving needs, reflected in three reportable segments: • Digital Workplace Solutions • Cloud, Applications & Infrastructure Solutions • Enterprise Computing Solutions Digital Workplace Solutions (DWS) We help clients shape the future of their workplace – in-office, remote, or hybrid – to help employees be more efficient and productive, which improves retention, collaboration and company performance.
We are committed to our culture of Diversity, Equity and Inclusion (DEI) not only as the “right thing to do,” but also as a business imperative. Creating an equitable workplace improves our organization, local communities and society. At Unisys, we are focused on having a workforce that represents the diverse communities in which we live and serve.
We are committed to our culture of Diversity, Equity and Inclusion not only as the “right thing to do,” but also as a business imperative. We believe creating an equitable workplace improves our organization, local communities and society. At Unisys, we are focused on having a workforce that represents the diverse communities in which we live and serve.
These marks are valuable assets used on or in connection with our services and products, and as such are actively monitored, policed and protected by Unisys and its agents. Seasonality Our revenue is affected by such factors as the introduction of new services and products, the length of sales cycles and the seasonality of purchases.
These marks are valuable assets used on or in connection with our services and products, and as such are actively monitored and protected by Unisys and its agents. Seasonality Our revenue is affected by factors such as the introduction of new services and solutions, the length of sales cycles and the seasonality of purchases.
We provide our associates a wide range of offerings through a range of benefits and resources including health and welfare benefits, flexible time-off and employee assistance programs. We also promote a culture of ethics and integrity through our Code of Ethics and Business Conduct, policies, and training and all associates must adhere to our Code.
We provide our employees a wide range of offerings through a range of benefits and resources, including health and welfare benefits, flexible time-off and employee assistance programs. We also promote a culture of ethics and integrity through our Code of Ethics and Business Conduct, policies and training, and all employees must adhere to our Code.
We assess risk using data analytics, an annual risk assessment, investigations, and other compliance-related initiatives. Available Information Our investor website is located at www.unisys.com/investor.
We assess human capital risk using data analytics, an annual risk assessment, investigations and other compliance-related initiatives. Available Information Our investor website is located at www.unisys.com/investor.
An integrated suite of technologies for omnichannel support, advanced analytics, automation, artificial intelligence, machine learning and identity authentication that transforms traditional service desks into intelligent, user-centric experiences for the modern workplace. • PowerSuite™ Communication and collaboration software that empowers enterprise IT teams to manage, optimize and secure multi-platform UCC environments from a unified set of dashboards.
An integrated suite of technologies for omnichannel support, advanced analytics, automation, AI, machine learning and identity authentication that transforms service desks into intelligent, user-centric experiences for the modern workplace. PowerSuite™ Communication and collaboration software that empowers enterprise IT teams to manage, optimize and secure multi-platform UCC environments from a unified set of dashboards.
Through our website, we make available, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after this material is electronically filed with or furnished to the U.S.
Through our website, we make available, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the Exchange Act), as soon as reasonably practicable after this material is electronically filed with or furnished to the Securities and Exchange Commission.
Our Corporate By-Laws provide that the officers of Unisys shall be elected annually by the Board of Directors and that each officer shall hold office for a term of one year and until a successor is elected and qualified, or until the officer’s earlier resignation or removal. Mr.
Our Amended and Restated By-Laws provide that the officers of Unisys shall be elected annually by the Board of Directors and that each officer shall hold office for a term of one year and until a successor is elected and qualified, or until the officer’s earlier resignation or removal. Mr.
Thomson served as Chief Financial Officer since 2019 and as Executive Vice President since 2021 after having served as Senior Vice President since 2019. Mr. Thomson served as Vice President and Corporate Controller from 2015 to 2019. Mr.
Thomson served at Unisys as Chief Financial Officer since 2019 and as Executive Vice President since 2021 after having served as Senior Vice President since 2019. Mr. Thomson served as Vice President and Corporate Controller from 2015 to 2019. Mr.
For more information on the risks associated with purchasing components and supplies, see “Risk Factors” (Part I, Item 1A of this Form 10-K). Patents, Trademarks and Licenses As of January 31, 2023, Unisys owns over 455 active U.S. patents and over 35 active patents granted in eight non-U.S. jurisdictions.
For more information on the risks associated with purchasing components and supplies, see “Risk Factors” (Part I, Item 1A of this Form 10-K). Patents, Trademarks and Licenses As of January 31, 2024, Unisys owns over 420 active U.S. patents and over 35 active patents granted in eight non-U.S. jurisdictions.
We recognize that continuous learning and professional development are key factors for our success. We offer a range of development programs and opportunities that focus on leadership/management, digital transformation skills, information technology skills, cybersecurity, regulatory compliance, diversity, anti-harassment, ethics and more. We are committed to the health, safety, and wellness of our employees.
We recognize that continuous learning and professional development are key factors for our success. We offer a range of skill development programs that focus on leadership, AI, digital transformation, information technology, cybersecurity, regulatory compliance, diversity, anti-harassment, ethics and more. We are committed to the health, safety and wellness of our employees.
From our origins dating back to 1873 through the formation of Unisys in 1986, we have built a legacy of innovation and a reputation of trust. Our solutions and services are provided through scaled, global delivery platforms which allow us to execute large-scale, rapid technology migration and modernization projects.
Our solutions and services are provided through global delivery capabilities, which allows us to execute large-scale, rapid technology migration and modernization projects. From our origins dating back to 1873 through the formation of Unisys in 1986, we have built a legacy of innovation and a reputation of trust.
Complementing our direct sales force, we make use of a select group of resellers and alliance partners to market our services and product portfolio. In many cases, we may jointly develop integrated solutions with our partners that we directly or jointly sell to our clients. In certain countries, we market primarily through distributors.
Complementing our direct sales force, we leverage a select group of resellers and alliance partners to market our solution and services portfolio. In many cases, we may jointly develop integrated solutions with our partners that we directly or jointly sell to our clients. In certain countries, we market primarily through distributors.
For certain technology products, we rely on a single or limited number of suppliers, although we make every effort to assure that alternative sources are available if the need arises. The failure of our suppliers to deliver components and supplies in sufficient quantities and in a timely manner could adversely affect our business.
We rely on a single or limited number of suppliers for certain technology products, although we attempt to ensure that alternative sources are available if the need arises. The failure of our suppliers to deliver components and supplies in sufficient quantities and in a timely manner could adversely affect our business.
Increased reliance on technology, growth of the internet, remote work adoption, increased cloud adoption, and the evolving sophistication of cyber attackers have all contributed to the proliferation of cyber-attacks. Now more than ever, an organization’s security posture is critically important to its ongoing ability to operate successfully.
Cybersecurity Increased reliance on technology, growth of the internet, remote work adoption, greater cloud use and the evolving sophistication of threat actors have all contributed to the proliferation of cyber attacks. Now more than ever, an organization’s security posture is critically important to its ongoing ability to operate successfully.
Unisys Stealth ® reduces the cost and complexity of securing information and operation technology, allowing organizations to meet compliance and security mandates.
It reduces the cost and complexity of securing information and operation technology, allowing organizations to meet compliance and security mandates.
SEC. We also make available on our website our Guidelines on Significant Corporate Governance Issues, the charters of the Audit and Finance Committee, Compensation and Human Resources Committee, Nominating and Corporate Governance Committee and Security and Risk Committee of our board of directors, and our Code of Ethics and Business Conduct.
We also make available on our website our Restated Certificate of Incorporation, Amended and Restated Bylaws, Guidelines on Significant Corporate Governance Issues, the charters of the Audit and Finance Committee, Compensation and Human Resources Committee, Nominating and Corporate Governance Committee and Security and Risk Committee of our board of directors, and our Code of Ethics and Business Conduct.
We advise and execute the deployment, integration and management of enterprise technologies, applications, and data-driven management to orchestrate a seamless workplace experience. We classify our solutions within DWS as either “Modern Workplace” or “Traditional Workplace.” • Modern Workplace . Proactive, experience-based digital solutions that transform technology support, employee experience, communications & collaboration, and device management.
We advise and execute the deployment, integration and management of enterprise technologies, applications and data-driven management to orchestrate a seamless workplace experience. We classify our DWS offerings as either “Modern Workplace” or “Traditional Workplace.” Our Modern Workplace offerings are proactive, experience-based digital solutions that transform technology support to elevate employee experience, 6 communication and collaboration.
This information is also available in print to stockholders upon request. We do not intend for information on our website to be part of this Annual Report on Form 10-K. 11 INFORMATION ABOUT OUR EXECUTIVE OFFICERS Information concerning the executive officers of Unisys as of February 15, 2023 is set forth below. Name Age Position with Unisys Peter A.
This information is also available in print to stockholders upon request. We do not intend for information on our website to be part of this Annual Report on Form 10-K. 11 INFORMATION ABOUT OUR EXECUTIVE OFFICERS Information concerning the executive officers of Unisys as of February 15, 2024, is set forth below.
Our Market The markets in which we operate are broad and rapidly evolving, encompassing a wide range of technologies, services and solutions aimed at helping organizations leverage technology to improve their operations and achieve their business objectives.
Our Market The markets in which we operate are broad and rapidly evolving, encompassing a wide range of technologies, services and solutions aimed at helping organizations leverage technology to improve their operations and achieve their business objectives. Organizations across the globe are harnessing technology to reimagine their business models and create competitive advantages.
We regularly collaborate with Unisys Alliance Partners, our global network of channel and alliance partners, to develop new joint solution offerings and may build, market and co-sell these joint solutions with our partners.
We regularly collaborate with our global network of partners, to develop joint solution offerings and to build, market and co-sell these joint solutions.
Our business is not materially dependent upon any single patent, patent license, or related group thereof. Unisys also maintains 24 U.S. trademark and service mark registrations, and over 340 additional trademark and service mark registrations in seventy non-U.S. jurisdictions as of January 31, 2023.
Our business is not materially dependent upon any single patent, patent license or related group thereof. Unisys also maintains 25 U.S. trademark and service mark registrations, and over 285 additional trademark and service mark registrations in fifty-four non-U.S. jurisdictions as of January 31, 2024.
Through local market-savvy teams, we enable mission critical functions spanning digital mortgage processing for financial services clients, integrated portfolio and investment management for clients with large capital investments, and data aggregation and presentation solutions for public and local law enforcement agencies, among other solutions.
Other Solutions We also provide clients with a wide range of micro-market and business process solutions. Through local market teams, we enable mission critical functions spanning digital mortgage processing for financial services clients, integrated portfolio and investment management for clients with large capital investments, and data aggregation and presentation solutions for public and local law enforcement agencies, among other solutions.
A few of the broader trends in the technology services and solutions market are as follows: • Work of the Future . Hybrid work has become the new standard of working. However, organizations are challenged by the constantly evolving workforce dynamics and finding the right balance between flexibility, collaboration, corporate culture, employee morale, productivity, and financial results.
Some examples of those trends are as follows: Future of Work Hybrid work has become the new standard of working. However, organizations are challenged by the constantly evolving workforce dynamics and finding the right balance between flexibility, collaboration, corporate culture, employee morale, productivity and financial results.
Our primary competitors are systems integrators, consulting and other professional services firms, outsourcing providers, infrastructure services providers, computer hardware manufacturers and software providers. We compete primarily on the basis of service quality, product performance, technological innovation, price, and reputation, among other factors.
We face competition from many domestic and foreign companies. Our primary competitors are systems integrators, consulting and other professional services firms, outsourcing providers, infrastructure services providers, computer hardware manufacturers and software providers. We compete primarily based on service quality, product performance, technological innovation, price and reputation, among other factors.
In that spirit, we continually evolve our solutions to enable our clients to continue making breakthroughs, optimizing their processes and furthering our mission to grow through our clients’ successes.
In that spirit, we continually evolve our solutions and services to enable our clients to continue making breakthroughs, optimizing their processes and furthering our mission to grow through our clients’ successes. Our efforts include developing, evolving and upskilling our global associate workforce.
Ebrahimi has been Senior Vice President and Chief Human Resources Officer since 2018. Ms. Ebrahimi served as Vice President of Human Resources, Global Delivery at DXC Technology from 2017 to 2018 prior to joining Unisys. From 2015 to 2017, she was Vice President of Human Resources, Enterprise Services, Global Practices & Solutioning for Hewlett-Packard Enterprise.
Ebrahimi served as Vice President of Human Resources, Global Delivery at DXC Technology, an American multinational information technology services and consulting company from 2017 to 2018 prior to joining Unisys. From 2015 to 2017, she was Vice President of Human Resources, Enterprise Services, Global Practices & Solutioning for Hewlett-Packard Enterprise.
Revenue from ClearPath Forward licenses and associated support services is reported within the ECS segment. • Unisys Stealth ® Unisys Stealth, a proprietary security software, enables trusted identities to access micro-segmented critical assets and safely communicate through encrypted channels. It establishes user authentication, prevents lateral attacker movement and reduces data center, mobile and cloud attack surfaces.
The secondary element is Unisys Stealth ® (core) is a proprietary security software and technology framework that enables trusted identities to access micro-segmented critical assets and safely communicate through encrypted channels. It establishes user authentication, prevents lateral attacker movement and reduces data center, mobile and cloud attack surfaces.
