What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-03-01 compared with 2022-02-22 · 282 added, 259 removed, 1345 unchanged (29% of the section changed)

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Report of Management 33

Reports of Independent Registered Public Accounting Firms 32

Report of Independent Registered Public Accounting Firm 35

Consolidated Statements of Income (Loss) 37

Consolidated Statements of Comprehensive Income (Loss) 36

Consolidated Statements of Comprehensive Income 38

Consolidated Balance Sheets 39

Consolidated Statements of Cash Flows 40

Consolidated Statements of Deficit 39

Consolidated Statements of Equity (Deficit) 41

Notes to Consolidated Financial Statements 42

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Management assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, we concluded that the company maintained effective internal control over financial reporting as of December 31, 2021, based on the specified criteria.

PricewaterhouseCoopers LLP, an independent registered public accounting firm, has audited the company’s internal control over financial reporting as of December 31, 2021, as stated in its report that appears herein.

Altabef /s/ Michael M.

Altabef Michael M.

Based on this assessment, we identified material weaknesses in the company’s internal control over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Management concluded that our internal control over financial reporting was not effective as of December 31, 2022.

The company did not design and maintain effective formal policies and procedures to ensure appropriate information is communicated from the IT function and the legal and compliance function to the accounting function and those responsible for governance on a timely basis so as to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

These material weaknesses did not result in a misstatement of the company’s financial statements, however, they could have resulted in misstatements of interim or annual consolidated financial statements and disclosures that would result in a material misstatement that would not be prevented or detected.

The effectiveness of our internal control over financial reporting as of December 31, 2022, has been audited by PricewaterhouseCoopers LLP, our independent registered public accounting firm, as stated in their report, which is included herein.

Status of Remediation Plan for Material Weaknesses

Management has implemented measures designed to ensure that the material weaknesses are remediated.

The company has taken the following remediation steps during the fourth quarter of 2022:

• The company enhanced its written policy regarding information escalation for cyber-incidents.

In addition, the company completed an assessment of staffing within the company’s incident response team.

• The company enhanced its disclosure committee (the Disclosure Committee) and the disclosure working group that supports the Disclosure Committee.

• The company is requiring all direct reports to the CEO to confirm that they have made the Disclosure Committee aware of any matters under their purview that the Disclosure Committee should be considering in advance of applicable SEC filings.

• The company provided training and policies (including any policy revisions) to non-finance executives regarding escalation of significant matters related to SEC reporting requirements.

• Procedures were drafted to address the proper handling of information so that the Security and Risk Committee and Audit and Finance Committee are properly informed.

• Management has revised its Speak Up Policy to make all associates aware that they have direct access to, and may approach, company executives and the Board of Directors, and that they have access to the company’s whistleblower hotline.

As of December 31, 2022, management has implemented all remedial actions described above in respect to the material weaknesses relating to policies and procedures within the IT function and the legal and compliance function to the accounting function.

Due to the timing of the design and implementation of these remediation efforts during the fourth quarter of 2022, there has been insufficient time for the company to demonstrate consistent execution against all newly implemented actions.

As such, management is unable to conclude on the operating effectiveness of implemented remediations at December 31, 2022.

We expect to continue to enhance these controls and assess their operating effectiveness in 2023.

Altabef /s/ Debra McCann

Altabef Debra McCann

Chair and Chief Executive Officer Executive Vice President and Chief Financial Officer

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Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of Unisys Corporation and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of income (loss), of comprehensive income (loss), of deficit and of cash flows for each of the two years in the period ended December 31, 2021, including the related notes and schedule of valuation and qualifying accounts for each of the two years in the period ended December 31, 2021 listed under I tem 15(1) (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of Unisys Corporation and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of income (loss), of comprehensive income, of equity (deficit) and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended December 31, 2022 appearing after the signatures page (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020 , and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 3 of the consolidated financial statements, the Company changed the manner in which it accounts for income taxes in 2020.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021 , and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because material weaknesses in internal control over financial reporting existed as of that date related to the design and maintenance of effective formal policies and procedures to ensure appropriate information is communicated from the IT function and the legal and compliance function to the accounting function and those responsible for governance on a timely basis.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses referred to above are described in the accompanying Management’s Report on Internal Control Over Financial Reporting.