Thomson 54 President and Chief Operating Officer Debra McCann 50 Executive Vice President and Chief Financial Officer Dwayne Allen 61 Senior Vice President, Solution Innovation and Architecture and Chief Technology Officer Katie Ebrahimi 53 Senior Vice President and Chief Human Resources Officer Teresa Poggenpohl 61 Senior Vice President and Chief Marketing Officer Claudius Sokenu 55 Senior Vice President, General Counsel and Secretary and Chief Administrative Officer Shalabh Gupta 61 Vice President and Treasurer Erin Mannix 39 Vice President, Chief Accounting Officer and Corporate Controller There is no family relationship among any of the above-named executive officers.
Thomson 55 2015 President and Chief Operating Officer Debra McCann 51 2022 Executive Vice President and Chief Financial Officer Dwayne Allen 62 2021 Senior Vice President and Chief Technology Officer Katie Ebrahimi 54 2018 Senior Vice President and Chief Human Resources Officer Teresa Poggenpohl 62 2021 Senior Vice President and Chief Marketing Officer Kristen Prohl 50 2023 Senior Vice President, General Counsel, Secretary and Chief Administration Officer Shalabh Gupta 62 2017 Vice President, Tax and Treasurer David Brown 45 2023 Vice President, Chief Accounting Officer and Corporate Controller There is no family relationship among any of the above-named executive officers.
This ecosystem differentiates our offerings and may be sold as part of our solutions or, in some cases provided by our channel partners directly. The primary elements of our proprietary ecosystem are: • Unisys InteliServe TM .
Products We have developed a portfolio of enterprise software and technology solutions. This ecosystem differentiates our offerings and may be sold as part of our solutions or, in some cases, provided by our partners directly. Elements of this ecosystem include: Unisys InteliServe TM.
It features an automated software-as-a-service platform to identify and provision private, public and hybrid cloud services, real-time analytics, and capabilities for industrial grade modernization of legacy applications. • ClearPath Forward ® A secure, scalable operating environment for high-intensity enterprise computing, ClearPath Forward ® is hardware-independent and provides a tested, integrated stack of software products that run on a range of modern, commonly-deployed Intel x86 server platforms and select virtualization environments.
ClearPath Forward ® A secure, scalable operating environment for high-intensity enterprise computing, ClearPath Forward ® is hardware-independent. It provides a tested, integrated stack of software products that run on a range of modern, commonly deployed Intel x86 server platforms and select virtualization environments.
McCann held leadership roles at Cegedim and AT&T, Inc. Ms. McCann has been an executive officer since May 2022. Mr. Allen has been Senior Vice President, Solution Innovation and Architecture and Chief Technology Officer since 2021. Prior to joining Unisys, Mr. Allen was a Global Digital Strategist at Microsoft Corporation from 2019 to 2021. From 2017 to 2019, Mr.
McCann held leadership roles at Cegedim, a technology and services company, and AT&T, Inc., an American multinational telecommunications and technology holding company. Ms. McCann has been an executive officer since May 2022. Mr. Allen has been Senior Vice President and Chief Technology Officer since April 2021. Prior to joining Unisys, Mr.
She also served in increasingly senior roles with Cisco Systems, Inc. (2009-2015), Sun Microsystems, Inc. (2000-2009) and McAfee, LLC. Ms. Ebrahimi has been an executive officer since 2018. 12 Ms. Poggenpohl has been Senior Vice President and Chief Marketing Officer since 2021. Prior to joining Unisys, she ran a consulting firm, Poggenpohl Consulting, which she founded in 2020. Ms.
She also served in increasingly senior roles with Cisco Systems, Inc. from 2009 to 2015, Sun Microsystems, Inc. from 2000 to 2009 and McAfee, LLC. Ms. Ebrahimi has been an executive officer since 2018. Ms. Ebrahimi will be leaving the company effective March 31, 2024. Ms. Poggenpohl has been Senior Vice President and Chief Marketing Officer since April 2021.
This includes enterprise applications development services, managed technology services, workflow-based industry solutions, and computing innovation to enable workload execution in diverse environments. We provide application services that help clients overcome large-scale transformation challenges by modernizing legacy applications and ecosystems for clients utilizing both ClearPath Forward ® and competitor compute environments.
We provide application services that help clients overcome large-scale transformation challenges by modernizing legacy applications and ecosystems for clients utilizing both ClearPath Forward and other compute environments. • Next-Generation Computing. We help clients explore and diversify computing capabilities in areas including quantum computing and high-performance computing to optimize workload execution in diverse environments. • Industry Solutions.
Each year we measure associate engagement and develop action plans to improve based on feedback. This year, more than 80% of our associates participated in the survey with 75% of participating associates indicating they are engaged.
In addition, understanding our employees’ perspectives and experiences - their engagement - is critical to our success. Each year we measure employees’ engagement through a survey and develop action plans to improve based on that feedback. This year, more than 80% of our employees participated in our annual engagement survey with 71% of participating employees indicating they felt engaged.
Based on our continued efforts to improve diverse representation, women now make up 33% of our workforce globally and associates from Underrepresented Ethnic Groups (UREG) make up 31% within the U.S.
Based on our continued efforts to improve diverse representation, women now make up 34% of our workforce globally and employees from Underrepresented Ethnic Groups make up 33% of our U.S workforce. Although we are proud of our progress, we continue to focus our efforts on creating a culture of belonging and inclusivity.
Convenient, efficient technology support services provided at scale. Our solutions in areas such as traditional service desk, device management, and field services help clients elevate employee experience and productivity while simultaneously reducing the cost of support.
Our solutions in areas such as traditional service desk, device management and field services help clients elevate employee experience and productivity while reducing the cost of support. Cloud, Applications & Infrastructure Solutions (CA&I) We accelerate digital transformation in the critical areas of cloud migration and management, as well as application and infrastructure transformation and modernization.
Seasonality generally has not resulted in material quarterly revenue changes. Changes in timing or terms of renewals from client to client can lead to fluctuations in software license revenue from period to period since accounting rules require that software license revenue be recognized when the license term begins.
Changes in timing or terms of renewals from client to client can lead to fluctuations in software license revenue from period to period since accounting rules require that software license revenue be recognized when the license term begins. 10 Backlog At December 31, 2023, firm order backlog was $3.0 billion, compared to $2.9 billion at December 31, 2022.
Backlog At December 31, 2022, firm order backlog was $2.9 billion, compared to $3.0 billion at December 31, 2021. Approximately $1.3 billion (45%) of 2022 backlog is expected to be converted to revenue in 2023. Although we believe that this backlog is firm, we may, for commercial reasons, allow the orders to be canceled, with or without penalty.
Approximately $1.3 billion (44%) of 2023 backlog is expected to be converted to revenue in 2024. Although we believe that this backlog will be executed, the orders may be canceled, in some cases with or without penalty.
We are also committed to growing our partner ecosystem to ensure we are able to deliver or integrate with the latest technology, applications, and platforms. Our solutions are supported by our delivery organization, which provides comprehensive, mission-critical services that address the evolving needs of our clients who operate in complex, highly regulated industries worldwide.
Our solutions and services are supported by our delivery capability, which provides comprehensive, mission-critical services that address the evolving needs of our clients who operate in complex, highly regulated industries worldwide. We work to improve our delivery efficiency by increasing automation and optimizing our geographic labor distribution.
Poggenpohl served as the Chief Marketing and Communications Officer for North America at Accenture from 2017 to 2020. Prior to this role, Ms. Poggenpohl held senior leadership positions within Accenture for more than twenty years. Ms. Poggenpohl has been an executive officer since 2021. Mr.
Prior to joining Unisys, she ran a consulting firm, Poggenpohl Consulting, which she founded in January 2020. Ms. Poggenpohl served as the Chief Marketing and Communications Officer for North America at Accenture, a global professional services company, from 2016 to September 2019. Prior to this role, Ms. Poggenpohl held senior leadership positions within Accenture for more than twenty years. Ms.
Our Services and Solutions Our global clients look to us to provide independent advisement, quality solutions, and essential capabilities to ensure their mission-critical projects succeed. Our services may be delivered through standalone solutions or integrated solutions that may incorporate proprietary Unisys products, a Unisys-managed service offering, and/or solutions of our trusted partners.
Our Solutions We provide our global clients with advice and essential capabilities to architect, develop, modernize, implement and integrate the technologies that power their organizations. Our solutions may be delivered on a standalone basis or through integrated offerings that may incorporate proprietary Unisys products, a Unisys-managed service offering, and/or offerings of our trusted partners.
In addition to the technical expertise required to implement digital 8 transformation efforts, our clients look to us for industry-specific subject matter expertise that will help them apply and implement our solutions to maximize the benefits. We believe our portfolio of solutions is well-aligned with the markets we serve.
In addition to technical proficiency, our clients look to us for industry-specific expertise to help maximize the impact of their technology investments. We believe our portfolio of solutions is aligned with the markets we serve and the secular trends shaping market demand.
Our public sector clients primarily consist of state and local and non-U.S. governments and agencies, as well as global not-for-profit organizations. Overall, our commercial clients are well-diversified across sectors; although certain of our industry computing and business process solutions have a more concentrated client base, particularly in the areas of travel and transportation, financial services, energy, and healthcare.
Our Clients We deliver advanced IT solutions and services to some of the largest commercial and public sector clients around the world. Our public sector clients primarily consist of state, local and non-U.S. governments and agencies, as well as global not-for-profit organizations. Overall, our commercial clients are well-diversified across sectors.
Our direct sales force consists of a combination of global sales specialists focused on attracting new clients and cross-selling solutions, client specialists responsible for account retention and services growth, and client satisfaction and industry solution specialists responsible for supporting the specialized nature of some of our solutions and services within each of our segments.
Our direct global sales force consists of sales executives focused on attracting new clients and client executives responsible for account retention, services growth and client satisfaction. Our sales teams work and collaborate closely with industry solution specialists, solution architects and technologists with domain expertise from each segment.
McCann has been Executive Vice President and Chief Financial Officer since May 2022. Prior to joining Unisys, Ms. McCann was at Dun & Bradstreet, Inc. from 2009 until 2022, where she most recently served as Treasurer and Senior Vice President, Investor Relations and Corporate Financial Planning and Analysis from 2020 to 2022. Prior to Dun & Bradstreet, Ms.
McCann was at Dun & Bradstreet, Inc., a global provider of business decisioning data and analytics, from 2009 until April 2022, where she held roles of increasing responsibility, including as Treasury Director, Assistant Treasurer, and most recently as Treasurer and Senior Vice President, Investor Relations and Corporate Financial Planning and Analysis. Prior to Dun & Bradstreet, Ms.
We plan to continue to invest in our Next-Gen solutions to develop and deliver innovative products and services to effectively support our clients on their business transformation and modernization journeys. 7 Products We have developed a portfolio of proprietary platforms, enterprise software and technology products that support the delivery of our primary solutions.
We believe our Next-Gen Solutions create significant cross-sell and up-sell opportunities with our existing clients as well as attract new clients to the Unisys platform of services. We plan to continue to invest in our Next-Gen Solutions to develop and deliver innovative products and services to effectively support our clients on their business transformation and modernization journeys.
PowerSuite integrates six key areas critical to UCC platform success: user experience, administration and automation, governance, intelligent reporting, monitoring and security analytics. • CloudForte ® Available for hybrid and multi-cloud environments, CloudForte ® is a framework and platform that helps accelerate the secure movement of data and applications to the cloud, enhancing our CA&I capabilities.
PowerSuite integrates six key areas critical to UCC platform success: user experience, administration and automation, governance, intelligent reporting, monitoring and security analytics.
Organizations are placing a growing emphasis on end-to-end security, implementing cybersecurity solutions across the organizations from laptops, desktops, tablets, and sensors to servers, networks, and the cloud. Our Clients We deliver advanced IT solutions to some of the largest commercial and public sector clients around the world.
Organizations are placing a growing emphasis on end-to-end security and implementing cybersecurity solutions across organizations from laptops, desktops, tablets and sensors to servers, networks and the cloud. They must also protect against advancements in techniques deployed by threat actors, which are continually evolving.
Allen served as Chief Information Officer at Masonite International. Mr. Allen has also held senior leadership positions in IT at Cummins (2009 to 2017), Fifth Third Bank (2003 to 2009) and Wells Fargo (1998 to 2003). Mr. Allen began his career at Marriott International. Mr. Allen has been an executive officer since 2021. Ms.
Allen has also held senior leadership positions in IT at Cummins, an American multinational corporation that designs, manufactures and distributes engines, filtration and power generation products from 2009 to 2017, Fifth Third Bank from 2003 to 2009 and Wells Fargo from 1998 to 2003. Mr.
Organizations are urgently looking to technology solutions to help them facilitate a work-from-anywhere environment where collaboration, culture, and productivity are not sacrificed. Unified communications as a service, modern device management, virtual desktop interface, and service desk proactive self-healing are just some of the technology organizations are implementing to enhance the overall workplace experience. • Hybrid and Multi-Cloud adoption .
Organizations are urgently looking to technology solutions to help them facilitate a work-from-anywhere environment where collaboration, culture and productivity are not sacrificed. Multi-Cloud Organizations are migrating workloads to the cloud to seek flexibility in their deployments.
Since 2020, we have launched several Associate Impact Groups, which are associate-led groups that provide support, career development, and professional networking for their members. These groups focus mainly on underrepresented groups at Unisys and are centered on gender, race and ethnicity, LGBTQ+, veterans and people with disabilities.
Fostering an inclusive culture is a key component of engagement and 80% of participating employees indicated they “feel comfortable being themselves at work.” We sponsor several Associate Impact Groups, which are employee-led groups that provide support, career development and professional networking for their members. These groups center on gender, race and ethnicity, LGBTQ+, veterans and people with diverse abilities.