We considered these material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the 2022 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

Basis for Opinions

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As described in Notes 1 and 18 to the consolidated financial statements, the Company’s consolidated defined benefit pension plan obligation was $4,428 million as of December 31, 2022.

Additionally, the Company recorded settlement losses associated with its pension plans of $499 million for the year ended December 31, 2021.

Management develops the actuarial assumptions used by its U.S.

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The determination of the defined benefit pension plan obligations requires the use of estimates.

Management’s significant assumption used in the determination of the defined benefit pension plan obligations, and settlement losses associated with respect to the U.S.

Management’s significant assumption used in the determination of the defined benefit pension plan obligations with respect to the U.S.

pension plans, is the discount rate.

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(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate management’s significant assumption related to the discount rates;

(iii) the audit effort involved the use of professionals with specialized skill and knowledge.

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

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Philadelphia, Pennsylvania

February 22, 2022

March 1, 2023

We have served as the Company’s auditor since 2020.

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

UNISYS CORPORATION

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of income (loss), comprehensive income (loss), cash flows, and deficit for the year ended December 31, 2019, and the related notes and financial statement schedule II (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the results of its operations and its cash flows for the year ended December 31, 2019, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

We served as the Company’s auditor from 2008 to 2020.

Philadelphia, Pennsylvania

February 28, 2020, except for Note 2 and Note 21, as to which the dates are February 26, 2021 and February 22, 2022, respectively

UNISYS CORPORATION

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

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Loss from continuing operations before income taxes ( 62.6 ) ( 461.7 ) ( 271.8 )

(Benefit) provision for income taxes ( 11.9 ) 45.4 27.7

Provision for (benefit from) income taxes 42.3 ( 11.9 ) 45.4

Consolidated net loss from continuing operations ( 104.9 ) ( 449.8 ) ( 317.2 )

Net (loss) income attributable to noncontrolling interests ( 1.3 ) 0.5 3.9

Net income (loss) attributable to noncontrolling interests 1.1 ( 1.3 ) 0.5

Net loss from continuing operations attributable to Unisys Corporation ( 106.0 ) ( 448.5 ) ( 317.7 )

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UNISYS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Year ended December 31, 2022 2021 2020

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Total ( 104.9 ) ( 449.8 ) 751.2

Other comprehensive income (loss)

Other comprehensive income

Foreign currency translation ( 117.5 ) ( 40.5 ) 49.3

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291.7 721.8 106.9

Total other comprehensive income (loss) 681.3 156.2 ( 14.5 )

Comprehensive income (loss) 231.5 907.4 ( 27.8 )

Comprehensive income (loss) attributable to noncontrolling interests 4.6 7.6 ( 6.8 )

Comprehensive income (loss) attributable to Unisys Corporation $ 226.9 $ 899.8 $ ( 21.0 )

Total other comprehensive income 174.2 681.3 156.2

Comprehensive income 69.3 231.5 907.4

Comprehensive (loss) income attributable to noncontrolling interests ( 12.8 ) 4.6 7.6

Comprehensive income attributable to Unisys Corporation $ 82.1 $ 226.9 $ 899.8

See notes to consolidated financial statements.

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CONSOLIDATED BALANCE SHEETS

(Millions, except par value per share information)

As of December 31, 2022 2021

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Total assets $ 2,065.6 $ 2,419.5

Liabilities and deficit

Total liabilities and equity (deficit)

Current liabilities:

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Commitments and contingencies (see Note 19)

Equity (deficit):

Common stock, par value $ .01 per share ( 150.0 shares authorized;

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Noncontrolling interests 36.5 49.3

Total deficit ( 64.4 ) ( 312.1 )

Total liabilities and deficit $ 2,419.5 $ 2,707.9

Total equity (deficit) 21.8 ( 64.4 )

Total liabilities and equity (deficit) $ 2,065.6 $ 2,419.5

See notes to consolidated financial statements.

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Income from discontinued operations, net of tax — — 1,068.4

Adjustments to reconcile consolidated net income (loss) to net cash provided by (used for) operating activities:

Adjustments to reconcile consolidated net (loss) income to net cash provided by (used for) operating activities:

Gain on sale of U.S.

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Cash flows from investing activities

Purchases of businesses, net of cash acquired ( 239.3 ) — —

Net proceeds from sale of U.S.

Federal business — 1,162.9 —

Proceeds from investments 3,336.1 4,148.2 3,388.5

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Investment in marketable software ( 46.3 ) ( 54.4 ) ( 72.3 )

Net proceeds from sale of properties — — ( 0.3 )

Purchases of businesses, net of cash acquired ( 0.3 ) ( 239.3 ) —

Net proceeds from sale of U.S.

Federal business — — 1,162.9

Other ( 0.9 ) ( 0.9 ) ( 0.5 )

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Cash flows from financing activities

Proceeds from issuance of long-term debt 1.5 497.3 30.5

Payments of long-term debt ( 17.8 ) ( 103.1 ) ( 454.8 )

Proceeds from issuance of long-term debt — 1.5 497.3

Cash paid for debt extinguishment — — ( 23.7 )

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Proceeds from exercise of stock options — 4.5 —

Proceeds from capped call transactions — — 7.2

Other ( 3.8 ) ( 8.4 ) ( 5.8 )

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UNISYS CORPORATION

CONSOLIDATED STATEMENTS OF DEFICIT

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

Unisys Corporation

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Balance at December 31, 2019 $ ( 1,228.3 ) $ ( 1,265.4 ) $ 0.7 $ ( 1,711.2 ) $ ( 109.6 ) $ 4,643.3 $ ( 4,088.6 ) $ 37.1

Consolidated net income (loss) ( 13.3 ) ( 17.2 ) ( 17.2 ) 3.9

Consolidated net income 751.2 750.7 750.7 0.5

Stock-based activity 8.8 8.8 ( 4.8 ) 13.6

Debt exchange 83.9 83.9 0.1 83.8

Capped call on debt exchange 7.2 7.2 7.2

Translation adjustments 49.3 46.3 46.3 3.0

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Balance at December 31, 2020 $ ( 312.1 ) $ ( 356.8 ) $ 0.7 $ ( 960.5 ) $ ( 114.4 ) $ 4,656.9 $ ( 3,939.5 ) $ 44.7

Consolidated net income 751.2 750.7 750.7 0.5

Consolidated net loss ( 449.8 ) ( 448.5 ) ( 448.5 ) ( 1.3 )

Capped call on conversion of debt — — ( 30.8 ) 30.8

Stock-based activity 16.2 16.2 ( 7.0 ) 23.2

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Balance at December 31, 2021 $ ( 64.4 ) $ ( 113.7 ) $ 0.7 $ ( 1,409.0 ) $ ( 152.2 ) $ 4,710.9 $ ( 3,264.1 ) $ 49.3

Consolidated net loss ( 449.8 ) ( 448.5 ) ( 448.5 ) ( 1.3 )

Capped call on conversion of debt — — ( 30.8 ) 30.8

Consolidated net (loss) income ( 104.9 ) ( 106.0 ) ( 106.0 ) 1.1

Stock-based activity 16.9 16.9 ( 3.8 ) 20.7

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As future events and their effects cannot be determined with precision, actual results could differ materially from these estimates.

Changes in those estimates resulting from continuing changes in the economic environment will be reflected in the financial statements in future periods.

The company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to us and the unknown future impacts of COVID-19 as of December 31, 2021 and through the date of this report.

The accounting matters assessed included, but were not limited to the valuation of estimated credit losses, contract assets, outsourcing assets, marketable software, deferred tax assets, goodwill, purchased intangibles and other long-lived assets, and retirement and other post-employment benefits.

While there was not a material impact to our consolidated financial position as of December 31, 2021 resulting from our assessments, our future assessment of our current expectations at that time of the future impacts and duration of COVID-19, as well as other factors, could result in material impacts to our consolidated financial position in future reporting periods.

Changes in those estimates resulting from continuing changes in the economic environment such as rising interest rates, inflation, fluctuation in foreign exchange rates, the coronavirus pandemic and the ongoing conflict in Ukraine, will be reflected in the financial statements in future periods.