Our technologists also build customized enterprise applications that effectively address our clients’ needs with long-term support to manage and evolve applications over time. Our CA&I offerings integrate cybersecurity services to deliver highly secure environments. We classify our solutions within CA&I as either “Digital Platforms and Applications” or “Infrastructure.” • Digital Platforms and Applications (DP&A) .
We classify our solutions within CA&I as either “Digital Platforms and Applications” or “Infrastructure.” Our Digital Platforms and Applications (DP&A) solutions include: • Cloud Management. We deliver cloud services that monitor and manage complex multi-cloud environments to control costs and uphold compliance. • Hybrid Infrastructure.
Organizations migrating workloads to the cloud are seeking flexibility in the form of hybrid and multi-cloud deployments. This flexibility enables organizations to strike the most appropriate balance between resiliency, cost, scalability, and security for their data and applications.
This flexibility enables organizations to modernize incrementally and strike the most appropriate balance between resiliency, cost, scalability and security for their unique data and applications. Designing, maintaining and modernizing hybrid infrastructures require deep expertise in traditional IT infrastructure (e.g., data centers, servers and networking hardware).
Our associates ensure our success, and we are committed to providing a productive, ethical, diverse and safe working environment for each and every one of them. 10 We welcome qualified associates and do not discriminate on any legally protected characteristics.
Human Capital At December 31, 2023, we employed approximately 16,500 professionals, of which 2,600 are located in the United States and 13,900 are located in other countries around the world. We are committed to providing a productive, ethical, diverse and safe working environment for our employees. We welcome qualified employees and do not discriminate on any legally protected characteristics.
Altabef 63 Chair and Chief Executive Officer Michael M.
Name Age Officer Since Position with Unisys Peter A. Altabef 64 2015 Chair and Chief Executive Officer Michael M.
Clients have the flexibility to deploy it either as an integrated system, as a private cloud via software services or in a public cloud, starting with Microsoft Azure.
Clients can deploy it either as an integrated system, as a private cloud via software services or in a public cloud. Revenue from ClearPath Forward licenses and associated support services is reported within the ECS segment. Unisys Stealth ® Unisys Stealth ® which has two main components to it.
We partner with clients to evolve compute architectures as part of digital transformation in industries including financial services, travel and transportation, and telecommunications, among others. We classify our solutions within ECS as either “License and Support” or “Specialized Services and Next-Gen Compute.” • Specialized Services and Next-Gen Compute (SS&C) .
We use industry expertise to create data-intensive, AI-enabled solutions to provide next-level business outcomes in financial services, travel and transportation, telecommunications, and other industries. We classify our solutions within ECS as either “License and Support” or “Specialized Services and Next-Gen Compute.” 7 Our License and Support solutions include ClearPath Forward® and other Unisys IP-related licenses and associated support services.
These value-added solutions may incorporate advanced technologies such as artificial intelligence, machine learning, hyper-automation, or quantum computing and encryption, among others. We believe our Next-Gen solutions create significant cross-sell and up-sell opportunities with our existing clients as well as attract new clients to the Unisys platform of services.
Next-Gen Solutions We classify our Modern Workplace, DP&A, SS&C and certain micro-market solutions as our “Next-Gen Solutions.” These solutions may incorporate advanced technologies such as AI, machine learning, hyper-automation, or quantum computing and encryption, among others.
Lastly, we help clients streamline security environments and meet rapidly evolving security challenges. • Infrastructure . Traditional technology infrastructure management solutions spanning design, implementation, monitoring, automation, and management of dedicated on-premises or hosted infrastructure. Enterprise Computing Solutions (ECS) We deliver high-intensity software-defined operating environments and solutions in the cloud, and on premise.
Our Infrastructure solutions include the design, implementation, monitoring, automation and management of dedicated on-premises or hosted infrastructure. Enterprise Computing Solutions (ECS) We deliver proprietary and hybrid compute capabilities in the cloud and on-premises. We extend value through services to operate and manage these environments and the application workloads that run on them.
Next generation cloud solutions for modern applications, data and analytics, cloud management, hybrid infrastructure, and cyber security. We transform and manage enterprise applications by deploying a range of capabilities to refactor, rebuild, or rearchitect legacy applications for cloud environments.
We help transform and manage our client’s IT infrastructure, whether they are modernizing their existing infrastructure, integrating with cloud platforms or fully migrating to new platforms. • Modern Applications. We transform and manage enterprise applications with capabilities to refactor, rebuild, or rearchitect legacy applications for cloud environments.
We modernize technology support through hybrid virtual desktop, device subscriptions, and next generation service desk solutions. We also provide employee experience solutions by leveraging our Unisys Unified Experience Management platform that integrates a managed service offering with our proprietary software and artificial intelligence to centralize identification and support to remediate future issues before they occur.
We modernize and centralize technology support organizations with solutions that enable proactive and personalized technology support for field, frontline and remote workers including experience management office (XMO) software, device subscriptions, touchless experience support, and next-generation service desk and field services offerings. • Unified Experience Management. Our Experience-as-a-Service (XaaS) offering is a managed service designed to deliver digital employee experiences.
F or more information on the competitive risks we face, see “Risk Factors” (Part I, Item 1A of this Form 10-K). 9 Our Strategy Our growth strategy is focused on increasing the value we create for our clients, which we believe will ultimately enable us to achieve our financial objectives of improving our revenue growth, margins, and free cash flow.
Our Strategy Our primary objective is to increase the value we create for our clients to support our financial objectives of improving our revenue growth, profitability and free cash flow.
We believe that our continued investment in enhancing and expanding our Next-Gen solution portfolio through our build/partner/buy strategy, coupled with investment in our go-to-market capabilities, will have a favorable impact on our competitive position.
We believe that our investment in enhancing and expanding our Next-Gen Solutions portfolio, coupled with investment in our go-to-market capabilities, will favor our competitive position. F or more information on the competitive risks we face, see “Risk Factors” (Part I, Item 1A of this Form 10-K). Materials Unisys purchases components and supplies from a number of suppliers around the world.
We have a long track record of delivering and integrating solutions to simplify and accelerate digital transformation. In recent decades, the rise of the internet and new online platforms has led to an accelerated shift of enterprise and government transactions and interactions with customers, suppliers, employees, and citizens to digital channels.
In recent decades, enterprise and government interactions with customers, suppliers, employees and citizens have shifted increasingly to digital channels. Cloud computing, artificial intelligence (AI), machine learning and quantum computing have pushed the required pace of innovation and led to a proliferation of data.
Sokenu has been Senior Vice President, General Counsel and Secretary since May 2022 and Chief Administrative Officer since October 2022. Prior to joining Unisys, he served as Senior Vice President, Global Deputy General Counsel and Chief of Staff to the General Counsel at Cognizant Technology Solutions Corporation from 2020 to 2022. Prior to that, Mr.
Prior to joining Unisys, she served as Vice President, Deputy General Counsel, Chief Compliance Officer and Corporate Secretary at ITT Inc., a manufacturer of highly engineered critical components and customized technology for the transportation, industrial and energy markets, from July 2021 to July 2023. Prior to that, Ms.
Cloud, Applications & Infrastructure Solutions (CA&I) We accelerate digital transformation in the critical areas of cloud migration and management as well as application and infrastructure modernization. Our solutions accelerate hybrid and multi-cloud adoption and help our clients leverage the flexibility and efficiency of the cloud to deliver business growth.
Our solutions accelerate multi-cloud adoption and help our clients leverage the flexibility and efficiency of the cloud to deliver business growth. Our in-house developers also design and build customized enterprise applications that address our clients’ needs with long-term support to manage and evolve applications over time. Our CA&I offerings often incorporate cybersecurity services and solutions to enable secure environments.
To support collaboration and cross-selling across our global client teams, our incentive compensation structure is based on a combination of individual, operating segment, and overall company performance. We also use a variety of shared commission structures to incentivize go-to-market collaboration.
To support collaboration and cross-selling across our global client teams, our commission structure is based on a combination of individual targets aligned with our business objectives such as growing revenue with existing clients and prospects, expanding our Next-Gen Solutions and generating in-year revenue, among others.
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At the same time, market incumbents have been challenged by cloud-native competitors pushing the pace of innovation. Businesses and governments are also facing rising costs and complexity of managing enterprise infrastructure, data, security, and compliance. The COVID-19 pandemic and a rapid shift to hybrid and remote work models have amplified these challenges.
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At the same time, organizations face rising costs and complexity of managing IT infrastructure, data, security and compliance while integrating new technologies. We have a long track record of helping clients navigate technological change and architecting innovative solutions that simplify and accelerate digital transformation.
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During this time, customers and employees have increasingly come to expect seamless and personalized digital experiences. Unisys partners with clients to transform the mission-critical systems that support their daily operations in this rapidly evolving digital age. In 2022, we launched our new Unisys brand, which marked the most significant brand transformation for the company since 1986.
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Government and Enterprise Digitization Citizens and businesses are beginning to expect a digital experience when engaging government services such as voter registration, tax filing and application processes for licenses, permits, visas or passports.
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Our new brand is all about progress and embodies our entrepreneurial spirit and the aspirations we help our clients achieve. It is about Unisys being the catalyst that pushes people and organizations to break through to the next big innovation.
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Governments and law enforcement agencies are also seeking to automate processes, leverage data to make better decisions and improve transparency, and better share information across agencies and localities. Governments are prioritizing digital transformation and strategies for evaluating and measuring their IT investments. Similarly, customers, employees, suppliers and alliance partners expect a digital experience when interacting with enterprises.
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We also deliver communications and collaboration solutions for management and optimization of unified communications and collaboration (UCC) applications with governance and policy enforcement without hindering employee productivity. Lastly, we deploy third-party unified endpoint management solutions for our clients, enabling central device management across the entire lifecycle for smartphones, tablets, laptops, and internet of things devices. 6 • Traditional Workplace .
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Enterprise IT organizations must evaluate myriad technologies, software platforms and tools to manage and optimize their technology infrastructure and environments that support mission-critical workloads to meet these expectations while maintaining business continuity. 5 Data and AI The growing use of digital platforms, connected devices and enterprise digitization generates vast amounts of structured and unstructured data, often from disparate sources or stored within disconnected environments.
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We accelerate cloud data and analytics with solutions for modernizing, migrating, and managing data to unlock powerful insights and drive business performance. We deliver cloud management with services that monitor and manage complex cloud environments to control costs and uphold compliance. We provide hybrid infrastructure solutions such as IT estate modernization and cloud migration to shed legacy technology.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFuture 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 our relationship with, distributors and other indirect channel partners, which can affect our capacity to effectively and efficiently serve current and potential customers and end users.
Biggest changeAdditionally, the financial condition of, and our relationship with, distributors and other indirect partners can impact our ability to serve current and potential clients and end users effectively and efficiently. Our commercial contracts have not been, and in the future may not be, as profitable as expected or provide the expected level of revenue.
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 U.S.
A corporation’s ability to deduct its U.S. 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 U.S.
Various lawsuits, claims, investigations and proceedings have been brought or asserted against us 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, securities matters, intellectual property and non-income tax matters.
Various lawsuits, claims, investigations and proceedings have been brought or asserted against us relating to matters arising in the ordinary course of business, including actions with respect to commercial and government contracts, labor and employment, employee benefits, intellectual property, environmental, securities, and non-income tax matters.
In addition, if we fail to maintain the adequacy of our internal control over financial reporting, we will not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002.
If we fail again to maintain the adequacy of our internal control over financial reporting, we will not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002.
If we are unsuccessful in selling these other solutions and related services, there may not be a meaningful return on these investments. Further, the revenues generated by other solutions and related services may be insufficient to offset any revenue declines caused if we are unable to retain our installed base.
If we invest insufficiently or are unsuccessful in selling these other solutions and related services, there may not be a meaningful return on these investments. Further, the revenues generated by newer solutions and related services may be insufficient to offset any revenue declines caused if we are unable to retain the revenues generated by our installed base.
Chargeability is also affected by a number of factors, including our ability to transition resources from completed projects to new engagements and across geographies, and our ability to forecast demand for services and thereby maintain appropriate resource levels.
Chargeability is also affected by several factors, including our ability to transition resources from completed projects to new engagements and across geographies, and our ability to forecast demand for services and thereby maintain appropriate resource levels.
Furthermore, if ClearPath Forward is sold in the form of Software as a Service (SaaS) at an accelerated pace, this would have a negative impact on our short- and medium-term cash position and could adversely impact our operations, financial condition and liquidity. Additionally, we also continue to invest in other software and solutions and related services.
Furthermore, if ClearPath Forward is sold in the form of Software as a Service (SaaS) at an accelerated pace, this would have a negative timing impact on our short- and medium-term cash position and could adversely impact our operations, financial condition and liquidity. Additionally, we invest in and sell new solutions and related services.
If we fail to achieve and maintain an effective internal control environment, we could suffer misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information.
If we fail to achieve and maintain an effective internal control environment, we could suffer misstatements in our financial statements and fail to meet our reporting obligations, which could cause investors to lose confidence in our reported financial information and result in significant expenses to remediate.
The rates we are able to charge for our solutions are affected by a number of factors, including clients’ perception of our ability to add value through our solutions, introduction of new offerings by us or our partner eco-system, market pricing pressure, and general economic conditions such as inflation or an economic downturn, or the perception of the risk of these occurrences.
The rates we charge for our solutions are affected by several factors, including clients’ perception of our ability to add value, introduction of new offerings by us or our alliance partners, market pricing pressure, and general economic conditions such as inflation or an economic downturn, or the perception of the risk of these occurrences.
In addition, some of our contracts may permit termination at the customer’s discretion before the end of the contract term or may permit termination or impose other penalties if we do not meet the performance levels specified in the contracts.
Some of our contracts may permit termination at the client’s discretion before the end of the contract term or may permit termination or impose other penalties if we do not meet the performance levels specified in the contracts, particularly for government and public sector clients.
A downgrade of our credit ratings could adversely affect our access to liquidity and capital, and could significantly increase our cost of funds, decrease the number of investors and counterparties willing to lend to us or purchase our securities and impact our ability to utilize surety bonds or other financial instruments we use to conduct our business.
A downgrade of our credit ratings could adversely affect our access to liquidity and capital; particularly as we plan to refinance the 2027 Notes prior to maturity, an adverse change in our credit rating could significantly increase our cost of funds, decrease the number of investors and counterparties willing to lend to us or purchase our securities and impact our ability to utilize surety bonds or other financial instruments we use to run our business.
Market conditions may impact our ability to access the financing markets on terms acceptable to us or at all. If we are unable to access the financing markets, we would be required to use cash on hand to fund operations and our required pension contributions and repay outstanding debt as it comes due.
If we are unable to access the financing markets, we would be required to use cash on hand to fund operations and our required pension contributions and repay outstanding debt as it comes due.
In 2022, we made cash contributions of $39.3 million, primarily for our international defined benefit pension plans. Based on current legislation, global regulations, recent interest rates and expected returns, in 2023 we expect to make cash contributions of approximately $40 million, primarily for our international defined benefit pension plans.
In 2023, we made cash contributions of $42.4 million, primarily for our international defined benefit pension plans. Based on current legislation, global regulations, recent interest rates and expected returns, we estimate cash contributions of approximately $21 million in 2024, primarily for our international defined benefit pension plans.
Our results of operations and financial condition may be adversely impacted if sales of higher-margin offerings do not offset declines in revenue and profitability of lower-margin offerings, including lower-margin contracts that we voluntarily exit. Future results may be adversely impacted if we are unable to maintain our installed base and sell new solutions and related services.
Our results of operations and financial condition may be materially adversely impacted if sales of higher-margin offerings do not offset declines in revenue and profitability of lower-margin offerings, including contracts that we voluntarily exit.
We are expecting revenue, margin and market share expansion due to our differentiated solutions and the decisions by some of our competitors to exit or de-emphasize their focus on our target markets. If such competitors change that position, it could impact our ability to gain market share.
We are expecting revenue, margin and market share expansion due to our differentiated solutions and the decision by some of our competitors to exit or de-emphasize their focus on our targets markets. If some or all of these competitors focus on our target markets, it could adversely affect our ability to gain market share or otherwise adversely affect future results.
Our contracts may not be as profitable as expected or provide the expected level of revenues. In a number of our long-term services contracts, our revenue is based on the volume of services and products provided. As a result, revenue levels anticipated at contract inception are not guaranteed.
In many of our long-term solutions and services contracts, revenue is based on the volume of solutions and services provided. As a result, revenue levels anticipated at contract inception are not guaranteed.
Any acquisitions may result in the incurrence 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.
Acquisitions could also result in potentially dilutive issuances of equity securities and an increase in amortization expenses related to intangible assets.
Cyberattacks from computer hackers and cyber criminals and other malicious internet-based activity continue to increase generally, and our services and systems, including the systems of our outsourced service providers, have been and may in the future continue to be the target of various forms of cybersecurity incidents such as DNS attacks, wireless network attacks, viruses and worms, malicious software, ransomware, cyber extortion, misconfigurations, supply chain attacks, application centric attacks, peer-to-peer attacks, phishing attempts, backdoor trojans and distributed denial of service attacks, among other cybersecurity threats.
The occurrence of cybersecurity attacks and other security breaches continue to increase globally, and our systems, including the systems of our outsourced service providers, have been and may in the future be targeted by attacks such as denial of service attacks, wireless network attacks, viruses and worms, malicious software, ransomware, malware, misconfigurations, supply chain attacks, application centric attacks, peer-to-peer attacks, phishing, vishing and smishing attempts, backdoor trojans, distributed denial of service attacks, social engineering, business email compromises and cyber-extortion, among other cybersecurity threats.
Our business includes managing, processing, storing and transmitting proprietary and confidential data, including personal information, intellectual property and proprietary business information, within our own IT systems and those that we design, develop, host or manage for clients.
Our business includes managing, processing, storing and transmitting information, including proprietary, confidential, client, employee and personal information, intellectual property and proprietary business information. This information is housed within our own information systems (made of a combination of on-premise and third-party cloud providers), the cloud and those that we design, develop, host or manage for clients.
We 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. We could also lose clients as a result of their merger, acquisition or business failure. We may not be able to replace the revenue and earnings from any such lost client.
We could also lose clients because of their merger, acquisition or business failure. We may not be able to replace the revenue and earnings from any such lost client.
We have received, and may receive in the future, regulatory, investigative and enforcement inquiries, subpoenas or demands arising from, related to, or in connection with these matters.
We have received, and may receive in the future, regulatory, investigative and enforcement inquiries, subpoenas or demands arising from, related to, or in connection with these matters, including as disclosed in Note 18, “Litigation and contingencies” in Part II, Item 8 of this Form 10-K.
Although we believe that no significant business has been lost to date, it is possible that a change in the perceptions of our business partners could occur as a result of the investigation and the material weaknesses.
Professional costs resulting from litigation and contingencies have been significant and are expected to continue to be significant, in particular, if litigation costs grow. Although we believe that no significant business has been lost to date, it is possible that a change in the perceptions of our clients could occur as a result.
Despite established security controls, cybersecurity incidents involving our systems could result in disruption of our services, misappropriation, misuse, alteration, theft, loss, corruption, leakage, falsification, and accidental or premature release or improper disclosure or misuse of confidential or other information, including intellectual property, personal information, and other confidential information (of the company, third parties, employees, clients or others).
These attacks have been successful against us and those of our third-party service providers and have resulted in, and in the future could result in, misappropriation, misuse, alteration, theft, loss, corruption, leakage, falsification, and accidental or premature release or improper disclosure of confidential or other information, including intellectual property, personal information, and data of the company, third parties, employees, clients or others.
In addition, as a result of the investigation and remediation efforts, certain operational changes have occurred and may continue to occur in the future.
In addition, as a result of the investigation and remediation efforts, certain operational changes have occurred and may continue to occur in the future. Any or all of these could directly or indirectly have a material adverse effect on our operations and/or financial performance.
A future tax “ownership change” pursuant to Section 382 or future changes in tax laws that impose tax attribute utilization limitations may severely limit or effectively eliminate our ability to utilize our NOL carryforwards and other tax attributes. Other factors discussed in this report, although not listed here, also could materially affect our future results. 19 ITEM 1B.
A future tax “ownership change” pursuant to Section 382 or future changes in tax laws that impose tax attribute utilization limitations may severely limit or effectively eliminate our ability to utilize our NOL carryforwards and other tax attributes. Impairment of goodwill or intangible assets may negatively impact our results of operations.
The techniques used by computer hackers and cyber criminals to obtain unauthorized access to data or to sabotage computer systems change frequently and are growing in sophistication, and these new techniques may not be detected until after an incident has occurred.
The techniques used by computer hackers and cyber criminals to obtain unauthorized access to data or to sabotage computer systems change frequently and are growing in sophistication, which increases the risk and severity when they occur.
GENERAL BUSINESS RISKS Cybersecurity incidents have occurred and may continue to occur and could result in the incurrence of significant costs and harm to our business and reputation.
BUSINESS AND OPERATING RISKS Cyber incidents, security breaches and other disruptions in our IT systems have occurred and will continue to occur that could result in the incurrence of significant costs as well as harm to our business.
The credit rating agencies rating our indebtedness regularly evaluate us, and credit ratings are based on a number of factors, including our financial strength and ability to generate earnings, as well as factors not entirely within our control, including conditions affecting the information technology industry and the economy and changes in rating methodologies.
These factors include our financial strength and ability to generate earnings and cash flows, as well as factors not entirely within our control, such as rising interest rates, conditions affecting the information technology industry and the economy and changes in rating methodologies.
There is no assurance that we will generate sufficient cash to fund our operations and required pension contributions and refinance such debt.
There is no assurance that we will generate sufficient cash to fund our operations, pension contributions and refinance such debt, including because of impaired access to financing markets, which could have a material adverse effect on our business.
The impairment test is based on several factors, estimates and assumptions, including macroeconomic conditions, industry and market consideration, overall financial performance, market capitalization and relevant entity-specific events. Significant changes to these factors could impact the assumptions used in calculating the fair value of goodwill or intangible assets and may indicate potential impairment.
On an annual basis, and whenever circumstances arise, we review goodwill and intangible assets for impairment. The impairment test is based on several factors, estimates and assumptions, including macroeconomic conditions, industry and market consideration, overall financial performance, market capitalization and relevant entity-specific events.
Revenue and profit margins in these businesses are a function of both the portfolio of solutions sold and the rates we are able to charge for solutions.
It also depends on an efficient utilization of delivery personnel and the ability to meet our clients’ technological needs. Revenue and profit margin in these businesses are a function of both the portfolio of solutions sold and the rates we charge.
Additionally, cost inflation and supply chain disruptions may lead to higher labor and other costs, as well as an inability to procure products needed to deliver our solutions, which could adversely affect our results of operations.
Inflation may lead to higher labor and other costs charged by these third parties, and supply chain disruptions 18 may cause the inability by them to deliver in a timely manner, which could adversely affect our results of operations.
If clients do not believe in the value proposition provided by ClearPath Forward or choose not to renew their contracts, there may not be a meaningful return on these investments, and revenue could decline meaningfully.
If legacy clients do not believe in the value provided by our solutions and exit their contracts, or if they choose not to renew their contracts, or not to renew these contracts on terms at least as favorable as the current contracts, our revenue could decline meaningfully and there could be a material adverse effect on our business, results of operations or financial condition.
In addition, legal proceedings or environmental matters may arise in the future with respect to our existing and legacy operations that may adversely affect our business or reputation. Impairment of goodwill or intangible assets may negatively impact our results of operations. On an annual basis, and whenever circumstances arise, we review goodwill and intangible assets for impairment.
Regardless of the outcome of any individual matter, litigation and environmental matters have impacted and could continue to impact our results of operations, cash flows and business. In addition, legal proceedings or environmental matters may arise in the future with respect to our existing and legacy operations that may adversely affect our business.
Any or all of these impacts based on the findings of the investigation and related matters and the surrounding circumstances could exacerbate the other risks described herein and directly or indirectly have a material adverse effect on our operations and/or financial performance. If we are unable to access the financing markets, it may adversely impact our business and liquidity.
The occurrences or conditions described above have had an adverse impact on our results of operations and could have a material adverse effect on our business or our results of operations in the future. If we are unable to maintain our credit rating or access the financing markets, it may adversely impact our business and liquidity.
Some competitors also have or may develop greater financial and other resources than us, providing them with the 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.
Some competitors have and may continue to have greater financial and other resources than we have, providing them with the enhanced ability to compete for market share, including by providing significant economic incentives and discounts to secure contracts. Additionally, competitors may generally offer more aggressive pricing or contractual terms, which may affect our ability to win work.
If not remediated, our failure to establish and maintain effective disclosure controls and procedures and internal control over financial reporting could result in material misstatements in our financial statements and a failure to meet our reporting and financial obligations, each of which could have a material adverse effect on our financial condition and the trading price of our common stock.
If any of these new or improved controls and systems do not perform as expected, we may experience material weaknesses in our controls, which could result in material misstatements in our financial statements and a failure to meet our reporting and financial obligations, each of which could have a material adverse effect on our financial condition.
Market conditions may also impact our ability to utilize surety bonds, letters of credit, foreign exchange derivatives or other financial instruments we use to conduct our business. 17 A significant portion of our revenue is derived from international operations, and we are subject to the risks of doing business internationally.
Rising interest rates and other market conditions may also impact our ability to utilize surety bonds, letters of credit, foreign exchange derivatives or other financial instruments we use to conduct our business. These impacts could affect our growth, profitability, and financial condition, including liquidity.
We face aggressive competition, which could lead to reduced demand for our solutions and related services and could have an adverse effect on our business. The market in which we operate includes a large number of companies vying for customers and market share both domestically and internationally.
We face aggressive competition, which could lead to reduced demand for our solutions and related services and could have an adverse effect on our business. Our future performance is largely dependent on our ability to compete successfully and expand in the markets we currently serve.
We could be exposed to liability, litigation, and regulatory or other government action, as well as the loss of existing or potential customers, damage to our brand and reputation, damage to our competitive position, and other financial loss, any of which could have a material adverse effect on our business, financial condition and results of operations.
Cyber incidents, security breaches and other disruptions in our IT systems have exposed, and in the future could expose, us to liability, litigation and regulatory or other government action, which could result in the loss of existing or potential clients, damage to our brand and reputation, damage to our competitive position and financial loss.
Some of our competitors may develop competing services and products that offer better price for performance or that reach the market in advance of our offerings.
If we are unable to differentiate our offerings from those of our competitors and renew and expand on existing contracts and win new contracts, our revenues may significantly decline. Some of our competitors may develop competing solutions and services that offer better price for performance or that reach the market before our offerings.
Our ability to grow revenue and profitability in these businesses will depend our ability to win contracts with clients for higher growth and higher-margin user experience-based solutions, which in turn depends on our ability to offer differentiated solutions that meet client needs. It will also depend on an efficient utilization of delivery personnel.