Cash and Cash equivalents Cash and cash equivalents consist of cash on hand, short-term investments purchased with an original maturity of three months or less and certificates of deposit which may be withdrawn at any time at the discretion of the company without penalty.

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Actual future cash flows could differ from these estimates.

The gross amount of outsourcing assets totaled $ 568.3 million and $ 692.1 million as of

December 31, 2021 and 2020, respectively, and related accumulated amortization totaled $ 443.7 million and $ 518.2 million as of December 31, 2021 and 2020, respectively.

The gross amount of outsourcing assets totaled $ 559.4 million and $ 568.3 million as of December 31, 2022 and 2021, respectively, and related accumulated amortization totaled $ 493.0 million and $ 443.7 million as of December 31, 2022 and 2021, respectively.

Marketable software The cost of development of computer software to be sold or leased, incurred subsequent to establishment of technological feasibility, is capitalized and amortized to cost of sales over the estimated revenue-producing lives of the products.

For the company’s proprietary enterprise software products, the amortization period is five years following product release, and for the remaining products, the amortization period is three years following product release.

In assessing the estimated revenue-producing lives and recoverability of the products, the company considers operating strategies, underlying technologies utilized, estimated economic life and external market factors, such as expected levels of competition, barriers to entry by potential competitors, stability in the market and governmental regulation.

In assessing the estimated revenue-producing lives and recoverability of the products, the company considers operating strategies, underlying

technologies utilized, estimated economic life and external market factors, such as expected levels of competition, barriers to entry by potential competitors, stability in the market and governmental regulation.

The company continually reassesses the estimated revenue-producing lives of the products and any change in the company’s estimate could result in the remaining amortization expense being accelerated or spread out over a longer period.

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Goodwill is initially recognized as an asset and is subsequently measured at cost less any accumulated impairment losses.

The company tests goodwill for impairment annually in the fourth quarter using data as of September 30 of that year, as well as whenever there are events or changes in circumstances (triggering events) that would more likely than not reduce the fair value of one or more reporting units below its respective carrying amount.

The company reviews goodwill for impairment annually in the fourth quarter using data as of September 30 of that year, as well as whenever there are events or changes in circumstances (triggering events) that would more likely than not reduce the fair value of one or more reporting units below its respective carrying amount.

The company initially assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

This qualitative assessment considers all relevant factors specific to the reporting units, including macroeconomic conditions, industry and market considerations, overall financial performance, and relevant entity-specific events.

If the company determines that it is not more likely that the carrying amount for a reporting unit is less than its fair value, then subsequent quantitative goodwill impairment testing is not required.

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Impaired goodwill is written down to its fair value through a charge to the consolidated statement of income (loss) in the period the impairment is identified.

In January 2021, the company changed its organizational structure to more effectively address evolving client needs.

With these changes, the company changed its reportable segments, operating segments and reporting units.

The realignment and change was deemed a triggering event, resulting in the company performing an interim quantitative goodwill impairment test on the reporting units impacted by this segment change as of immediately before and immediately after the change.

There were no impairment charges resulting from this analysis.

See Note 21, “Segment information” for additional information on the company’s operating and reportable segments.

During the fourth quarter of 2021, the company performed its annual qualitative goodwill assessment and determined it was not necessary to perform the quantitative goodwill impairment test.

When the company performs the quantitative goodwill impairment test for a reporting unit, it estimates the fair value of the reporting unit using both the income approach and the market approach.

During the fourth quarter of 2022, the company performed a quantitative goodwill impairment test for each reporting unit, and estimated the fair value of the reporting units using both the income approach and the market approach.

The income approach incorporates the use of a discounted cash flow method in which the estimated future cash flows and terminal values for each reporting unit are discounted to present value.

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In order to assess the reasonableness of the calculated reporting unit fair values, the company also compares the sum of the reporting units’ fair values to its market capitalization (per share stock price multiplied by shares outstanding) and calculates an implied control premium (the excess of the sum of the reporting units’ fair values over the market capitalization).