Our strategy places an emphasis on growing revenue, including specifically from higher-value and higher-margin offerings and our ability to profitably grow revenue and generate cash flows in our businesses depends on our ability to win contracts with clients for higher growth and higher-margin solutions. This in turn depends on our ability to offer solutions that meet client needs.
In addition, the cost and operational consequences of responding to cybersecurity incidents and implementing remediation measures could be significant. In our industry, security vulnerabilities are increasingly discovered, publicized and exploited across a broad range of hardware, software or other infrastructure, elevating the risk of attacks and the potential cost of response and remediation for us.
Furthermore, our industry subjects us to elevated risk and, accordingly, security vulnerabilities can occur and will continue to occur across a broad range of hardware, software or other infrastructure, increasing for us the potential of occurrence and the cost of response and remediation.
There can be no assurance that we will be successful in consummating future acquisitions or dispositions on favorable terms or at all. 15 DEFINED BENEFIT PENSION PLANS We have significant underfunded pension obligations. We have significant underfunded obligations under our U.S. and non-U.S. defined benefit pension plans.
The risks associated with acquisitions, including integration, and dispositions could have a material adverse effect upon our business, financial condition and results of operations. There can be no assurance that we will be successful in consummating future acquisitions or dispositions on favorable terms or at all.
An impairment of a significant portion of our goodwill or intangible assets could adversely affect our results of operations. A failure to meet standards or expectations with respect to our environmental, social and governance practices could adversely impact our business and reputation.
Significant changes to these factors could impact the assumptions used in calculating the fair value of goodwill or intangible assets and may indicate potential impairment. An impairment of a significant portion of our goodwill or intangible assets could adversely affect our results of operations.
We could also see a further consolidation of clients, which could also result in a decrease in demand. Our business could also be affected by acts of war, terrorism, natural disasters and the widespread outbreak of infectious diseases. Geopolitical conditions could escalate, and this could have unpredictable consequences on the world economy and on our business.
Additionally, our business has been, and can in the future be, adversely impacted by acts of war, terrorism, natural disasters and the widespread outbreak of infectious diseases, like the COVID-19 pandemic, as such events have unpredictable consequences on the world economy and our operations.
We maintain business relationships with key partners, suppliers, channel partners and other parties that have complementary products, services or skills.
Future results depend in part on the pricing, performance and capabilities of third parties with whom we have commercial relationships. We maintain business relationships and transact with our alliance partners, suppliers and other third parties that have complementary solutions, services or skills. Future results will depend, in part, on the pricing, performance and capabilities of these third parties.
Future results will depend on our ability to perform these services contracts profitably. We could face business and financial risk in implementing acquisitions or dispositions. As part of our business strategy, we may from time to time acquire complementary technologies, products and businesses, or dispose of existing technologies, products and businesses, including transactions of a material size.
As part of our business strategy, we have and may acquire complementary technologies, solutions, services and businesses, or dispose of existing technologies, solutions, services and businesses, including transactions of a material size. We may not have the cash sufficient to make such opportunistic acquisitions. Accordingly, any acquisitions may result in the incurrence of substantial additional indebtedness or contingent liabilities.
ITEM 1A. RISK FACTORS Factors that could affect future results include the following: IMPLEMENTATION OF BUSINESS STRATEGY IN INFORMATION TECHNOLOGY MARKET Future results may be adversely impacted if we are unable to grow revenue and expand margin in our Digital Workplace Solutions and Cloud, Applications & Infrastructure Solutions businesses.
Future results may be materially adversely impacted if we are unable to grow revenue, expand profit margin and generate sufficient cash flows in our businesses.
These systems are critical to our business activities, and unauthorized access to or disruptions of, and cybersecurity attacks on, these systems pose increasing risks. Like other companies, we have experienced cybersecurity attacks and have had to expend increasing human and financial resources to respond.
These systems are critical to our and our clients’ business activities and unauthorized access to, disruption of, or attacks on these systems pose serious risks, including inadvertent loss or disclosure of company, information and employee and client data.
Following an investigation by our Audit & Finance Committee into our internal control environment, during the fourth quarter of 2022, we reevaluated the effectiveness of our disclosure controls and procedures and internal control over financial reporting and identified material weaknesses in our disclosure controls and procedures and internal control over financial reporting.
Following the identification during the fourth quarter of 2022 of material weaknesses in our disclosure controls and procedures and internal control over financial reporting, which has since been remediated, we have expended, and anticipate we will continue to expend, significant resources including accounting-related costs and costs associated with significant management oversight to maintain and improve the effectiveness of our disclosure controls and procedures and our internal control over financial reporting.
In addition to harm to reputation, if we fail to meet our contractual obligations, we could be subject to legal liability, which could adversely affect our business, operating results and financial condition. Our services or products may infringe upon the intellectual property rights of others.
If we are unable to protect or enforce our intellectual property rights, our services or solutions infringe upon the intellectual property rights of others or we lose our ability to utilize the intellectual property of others, our business could be adversely affected.
Our business may be adversely affected by global economic conditions, acts of war, terrorism, natural disasters or the widespread outbreak of infectious diseases. If global economic conditions deteriorate, or clients anticipate that they could deteriorate, we could see reductions in demand and increased pressure on revenue and profit margins.
Our results of operations have been, and may in the future be, adversely affected by volatile, negative or uncertain economic and political conditions as well as acts of war, terrorism, natural disasters or the widespread outbreak of infectious diseases. Approximately 56% of our total revenue for 2023 was derived from international operations.
Our competitors include systems integrators, consulting and other professional services firms, outsourcing providers, infrastructure services providers, computer hardware manufacturers and software providers. If we are unable to differentiate our offerings from those of our competitors and renew existing contracts and win new contracts, our revenues may decline.
The market in which we operate includes many companies vying for clients and market share both domestically and internationally. Our competitors include systems integrators, consulting and other professional services firms, outsourcing providers, infrastructure services providers, computer hardware manufacturers and software providers.
We cannot be sure that our services and products do not infringe on the intellectual property rights of third parties, and we may have infringement claims asserted against us or against our clients. These claims could cost us money, prevent us from offering some services or products, or damage our reputation.
In addition, we cannot be sure that our services and solutions, including, for example, our software and hardware solutions, or the solutions of others that we offer to our clients, do not infringe on the intellectual property rights of third parties (including competitors as well as non-practicing holders of intellectual property assets), and these third parties could claim that we or our clients are infringing upon their intellectual property rights.
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Our strategy places an emphasis on growing revenue, including specifically from higher-value and higher-margin offerings in our Digital Workplace Solutions and Cloud, Applications & Infrastructure Solutions businesses.
Added
ITEM 1A. RISK FACTORS We are subject to a wide range of factors that could materially affect future performance. Because of these factors, past performance may not be a reliable indicator of future results. You should carefully consider, together with the other information contained in this Annual Report on Form 10-K, the risks and uncertainties described below.
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We continue to invest in our ClearPath Forward operating system software in order to retain and extend our existing client base included in our Enterprise Computing Solutions business.
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These risks may have a material adverse effect on our reputation, business, results of operations, financial condition, or cash flows.
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If we are unable to attract and retain experienced personnel in key positions, our future results could be adversely impacted. Our ability to retain, train and develop our existing associate base in the skills and solutions required to service our clients is critical to our future success.
Added
In addition to these risks, there may be additional risks and uncertainties that adversely affect our business, performance or financial condition in the future that are not presently known, are not currently believed to be significant or are not identified below because they are common to most or all companies.
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We also need to attract new talent to augment the skills required to deliver our solutions to our clients.
Added
In addition, negligent or improper conduct of our employees or third parties working on our behalf with access to these systems and the sensitive information housed therein have and may in the future adversely affect our business and reputation.
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Our failure to retain, train and develop existing personnel or attract new talent with the requisite skill set, retain key personnel or implement an appropriate succession plan for such personnel could adversely impact our ability to successfully carry out our business strategy.
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We have experienced, and will continue to experience, cybersecurity attacks and other security breaches that have and, in the future, could result in access to, or in some instances, loss or disclosure of, sensitive information that would require significant human and financial resources to respond.
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Any of these factors could lead to reduced demand for our solutions and related services and could have an adverse effect on our business. Future results will depend on our ability to mitigate the effects of aggressive competition on revenues, pricing and margins.
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These include cyberattacks from computer hackers, cyber criminals, including nation states and nation state-sponsored actors, insiders and other malicious internet-based adversaries.
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Our future results may be adversely impacted if we are unable to effectively anticipate and respond to rapid technological innovation in our industry. 14 We operate in an industry characterized by rapid technological innovation, evolving technology standards, short product life cycles and continually changing customer demand patterns.
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As a known provider of IT solutions, we are and will remain an attractive target for such attacks.
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Future success will depend in part on our 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 newer delivery models.
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For example, in 2022, the company disclosed a cyber attack involving our software lab environment, which caused no service disruptions for our operations or, to our knowledge, to our clients, but resulted in the exfiltration of source code for our cybersecurity and product and platform software.
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Additionally, we 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 our services and product offerings. In addition, services and products developed by competitors may make our offerings less competitive.
Added
Additionally, limitations in the ability of our IT teams to remain up-to-date with the tools necessary to thwart these threat actors could lead to attacks not being detected until after the attack has occurred.
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Our future results will depend on our ability to retain significant clients and attract new clients. We have a number of significant long-term contracts with clients, including governmental entities, and our future success will depend, in part, on retaining our relationships with these clients and attracting new clients.
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In addition, we rely on our suppliers’ tools and services to adequately detect, report and respond to cyber incidents and security breaches, which could affect our ability to report or address these incidents effectively or in a timely manner.
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Our contracts with governmental entities are subject to the availability of appropriated funds and appropriations may be delayed or may not be made at all. Further, appropriations are subject to many different factors, including budget priorities, economic cycles, change in political administrations and other circumstances beyond our control that may impact our revenues from government contracts.
Added
An increase in consumption of public cloud services also elevates the risk to our environment, as securing cloud workload regularly involves new skills, tools and processes. The introduction of AI and quantum computing is also raising the risk level as it opens new possibilities for threat actors to launch complex attacks combining social engineering and classic hacking techniques.
Removed
Some of our services contracts are fixed-price contracts under which we assume the risk for delivery of the contracted services and products at an agreed-upon fixed price. Should we experience problems in performing fixed-price contracts on a profitable basis, adjustments to the estimated cost to complete may be required and may or may not be obtained.
Added
Similarly, the threat of malicious cyber activity from nation states and other sophisticated actors continues to increase, particularly with the rise of global conflicts like in the Ukraine.
Removed
Additional potential risks associated with acquisitions include technical, cultural and operational integration challenges; difficulties in maintaining or enhancing the profitability of any acquired business; risks of entering markets in which we have no or limited prior experience; potential loss of employees or failure to maintain 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.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS Information with respect to litigation is set forth in Note 19, “Litigation and contingencies,” of the Notes to Consolidated Financial Statements and is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 20 PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS Information with respect to litigation is set forth in Note 18, “Litigation and contingencies,” of the Notes to Consolidated Financial Statements and is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 25 PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 20 Part II Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 21 Item 6. Reserved 22 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 23 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 31 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 25 Part II Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 26 Item 6. Reserved 27 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 36 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe comparison assumes $100 was invested on December 31, 2017, in Unisys common stock and in each of such indices and assumes reinvestment of any dividends. 2017 2018 2019 2020 2021 2022 Unisys Corporation $ 100 $ 143 $ 146 $ 241 $ 252 $ 63 S&P 500 $ 100 $ 96 $ 126 $ 149 $ 192 $ 157 S&P 500 IT Services $ 100 $ 105 $ 147 $ 180 $ 189 $ 154
Biggest changeThe comparison assumes $100 was invested on December 31, 2018, in Unisys common stock and in each of such indices and assumes reinvestment of any dividends. 2018 2019 2020 2021 2022 2023 Unisys Corporation $ 100 $ 102 $ 169 $ 177 $ 44 $ 48 S&P 500 $ 100 $ 131 $ 156 $ 200 $ 164 $ 207 S&P 500 IT Services $ 100 $ 141 $ 172 $ 181 $ 147 $ 197
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Unisys Common Stock is listed for trading on the New York Stock Exchange (trading symbol “UIS”). Holders of Record At January 31, 2023, there were approximately 4,200 stockholders of record.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Unisys Common Stock is listed for trading on the New York Stock Exchange (trading symbol “UIS”). Holders of Record At January 31, 2024, there were approximately 4,000 stockholders of record.
Repurchase of Equity Securities None. 21 Stock Performance The following graph compares the cumulative total stockholder return on Unisys common stock during the five fiscal years ended December 31, 2022, with the cumulative total return on the Standard & Poor’s 500 Stock Index and the Standard & Poor’s 500 IT Services Index.
Repurchase of Equity Securities None. 26 Stock Performance The following graph compares the cumulative total stockholder return on Unisys common stock during the five fiscal years ended December 31, 2023, with the cumulative total return on the Standard & Poor’s 500 Stock Index and the Standard & Poor’s 500 IT Services Index.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeInformation by reportable segment is presented below: (millions) Total Segments DWS CA&I ECS 2022 Customer revenue $ 1,699.9 $ 509.9 $ 520.3 $ 669.7 Intersegment — — — — Total revenue $ 1,699.9 $ 509.9 $ 520.3 $ 669.7 Gross profit 32.4 % 14.0 % 9.1 % 64.5 % 2021 Customer revenue $ 1,745.8 $ 574.5 $ 485.6 $ 685.7 Intersegment 1.4 — — 1.4 Total revenue $ 1,747.2 $ 574.5 $ 485.6 $ 687.1 Gross profit 32.2 % 13.8 % 9.7 % 63.4 % Gross profit percent is as a percent of total revenue.
Biggest changeInformation by reportable segment is presented below: (millions) Total Segments DWS CA&I ECS 2023 Revenue $ 1,725.1 $ 546.1 $ 531.0 $ 648.0 Gross profit percent 32.2 % 14.0 % 15.4 % 61.2 % 2022 Revenue $ 1,699.9 $ 509.9 $ 520.3 $ 669.7 Gross profit percent 32.4 % 14.0 % 9.1 % 64.5 % DWS revenue was $546.1 million in 2023 and $509.9 million in 2022.
Any profit or loss recorded for the company’s U.S. operations will have no provision or benefit associated with it due to the company’s valuation allowance, except with respect to refundable tax credits and withholding taxes not creditable against future taxable income.
Any profit or loss recorded for the company’s U.S. operations will have no provision or benefit associated with it due to the company’s valuation allowance, except with respect to refundable tax credits and withholding taxes not creditable against future taxable income.
Revenue recognition Many of the company’s sales agreements contain standard business terms and conditions; however, some agreements contain multiple performance obligations or non-standard terms and conditions. As discussed in Note 1, “Summary of significant accounting policies,” of the Notes to Consolidated Financial Statements, the company enters into arrangements that may 27 include any combination of hardware, software or services.
Revenue recognition Many of the company’s sales agreements contain standard business terms and conditions; however, some agreements contain multiple performance obligations or non-standard terms and conditions. As discussed in Note 1, “Summary of significant accounting policies,” of the Notes to Consolidated Financial Statements, the company enters into arrangements that may include any combination of hardware, software or services.
This limitation will be applied to any net operating losses and then to any other Tax Attributes. Any unused limitation may be carried over to later years. Based on presently available information and the existence of tax planning strategies, the company does not expect to incur a U.S. cash tax liability in the near term.
This limitation will be applied to any net operating losses and then to any other Tax Attributes. Any unused limitation may be carried over to later years. Based on presently available information and the existence of tax planning strategies, the company does not expect to incur a U.S. federal cash tax liability in the near term.
The company evaluates segment performance based on gross profit exclusive of the service costs component of postretirement income or expense, restructuring charges, amortization of purchased intangibles and unusual and nonrecurring items, which are included in other gross profit. Corporate assets are principally cash and cash equivalents, prepaid postretirement assets and deferred income taxes.
The company evaluates segment performance based on gross profit exclusive of the service costs component of postretirement income or expense, restructuring charges, amortization of purchased intangibles and unusual and nonrecurring items, which are included in other gross profit. 29 Corporate assets are principally cash and cash equivalents, prepaid postretirement assets and deferred income taxes.
As a result, significant contract interpretation is sometimes required to determine the appropriate accounting, including how many performance obligations are present in an arrangement, whether they should be treated as separate performance obligations and when to recognize revenue and under what method for each performance obligation.
As a result, significant contract interpretation is sometimes required to determine the appropriate accounting, including how many performance obligations are present in an arrangement, whether 32 they should be treated as separate performance obligations and when to recognize revenue and under what method for each performance obligation.
The company regularly monitors ownership changes (as calculated for purposes of Section 382). The company has determined that, for purposes of the rules of Section 382 described above, an ownership change occurred in February 2011. Any future transaction or transactions and the timing of such transaction or transactions could trigger additional ownership changes under Section 382.
The company regularly monitors ownership changes (as calculated for purposes of Section 382). The company has determined that, for purposes of the rules of Section 382 described above, an ownership change occurred in 2011. Any future transaction or transactions and the timing of such transaction or transactions could trigger additional ownership changes under Section 382.
The company evaluates the realizability of its deferred tax assets by assessing its valuation allowance and by adjusting such amount, if necessary. The realization of the company’s deferred tax assets is dependent on the ability to generate sustained taxable income in various jurisdictions.
The company evaluates the realizability of its deferred tax assets by assessing its valuation allowance and by adjusting such amount, if necessary. The realization of the company’s deferred tax assets is primarily dependent on the ability to generate sustained taxable income in various jurisdictions.
This qualitative assessment considers all relevant factors specific to the reporting units, including macroeconomic conditions, industry and market considerations, overall financial performance, changes in share price and relevant entity-specific events. 29 If, after completing the qualitative assessment, the company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the company proceeds to perform a subsequent quantitative goodwill impairment test.
This qualitative assessment considers all relevant factors specific to the reporting units, including macroeconomic conditions, industry and market considerations, overall financial performance, changes in share price and relevant entity-specific events. 34 If, after completing the qualitative assessment, the company determines it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then the company proceeds to perform a subsequent quantitative goodwill impairment test.
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. See Note 8, “Income taxes,” of the Notes to Consolidated Financial Statements regarding the company’s intention to indefinitely reinvest earnings of foreign subsidiaries.
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. See Note 7, “Income taxes,” of the Notes to Consolidated Financial Statements regarding the company’s intention to indefinitely reinvest earnings of foreign subsidiaries.
As a result, the company’s provision or benefit for taxes may vary significantly period to period depending on the geographic distribution of income.
As a result, the company’s provision or benefit for taxes may vary significantly from period to period depending on the geographic distribution of income.
As a result, the company’s provision or benefit for taxes may vary significantly period to period depending on the geographic distribution of income. The realization of the company’s net deferred tax assets as of December 31, 2022 is primarily dependent on the ability to generate sustained taxable income in various jurisdictions.
As a result, the company’s provision or benefit for taxes may vary significantly period to period depending on the geographic distribution of income. The realization of the company’s net deferred tax assets as of December 31, 2023, is primarily dependent on the ability to generate sustained taxable income in various jurisdictions.
The company’s reportable segments are as follows: • Digital Workplace Solutions (DWS), which provides modern and traditional workplace solutions; • Cloud, Applications & Infrastructure Solutions (CA&I), which provides digital platform, applications, and infrastructure solutions; and • Enterprise Computing Solutions (ECS), which provides solutions that harness secure, continuous high-intensity computing and enable digital services through software-defined operating environments.
Segment results The company’s reportable segments are as follows: • Digital Workplace Solutions (DWS), which provides modern and traditional workplace solutions; • Cloud, Applications & Infrastructure Solutions (CA&I), which provides digital platform, applications and infrastructure solutions; and • Enterprise Computing Solutions (ECS), which provides solutions that harness secure, continuous high-intensity computing and enable digital services through software-defined operating environments.
A substantial portion of the company’s pension plan assets relates to its qualified defined benefit plans in the United States. 28 Funding requirements for its U.S. qualified pension plans are calculated by the plan’s actuaries based on certain assumptions as permitted under current regulations.
A substantial portion of the company’s pension plan assets relates to its qualified defined benefit plans in the United States. 33 Funding requirements for its U.S. qualified pension plans are calculated by the plan’s actuaries based on certain assumptions as permitted under current regulations.
If amortization is required, the minimum amortization is that excess above the 10 percent divided by the average remaining life expectancy of the plan participants. For the company’s U.S. qualified defined benefit pension plans and the company’s non-U.S. pension plans, that period is approximately 14 and 19 years, respectively.
If amortization is required, the minimum amortization is that excess above the 10 percent divided by the average remaining life expectancy of the plan participants. For the company’s U.S. qualified defined benefit pension plans and the company’s non-U.S. pension plans, that period is approximately 14 and 21 years, respectively.
The company maintains a full valuation allowance against the realization of all U.S. deferred tax assets as well as certain foreign deferred tax assets in excess of deferred tax liabilities. See Note 8, “Income taxes,” of the Notes to Consolidated Financial Statements.
The company maintains a full valuation allowance against the realization of all U.S. deferred tax assets as well as certain foreign deferred tax assets in excess of deferred tax liabilities. See Note 7, “Income taxes,” of the Notes to Consolidated Financial Statements.
The Amended and Restated ABL Credit Facility is subject to a springing maturity, under which the Amended and Restated ABL Credit Facility will immediately mature 91 days prior to any date on which contributions to pension funds in the United States in an amount in excess of $100.0 million are required to be paid unless the company is able to meet certain conditions, including that the company has the liquidity (as defined in the Amended and Restated 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.
Any borrowings under the facility will be subject to variable interest rates. 31 The Amended and Restated ABL Credit Facility is subject to a springing maturity, under which the Amended and Restated ABL Credit Facility will immediately mature 91 days prior to any date on which contributions to pension funds in the United States in an amount in excess of $100.0 million are required to be paid unless the company is able to meet certain conditions, including that the company has the liquidity (as defined in the Amended and Restated 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.
New accounting pronouncements See Note 3, “Recent accounting pronouncements and accounting changes,” of the Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements, including the expected dates of adoption and estimated effects on the company’s consolidated financial statements.
New accounting pronouncements See Note 2, “Recent accounting pronouncements and accounting changes,” of the Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements, including the expected dates of adoption and estimated effects on the company’s consolidated financial statements.
The expense or income related to corporate assets and centrally incurred costs are allocated to the business segments. See Note 21, “Segment information,” of the Notes to Consolidated Financial Statements.
The expense or income related to corporate assets and centrally incurred costs are allocated to the business segments. See Note 20, “Segment information,” of the Notes to Consolidated Financial Statements.
See Note 6, “Leases and commitments,” of the Notes to Consolidated Financial Statements for more information pertaining to future minimum lease payments relating to the company’s operating and finance lease obligations.
See Note 5, “Leases and commitments,” of the Notes to Consolidated Financial Statements for more information pertaining to future minimum lease payments relating to the company’s operating and finance lease obligations.
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, subject to relevant cure periods, as applicable. At December 31, 2022, the company has met all covenants and conditions under its various lending and funding agreements.
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, subject to relevant cure periods, as applicable. At December 31, 2023, the company had met all covenants and conditions under its various lending and funding agreements.
The company has a secured revolving credit facility (the 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 $40.0 million), with an accordion feature provision allowing for the aggregate amount available under the credit facility to be increased up to $175.0 million upon the satisfaction of certain conditions specified in the Amended and Restated ABL Credit Facility.
The company has a secured revolving credit facility (the Amended and Restated ABL Credit Facility), which matures on October 29, 2025, and provides for revolving loans and letters of credit up to an aggregate amount of $145.0 million (with a limit on letters of credit of $40.0 million), with an accordion feature provision allowing for the aggregate amount available under the credit facility to be increased up to $175.0 million upon the satisfaction of certain specified conditions.
The net charges related to work-force reductions were $7.5 million, principally related to severance costs, and were comprised of: (a) a charge of $7.1 million and (b) a charge of $0.4 million for changes in estimates.
The net charges related to workforce reductions were $7.5 million, principally related to severance costs, and were comprised of: (a) a charge of $7.1 million and (b) a charge of $0.4 million for changes in estimates.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (For a discussion of 2021 compared with 2020, refer to Part II, Item 7 contained in the company’s Form 10-K for the fiscal year ended December 31, 2021.) Overview In 2022, the company recorded a net loss attributable to Unisys Corporation of $106.0 million, or $1.57 per diluted share, compared with a loss of $448.5 million, or $6.75 per diluted share, in 2021.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (For a discussion of 2022 compared with 2021, refer to Part II, Item 7 contained in the company’s Form 10-K for the fiscal year ended December 31, 2022.) Overview In 2023, the company recorded a net loss attributable to Unisys Corporation of $430.7 million, or $6.31 per diluted share, compared with a loss of $106.0 million, or $1.57 per diluted share, in 2022.
The company expects to continue to meet these covenants and conditions through at least the next twelve months. At December 31, 2022, the company had outstanding standby letters of credit and surety bonds totaling approximately $218 million related to performance and payment guarantees.
The company expects to continue to meet these covenants and conditions through at least the next twelve months. At December 31, 2023, the company had outstanding standby letters of credit and surety bonds totaling approximately $232 million related to performance and payment guarantees.
Risk Factors.” The company records a tax provision or benefit for those international subsidiaries that do not have a full valuation allowance against their deferred tax assets.
The company records a tax provision or benefit for those international subsidiaries that do not have a full valuation allowance against their deferred tax assets.
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. At December 31, 2022 and 2021, the company had deferred tax assets in excess of deferred tax liabilities of $1,218.9 million and $1,332.3 million, respectively.
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. At December 31, 2023 and 2022, the company had deferred tax assets in excess of deferred tax liabilities of $1,263.2 million and $1,218.9 million, respectively.
The cost reduction charges (credits) were recorded in the following statement of income (loss) classifications: Year ended December 31, 2022 2021 Cost of revenue Services $ 19.1 $ (2.5) Technology 7.6 7.6 Selling, general and administrative 24.7 11.1 Research and development 0.6 3.0 Other (expenses), net 2.9 4.0 Total $ 54.9 $ 23.2 Gross profit and gross profit margin were $529.6 million and 26.7% in 2022, respectively, and $572.0 million and 27.8% in 2021, respectively.
The cost reduction charges (credits) were recorded in the following statement of income (loss) classifications: Year ended December 31, 2023 2022 Cost of revenue Services $ 4.9 $ 19.1 Technology 0.7 7.6 Selling, general and administrative 6.9 24.7 Research and development 0.5 0.6 Other (expenses), net (3.7) 2.9 Total $ 9.3 $ 54.9 Gross profit and gross profit margin were $551.3 million and 27.4% in 2023, respectively, and $529.6 million and 26.7% in 2022, respectively.