The company’s quantitative assessment in the fourth quarter of 2022 indicated that each reporting unit’s fair value exceeded its carrying value, as such no impairment charge was recognized as of December 31, 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.

Estimating the fair value of reporting units requires the use of estimates and significant judgments that are based on a number of factors including actual operating results.

It is reasonably possible that the judgments and estimates described above could change in future periods.

Finite-lived intangible assets purchased in a business combination are recorded at fair value and amortized to selling, general and administrative expense over their estimated useful lives.

The company continuously monitors and evaluates relevant events and circumstances that could unfavorably impact the significant assumptions noted above, including changes to U.S.

treasury rates and equity risk premiums, tax rates, recent market valuations from transactions by comparable companies, volatility in the company’s market capitalization, and general industry, market and macro-economic conditions.

It is possible that future changes in such circumstances or in the inputs and assumptions used in estimating the fair value of the reporting units, could require the company to record a non-cash impairment charge.

Finite-lived intangible assets purchased in a business combination are recorded at fair value and amortized to cost of revenue - technology and selling, general and administrative expense over their estimated useful lives.

Finite-lived intangible assets are tested for impairment whenever events or changes in circumstances would indicate that the carrying value may not be recoverable.

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At December 31 of each year, the company determines the fair value of its retirement benefits plan assets as well as the discount rate to be used to calculate the present value of plan liabilities.

Management’s significant assumption used in the determination of the defined benefit pension plan obligations, and settlement losses associated with respect to the U.S.

Management’s significant assumption used in the determination of the defined benefit pension plan obligations with respect to the U.S.

pension plans, is the discount rate.

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Revenue from time-and-material contracts is recognized on an output basis as labor hours are delivered.

In managed services, application management, business process outsourcing and other cloud-based services arrangements, the arrangement generally consists of a single performance obligation comprised of services that are substantially the same and that have the same pattern of transfer.

The promise to transfer the individual services is not separately identifiable from other promises in the contracts and, therefore, is not distinct.

In managed services, application management, business process outsourcing and other cloud-based services arrangements, the arrangement generally consists of a single performance obligation comprised of a series of distinct services that are substantially the same and that have the same pattern of transfer.

The company applies a measure of progress (typically time-based) to any fixed consideration and allocates variable consideration to the periods of service, which are typically monthly or quarterly, based on usage.

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(1) the expected cost plus margin approach, under which the company forecasts its expected costs of satisfying a performance obligation and then adds an appropriate margin for that distinct good or service and (2) the percent discount off of list price approach.

In the Digital Workplace Solutions (DWS) and the Cloud and Infrastructure Solutions (C&I) segments, substantially all of the company’s performance obligations are satisfied over time as work progresses and therefore substantially all of the revenue in this segment is recognized over time.

In the Digital Workplace Solutions (DWS) and the Cloud, Applications & Infrastructure Solutions (CA&I) segments, substantially all of the company’s performance obligations are satisfied over time as work progresses and therefore substantially all of the revenue in these segments is recognized over time.

The company generally receives payment for these contracts over time as the performance obligations are satisfied.

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The company generally receives payment for these contracts upon signature or within 30 to 60 days.

The company discloses disaggregation of its customer revenue by geographic areas by segment (see Note 21, “Segment information”).

The company discloses disaggregation of its customer revenue by geographic areas (see Note 21, “Segment information”).

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables, contract assets and deferred revenue (contract liabilities).

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Revenue includes payments for shipping and handling activities.

Advertising costs All advertising costs are expensed as incurred.

Advertising costs All advertising costs are expensed as incurred and reported in selling, general and administrative expenses in the consolidated statements of income (loss).

The amount charged to the expense during 2022, 2021 and 2020 was $ 8.0 million, $ 3.6 million and $ 2.5 million, respectively.

Shipping and handling Costs related to shipping and handling are included in cost of revenue.

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The fair value of awards with market conditions is estimated using a Monte Carlo simulation.

The company recognizes compensation expense for the fair value of stock options, which have graded vesting, on a straight-line basis over the requisite service period.

The expense is recorded in selling, general and administrative expenses.

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A valuation allowance is provided on deferred tax assets if it is determined that it is more likely than not that the asset will not be realized.