A change of 25 basis points in the expected long-term rate of return for the company’s U.S. and non-U.S. pension plans causes a change of approximately $7 million and $5 million, respectively, in 2023 pension expense.
A change of 25 basis points in the expected long-term rate of return for the company’s U.S. and non-U.S. pension plans causes a change of approximately $5 million and $4 million, respectively, in 2024 pension expense.
The provision for income taxes in 2022 was $42.3 million compared with a benefit of $11.9 million in 2021. The change in the tax provision (benefit) is described below. The company evaluates quarterly the realizability of its deferred tax assets by assessing its valuation allowance and by adjusting such amount, if necessary.
The provision for income taxes in 2023 was $79.3 million compared with a provision of $42.3 million in 2022. The change in the tax provision is described below. The company evaluates quarterly the realizability of its deferred tax assets by assessing its valuation allowance and by adjusting such amount, if necessary.
At December 31, 2022, total debt was $513.1 million compared with $529.4 million at December 31, 2021. See Note 16, “Debt,” of the Notes to Consolidated Financial Statements for more detailed discussion of the company’s debt financing agreements including maturities by fiscal year. The company has commitments under operating leases for certain facilities and equipment used in its operations.
At December 31, 2023, total debt was $504.2 million compared with $513.1 million at December 31, 2022. See Note 15, “Debt,” of the Notes to Consolidated Financial Statements for more detailed discussion of the company’s debt financing agreements including maturities by fiscal year. The company has commitments under operating leases for certain facilities and equipment used in its operations.
At December 31, 2022, for the company’s U.S. qualified defined benefit pension plans, the calculated value of plan assets was $2.89 billion and the fair value was $2.44 billion. Gains and losses are defined as changes in the amount of either the projected benefit obligation or plan assets resulting from experience different from that assumed and from changes in assumptions.
At December 31, 2023, for the company’s U.S. qualified defined benefit pension plans, the calculated value of plan assets was $2.08 billion and the fair value was $1.82 billion. Gains and losses are defined as changes in the amount of either the projected benefit obligation or plan assets resulting from experience different from that assumed and from changes in assumptions.
For the reasons cited below, at December 31, 2022 and 2021, management determined that it is more likely than not that $108.4 million and $106.1 million, respectively, of such assets will be realized, resulting in a valuation allowance of $1,110.5 million and $1,226.2 million, respectively.
For the reasons cited below, at December 31, 2023 and 2022, management determined that it is more likely than not that $113.1 million and $108.4 million, respectively, of such assets will be realized, resulting in a valuation allowance of $1,150.1 million and $1,110.5 million, respectively.
As a result of the February 2011 ownership change, utilization for certain of the company’s Tax Attributes, U.S. net operating losses and tax credits, is subject to an overall annual limitation of $70.6 million. The cumulative limitation as of December 31, 2022 is approximately $511.0 million.
As a result of the ownership change in 2011, utilization for certain of the company’s Tax Attributes, U.S. net operating losses and tax credits, is subject to an overall annual limitation of $70.6 million. The cumulative limitation as of December 31, 2023 is approximately $488 million.
For 2023, the company has assumed that the expected long-term rate of return on U.S. plan assets will be 7.10%, and on the company’s non-U.S. plan assets will be 4.44%.
For 2024, the company has assumed that the expected long-term rate of return on U.S. plan assets will be 7.00%, and on the company’s non-U.S. plan assets will be 4.82%.
At December 31, 2022, the estimated unrecognized loss for the company’s U.S. qualified defined benefit pension plans and the company’s non-U.S. pension plans was $1.80 billion and $800 million, respectively.
At December 31, 2023, the estimated unrecognized loss for the company’s U.S. qualified defined benefit pension plans and the company’s non-U.S. pension plans was $1.02 billion and $400 million, respectively.
A change of 25 basis points in the U.S. and non-U.S. discount rates causes a change in 2023 pension expense of approximately $400 thousand and $400 thousand, respectively, and a change of approximately $51 million and $46 million, respectively, in the benefit obligation. These estimates are intended to be illustrative based on a single 25 basis point change.
A change of 25 basis points in the U.S. and non-U.S. discount rates causes a change in 2024 pension expense of approximately $500 thousand and $800 thousand, respectively, and a change of approximately $42 million and $48 million, respectively, in the benefit obligation. These estimates are intended to be illustrative based on a single 25 basis point change.
In addition, the company recorded charges of $22.8 million comprised of $12.6 million for asset impairments, $6.2 million for other expenses related to cost-reduction efforts and $4.0 million for net foreign currency losses related to exiting foreign countries.
In addition, the company recorded charges of $47.4 million comprised of $35.8 million for asset impairments, $8.7 million for other expenses related to cost-reduction efforts and $2.9 million for net foreign currency losses related to exiting foreign countries.
As of December 31, 2022, the company’s operating lease liabilities were $55.7 million. The company also has a number of finance leases for equipment, with lease liabilities totaling $1.1 million as of December 31, 2022.
As of December 31, 2023, the company’s operating lease liabilities were $44.7 million. The company also has a number of finance leases for equipment, with lease liabilities totaling $0.3 million as of December 31, 2023.
Goodwill by reporting unit at December 31, 2022, was as follows: Reporting unit Carrying Amount DWS $ 140.5 CA&I 38.0 ECS 98.3 Other 10.3 Total $ 287.1 30
Goodwill by reporting unit at December 31, 2023, was as follows: Reporting unit Carrying Amount DWS $ 140.8 CA&I 38.0 ECS 98.3 Other 10.3 Total $ 287.4 35
Any material deterioration in the value of the company’s U.S. qualified defined benefit pension plan assets, as well as changes in pension legislation, discount rate changes, asset return changes, or changes in economic or demographic trends, could require the company to make cash contributions to its U.S. qualified defined benefit pension plans.
Any material deterioration in the value of the company’s U.S. qualified defined benefit pension plan assets, as well as changes in pension legislation, volatility in the capital markets, discount rate changes, asset return changes, or changes in economic or demographic trends, could require the company to make cash contributions to its U.S. qualified defined benefit pension plans in different amounts and on a different schedule than previously contemplated.
Judgment is required to estimate forecasted future taxable income, which may be impacted by future business developments, actual results, strategic operational and tax initiatives, legislative, and other economic factors and developments. See “Item 1A.
Judgment is required to estimate forecasted future taxable income, which may be impacted by future business developments, actual results, strategic operational and tax initiatives, legislative, and other economic factors and developments. See “Risk Factors” (Part I, Item 1A of this Form 10-K).
Cash usage during 2021, included $239.3 million for acquisitions. Net purchases of investments were $44.3 million in 2022 compared with net purchases of $19.9 million in 2021. Proceeds from investments and purchases of investments represent derivative financial instruments used to manage the company’s currency exposure to market risks from changes in foreign currency exchange rates.
Net proceeds from investments were $11.2 million in 2023 compared with net purchases of $44.3 million in 2022. Proceeds from investments and purchases of investments represent derivative financial instruments used to manage the company’s currency exposure to market risks from changes in foreign currency exchange rates.
Additionally, as described in Note 5, “Cost-reduction actions,” of the Notes to Consolidated Financial Statements, the company expects to make payments of approximately $11.7 million in 2023 related to the company’s work-force reduction actions.
Additionally, as described in Note 4, “Cost-reduction actions,” of the Notes to Consolidated Financial Statements, the company expects to make payments of approximately $9.4 million in 2024 related to the company’s workforce reduction actions.
For the year ended December 31, 2022, the company recognized consolidated pension expense of $47.1 million compared with $553.9 million for the year ended December 31, 2021 (which includes a $499.4 million settlement losses). For 2023, the company expects to recognize pension expense of approximately $41.5 million. See Note 18, “Employee plans,” of the Notes to Consolidated Financial Statements.
For the year ended December 31, 2023, the company recognized consolidated pension expense of $391.3 million (which includes $348.9 million of settlement losses) compared with $47.1 million for the year ended December 31, 2022. For 2024, the company expects to recognize pension expense of approximately $57.7 million. See Note 17, “Employee plans,” of the Notes to Consolidated Financial Statements.
Foreign currency had a 6.4-percentage-point negative impact on international revenue in 2022 compared with 2021. Revenue from U.S. operations was $854.9 million for 2022 compared with $856.2 million for 2021, a decrease of 0.2%. During 2022, the company recognized cost-reduction charges and other costs of $54.9 million.
Foreign currency had a negligible impact on international revenue in 2023 compared with 2022. Revenue from U.S. operations was $889.0 million for 2023 compared with $854.9 million for 2022, an increase of 4.0%. During 2023, the company recognized cost-reduction charges and other costs of $9.3 million.
Based on the annual impairment analysis performed during the fourth quarter of 2022, the reporting unit that was closest to impairment was the CA&I reporting unit with fair value in excess of book value, including goodwill, of 6%. All other reporting units had a fair value substantially in excess of book value.
Based on the annual impairment analysis performed during the fourth quarter of 2023, all reporting units had a fair value in excess of book value. The reporting units that were closest to impairment were the CA&I and DWS reporting units with fair value in excess of book value, including goodwill, of 10% and 16%, respectively.
We estimated the fair value of the reporting units using a combination of discounted cash flows and market-based valuation methodologies as noted above. These methodologies involve significant assumptions that are subject to variability.
The quantitative assessment indicated that each reporting unit’s fair value exceeded its carrying value, as such no impairment charge was recognized as of December 31, 2023. We estimated the fair value of the reporting units using a combination of discounted cash flows and market-based valuation methodologies as noted above. These methodologies involve significant assumptions that are subject to variability.
At December 31, 2022, the company determined this rate to be 6.04% for its U.S. defined benefit pension plans, an increase of 286 basis points from the rate used at December 31, 2021, and 4.80% for the company’s non-U.S. defined benefit pension plans, an increase of 307 basis points from the rate used at December 31, 2021.
At December 31, 2023, the company determined this rate to be 5.70% for its U.S. defined benefit pension plans, a decrease of 34 basis points from the rate used at December 31, 2022, and 4.24% for the company’s non-U.S. defined benefit pension plans, a decrease of 56 basis points from the rate used at December 31, 2022.
Any increase or decrease in the valuation allowance would result in additional or lower income tax expense in that period and could have a significant impact on that period’s earnings.
Any increase or decrease in the valuation allowance would result in additional or lower income tax expense in that period and could have a significant impact on that period’s earnings. During 2023, the company determined that a portion of its non-U.S. net deferred tax assets required an additional valuation allowance.
The net change in the valuation allowances impacting the effective tax rate in 2022 was approximately $9.8 million of a tax benefit, primarily in the United Kingdom and other foreign jurisdictions. The benefit from income tax benefits in 2021 included $51.5 million related to the pension plan settlement losses in the Netherlands and Switzerland.
The net change in the valuation allowances impacting the effective tax rate in 2022 was approximately $9.8 million of a tax benefit, primarily in the United Kingdom and other foreign jurisdictions.
The company believes that it will have adequate sources of liquidity to meet its expected cash requirements through at least the next twelve months.
The company believes that it will have adequate sources of liquidity to meet its expected cash requirements through at least the next twelve months. Cash and cash equivalents at December 31, 2023 were $387.7 million compared with $391.8 million at December 31, 2022.
In addition, capital additions of properties were $31.0 million in 2022 compared with $27.3 million in 2021, capital additions of outsourcing assets were $8.6 million in 2022 compared with $18.5 million in 2021 and the investment in marketable software was $46.3 million in 2022 compared with $54.4 million in 2021.
In addition, capital additions of properties were $21.3 million in 2023 compared with $31.0 million in 2022, capital additions of outsourcing assets were $11.4 million in 2023 compared with $8.6 million in 2022 and the investment in marketable software was $46.0 million in 2023 compared with $46.3 million in 2022. 30 Cash used for financing activities during 2023 was $17.3 million compared with cash used for financing activities of $21.6 million during 2022.
The company does not have any off-balance sheet arrangements that are material or reasonably likely to become material to its financial condition or results of operations Critical accounting policies and estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes.
Critical accounting policies and estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes.
It is reasonably possible that the judgments and estimates described above could change in future periods. During the fourth quarter of 2022, the company performed a quantitative goodwill impairment test for each reporting unit. The quantitative assessment indicated that each reporting unit’s fair value exceeded its carrying value, as such no impairment charge was recognized as of December 31, 2022.
It is reasonably possible that the judgments and estimates described above could change in future periods, which could have a significant impact on the fair value of the related reporting units. During the fourth quarter of 2023, the company performed a quantitative goodwill impairment test for each reporting unit.
Other (expense), net in 2021 includes $499.4 million of pension settlement losses. See Note 7, “Other (expense), net,” of the Notes to Consolidated Financial Statements for details of other (expense), net. Pension expense in 2022 was $47.1 million compared with $553.9 million in 2021.
See Note 6, “Other (expense), net,” of the Notes to Consolidated Financial Statements for details of other (expense), net. Pension expense in 2023 was $391.3 million compared with $47.1 million in 2022. Pension expense in 2023 included $348.9 million of settlement losses primarily related to the company’s U.S. defined benefits plans.
During 2021, the company recognized cost-reduction charges and other costs of $23.2 million. The net charges related to work-force reductions were $0.4 million, principally related to severance costs, and were comprised of: (a) a charge of $12.3 million and (b) a credit of $11.9 million for changes in estimates.
The net charges related to workforce reductions were $8.3 million, principally related to severance costs, and were comprised of: (a) a charge of $15.2 million and (b) a credit of $6.9 million for changes in estimates.
At the end of each year, the company estimates its future cash contributions to its U.S. qualified defined benefit pension plans based on year-end pension data and assumptions.
Due to the company’s significant postretirement plans accumulated other comprehensive losses, future group annuity contract purchases could result in material non-cash settlement losses. At the end of each year, the company estimates its future cash contributions to its U.S. qualified defined benefit pension plans based on year-end pension data and assumptions.
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.
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. The company does not have any off-balance sheet arrangements that are material or reasonably likely to become material to its financial condition or results of operations.
Cash and cash equivalents at December 31, 2022 were $391.8 million compared with $552.9 million at December 31, 2021. 25 As of December 31, 2022, $274.0 million of cash and cash equivalents were held by the company’s foreign subsidiaries and branches operating outside of the U.S.
As of December 31, 2023, $232.2 million of cash and cash equivalents were held by the company’s foreign subsidiaries and branches operating outside of the U.S.
During 2022, cash provided by operating activities was $12.7 million compared with cash provided by operations of $132.5 million during 2021. The decline in operating cash in 2022 was primarily driven by the change in accounts receivable. Cash used for investing activities during 2022 was $131.4 million compared with cash used for by investing activities of $360.3 million during 2021.
During 2023, cash provided by operating activities was $74.2 million compared with cash provided by operations of $12.7 million during 2022. The increase in operating cash in 2023 was primarily due to improvements in working capital. Cash used for investing activities during 2023 was $69.6 million compared with cash used for investing activities of $131.4 million during 2022.
Availability under the credit facility is subject to a borrowing base calculated by reference to the 26 company’s receivables. At December 31, 2022, the company had no borrowings and $6.3 million of letters of credit outstanding, and availability under the facility was $67.9 million net of letters of credit issued.
At December 31, 2023, the company had no borrowings and $7.1 million of letters of credit outstanding, and availability under the facility was $88.6 million net of letters of credit issued.
In addition, the company recorded net charges of $47.4 million comprised of $35.8 million for asset impairments, $8.7 million for other expenses related to cost-reduction efforts and $2.9 million for net foreign currency losses related to exiting foreign countries. See Note 5, “Cost-reduction actions,” of the Notes to Consolidated Financial Statements for details of the cost reduction activities.
See Note 4, “Cost-reduction actions,” of the Notes to Consolidated Financial Statements for details of the cost reduction activities. During 2022, the company recognized cost-reduction charges and other costs of $54.9 million.
As a result of its projections of future taxable income during 2022, the company has determined that a portion of its non-U.S. net deferred tax assets no longer requires a valuation allowance.
The net change in the valuation allowance impacting the effective tax rate in 2023 was approximately $2.1 million, primarily in Latin America. During 2022, the company determined that a portion of its non-U.S. net deferred tax assets no longer required a valuation allowance.
Foreign currency fluctuations had a 2.4 percentage-point negative impact on ECS revenue in 2022 compared with 2021. Gross profit percent was 64.5% in 2022 and 63.4% in 2021.
ECS revenue was $648.0 million in 2023 and $669.7 million in 2022. Foreign currency fluctuations had a negligible impact on ECS revenue in 2023 compared with 2022. Gross profit percent was 61.2% in 2023 and 64.5% in 2022. The decrease in revenue and gross profit percent was driven by the timing of software license renewals.
In the first quarter of 2023, the company expects to sign an agreement with an insurance company to purchase, with plan assets, a group annuity contract to transfer approximately $250 million of projected benefit obligations related to approximately 8,600 retires of the company’s U.S. defined benefit pension plans.
In March 2023, the company purchased a group annuity contract, with plan assets, for approximately $263 million to transfer projected benefit obligations related to approximately 8,650 retirees of one of the company’s U.S. defined benefit pension plans. This action resulted in a pre-tax settlement loss of $181.0 million for the year ended December 31, 2023.
The change was primarily due to increased investments in marketing and higher cost-reduction charges and other expenses. Research and development (R&D) expenses in 2022 were $24.2 million compared with $28.5 million in 2021. 23 In 2022, the company reported an operating profit of $52.2 million compared with an operating profit of $154.0 million in 2021.
Selling, general and administrative expenses were $450.3 million in 2023 (22.3% of revenue) and $453.2 million in 2022 (22.9% of revenue). 28 Research and development (R&D) expenses in 2023 were $24.1 million compared with $24.2 million in 2022. In 2023, the company reported an operating profit of $76.9 million compared with an operating profit of $52.2 million in 2022.
CA&I revenue was $520.3 million in 2022 and $485.6 million in 2021. The increase in revenue in 2022 compared with 2021 was driven by expansion of the digital platforms and applications solutions and acquired application development solutions. Foreign currency fluctuations had a 2.2-percentage-point negative impact on CA&I revenue in 2022 compared with 2021.
The increase in revenue in 2023 was primarily driven by new business with existing clients. Foreign currency fluctuations had a negligible impact on DWS revenue in 2023 compared with 2022. Gross profit percent was 14.0% in both 2023 and 2022. CA&I revenue was $531.0 million in 2023 and $520.3 million in 2022.
In 2022, the company recorded cost-reduction charges and other costs of $54.9 million compared with $23.2 million in 2021. Included in the 2021 results were defined benefit pension plan settlement losses of $499.4 million compared with zero in 2022.
As a result of these actions, the company recorded pre-tax settlement losses of $348.2 million for the year ended December 31, 2023. Additionally in 2023, the company recorded cost-reduction charges and other costs of $9.3 million compared with $54.9 million in 2022.
Pension expense in 2021 included $499.4 million of settlement losses related to defined benefits plans in the Netherlands, the United States and Switzerland. See Note 18, “Employee plans,” of the Notes to Consolidated Financial Statements for details of the settlement losses.
See Note 17, “Employee plans,” of the Notes to Consolidated Financial Statements for details of the settlement losses. The loss before income taxes in 2023 was $347.8 million compared with a loss of $62.6 million in 2022. Included in the loss in 2023 were $348.9 million of settlement losses related to the company’s defined benefit pension plans.
Net loss from continuing operations attributable to Unisys Corporation for 2022 was $106.0 million, or $1.57 per diluted share, compared with a net loss of $448.5 million, or $6.75 per diluted share in 2021. Included in the loss in 2021 was $447.9 million of after tax settlement losses related to the company’s defined benefit pension plans.
Pillar Two is not expected to have a material effect on the company’s global effective tax rate and its consolidated financial statements. Net loss attributable to Unisys Corporation for 2023 was $430.7 million, or $6.31 per diluted share, compared with a net loss of $106.0 million, or $1.57 per diluted share in 2022.
Foreign currency fluctuations had a 3.7-percentage-point negative impact on revenue in the current year compared with the year-ago period. Revenue from international operations for 2022 was $1.13 billion compared with $1.20 billion for 2021, a decrease of 6.1% principally due to decreases in Europe and Asia/Pacific.
Results of operations Company results Revenue for 2023 was $2.02 billion compared with $1.98 billion for 2022, an increase of 1.8%. Foreign currency fluctuations had a negligible impact on revenue in 2023 compared with 2022. Revenue from international operations for both 2023 and 2022 was $1.13 billion.
The decrease in 2022 was primarily driven by increased investments in marketing and higher cost-reduction charges and other non-recurring expenses. Interest expense was $32.4 million in 2022 compared with $35.4 million in 2021. Other (expense), net was expense of $82.4 million in 2022 compared with expense of $580.3 million in 2021.
The increase in 2023 was primarily driven by higher gross profit as discussed above. Interest expense was $30.8 million in 2023 compared with $32.4 million in 2022. Other (expense), net was expense of $393.9 million in 2023 compared with expense of $82.4 million in 2022. Other (expense), net in 2023 includes $348.9 million of pension settlement losses.
The accounting policies of each 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 ECS segment records intersegment revenue and manufacturing profit on hardware and software shipments to customers under contracts of other segments.
The accounting policies of each segment are the same as those followed by the company as a whole.
Gross profit percent was 9.1% in 2022 and 9.7% in 2021. The decrease in gross profit percent in 2022 compared with 2021 was primarily due to additional expense associated with certain contract exits and higher labor costs. ECS revenue was $669.7 million in 2022 and $685.7 million in 2021.
Foreign currency fluctuations had a negligible impact on CA&I revenue in 2023 compared with 2022. Gross profit percent was 15.4% in 2023 and 9.1% in 2022. The increase in revenue and gross profit percent in 2023 compared with 2022 was primarily due to certain prior year contract exits and new business with existing clients.
Removed
The provision for income tax comparison for 2022 compared with 2021 was impacted by a $51.5 million tax benefit recorded in 2021 related to the pension plan settlement losses compared with zero in 2022. Results of operations Company results Revenue for 2022 was $1.98 billion compared with $2.05 billion for 2021, a decrease of 3.6%.
Added
Included in the 2023 results were defined benefit pension plan settlement losses of $348.9 million compared with zero in 2022. During 2023, the company purchased two group annuity contracts, with pension plan assets, for approximately $516 million to transfer projected benefit obligations related to approximately 12,550 retirees of the company’s U.S. defined benefit pension plans.
Removed
The decrease in gross profit and gross profit margin in 2022 was primarily due to higher cost-reduction charges in the current year compared with the year-ago period and the impact from non-strategic contracts exited in 2021. Selling, general and administrative expenses were $453.2 million in 2022 (22.9% of revenue) and $389.5 million in 2021 (19.0% of revenue).
Added
In addition, the company recorded net charges of $1.0 million comprised of charges of $4.7 million primarily related to professional fees and other expenses related to cost-reduction efforts and a credit of $3.7 million for net foreign currency gains related to exiting foreign countries.
Removed
The loss from continuing operations before income taxes in 2022 was $62.6 million compared with a loss of $461.7 million in 2021, which included $499.4 million of settlement losses related to the company’s defined benefit pension plans. Additionally, 2022 was impacted by investments in marketing and higher cost-reduction charges and other non-recurring expenses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeForeign currency exchange rate risk The company is also exposed to foreign currency exchange rate risks. The company is a net receiver of currencies other than the U.S. dollar and, as such, can benefit from a weaker dollar, and can be adversely affected by a stronger dollar relative to currencies worldwide.
Biggest changeForeign currency exchange rate risk The company is also exposed to foreign currency exchange rate risks. The company is a net receiver of currencies other than the U.S. dollar and, as such, can benefit from a weaker dollar, and can be adversely affected by a stronger dollar relative to currencies worldwide, primarily the euro and British pound sterling.
In addition, the company uses derivative financial instruments, primarily foreign exchange forward contracts, to reduce its exposure to market risks from changes in foreign currency exchange rates on intercompany balances. See Note 13, “Financial instruments and concentration of credit risks,” of the Notes to Consolidated Financial Statements for additional information on the company’s derivative financial instruments.
In addition, the company uses derivative financial instruments, primarily foreign exchange forward contracts, to reduce its exposure to market risks from changes in foreign currency exchange rates on intercompany balances. See Note 12, “Financial instruments and concentration of credit risks,” of the Notes to Consolidated Financial Statements for additional information on the company’s derivative financial instruments.
Based on changes in the timing and amount of interest rate and foreign currency exchange rate movements and the company’s actual exposures and hedges, actual gains and losses in the future may differ from the above analysis. 31
Based on changes in the timing and amount of interest rate and foreign currency exchange rate movements and the company’s actual exposures and hedges, actual gains and losses in the future may differ from the above analysis. 36
The company has performed a sensitivity analysis assuming a hypothetical 10% adverse movement in foreign currency exchange rates applied to these derivative financial instruments described above. As of December 31, 2022 and 2021, the analysis indicated that such market movements would have reduced the estimated fair value of these derivative financial instruments by approximately $54 million and $55 million, respectively.
The company has performed a sensitivity analysis assuming a hypothetical 10% adverse movement in foreign currency exchange rates applied to these derivative financial instruments described above. As of December 31, 2023 and 2022, the analysis indicated that such market movements would have reduced the estimated fair value of these derivative financial instruments by approximately $49 million and $54 million, respectively.
Although at December 31, 2022 the company had no outstanding borrowings under the Amended and Restated ABL Credit Facility, future borrowings, if any, will be subject to variable interest rates. As of December 31, 2022, the company had outstanding $479.2 million ($485.0 million face value) of 6.875% senior secured notes due 2027 (the 2027 Notes).
Although at December 31, 2023 the company had no outstanding borrowings under the Amended and Restated ABL Credit Facility, future borrowings, if any, will be subject to variable interest rates. As of December 31, 2023, the company had outstanding $480.4 million ($485.0 million face value) of 6.875% senior secured notes due 2027 (the 2027 Notes).
As of December 31, 2022, substantially all of the company’s total long-term debt is at a fixed rate and therefore do not expose the company to risk related to rising interest rates. See Note 16, “Debt,” of the Notes to Consolidated Financial Statements.
As of December 31, 2023, substantially all of the company’s total long-term debt is at a fixed rate and therefore does not expose the company to risk related to rising interest rates. See Note 15, “Debt,” of the Notes to Consolidated Financial Statements.
As the 2027 Notes have a fixed interest rate, the company does not have financial and economic exposure related to rising interest rates with respect to the 2027 Notes. However, the fair value of fixed rate instruments fluctuates when interest rates change. As of December 31, 2022, the fair value of the 2027 Notes was $373.0 million.
As the 2027 Notes have a fixed interest rate, the company does not have financial and economic exposure related to rising interest rates with respect to the 2027 Notes. However, the fair value of fixed rate instruments fluctuates when interest rates change. As of December 31, 2023, the fair value of the 2027 Notes was $437.5 million.

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