The company releases the income tax effects of deferred tax balances that have a valuation allowance from accumulated other comprehensive income once the reason the tax effects were established ceases to exist (e.g., a postretirement plan is liquidated).

The company releases the income tax effects of deferred tax balances that have a valuation allowance from accumulated other comprehensive income (loss) once the reason the tax effects were established ceases to exist (e.g., a postretirement plan is liquidated).

The company recognizes penalties and interest accrued related to income tax liabilities in provision for income taxes in its consolidated statements of income (loss).

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Revenue $ 149.5

Income (loss)

Operations 8.4

Gain on sale 1,060.7

1,069.1 100.3

Income tax provision 0.7

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Effective January 1, 2022, the company adopted Accounting Standards Update (ASU) No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes, which removed certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The new standard was applied to the presentation of the company’s U.S.

Federal business, which is reflected in discontinued operations.

In October 2021, the Financial Accounting Standards Board issued ASU No.

2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.

This guidance requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts.

Deferred revenue acquired in a business combination is no longer required to be measured at its fair value, which had historically resulted in a deferred revenue impairment at the date of acquisition.

The amendment is effective January 1, 2023 and early adoption is permitted.

The company expects to adopt this new guidance effective January 1, 2022.

Deferred revenue acquired in a business combination is no longer required to be measured at its fair value, which had historically resulted in a deferred revenue fair value adjustment at the date of acquisition.

The company will apply this guidance for acquisitions completed on or after January 1, 2022.

Note 4 — Acquisitions

On December 14, 2021, the company acquired 100 % of CompuGain LLC (CompuGain), a leading cloud solutions provider, for a purchase price consideration of $ 85.3 million on a cash-free, debt-free basis.

The company funded the cash consideration and acquisition-related costs with cash on hand.

The acquisition enhanced the company’s delivery of rapid and agile cloud migration, application modernization and data value realization to our clients.

The fair values of the total net assets acquired was as follows:

Receivables $ 7.8

Prepaid expenses and other current assets 0.7

Properties and other long-term assets 0.2

Operating lease right-of-use assets 0.2

Accounts payable and accruals ( 7.4 )

Long-term operating lease liabilities ( 0.1 )

Intangible assets 45.9

Goodwill 38.0

During 2022, the company finalized its valuation of assets acquired and liabilities assumed resulting in measurement period adjustments that decreased goodwill by $ 27.5 million primarily related to an increase of $ 27.6 million in the fair value of the acquired intangible assets.

The goodwill represents expected synergies, intellectual capital and the acquired assembled workforce, none of which qualify for recognition as a separate intangible asset.

Goodwill determined by the allocation of the purchase price was recorded in the company’s CA&I segment and approximately $ 34 million is deductible for tax purposes.

The following table summarizes the fair value of the intangible assets acquired and the related weighted average amortization period:

Weighted Average Amortization Period in Years Fair Value

Customer relationships 12.0 $ 44.6

Trademark 4.0 1.3

During 2022 and 2021, the company incurred and expensed acquisition-related costs of $ 0.4 million and $ 1.1 million, respectively, included within selling, general and administrative expense in the consolidated statements of income (loss).

The company’s consolidated financial statements include the results of CompuGain commencing as of the acquisition date.

Pro forma information and revenue and operating results of CompuGain have not been presented as the impact is not material to the company’s consolidated financial statements.

Unify Square, Inc .

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Headquartered in Bellevue, Washington, and with offices in the United Kingdom, Germany, Switzerland, India, Australia and Lithuania, Unify Square is a leading experience management provider for secure collaboration and communication platforms.

The acquisition is expected to enhance the company’s digital workplace solutions and enable the company to deliver higher value solutions to its clients.

The acquisition enhanced the company’s digital workplace solutions and enabled the company to deliver higher value solutions to its clients.

The fair values of the total net assets acquired was as follows:

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Total $ 150.4

The company has finalized the purchase accounting related to Unify Square and the above amounts represent final fair values.

During 2021, the company finalized its valuation of assets acquired and liabilities assumed resulting in measurement period adjustments that increased goodwill by $ 16.7 million primarily related to a decrease of $ 16.3 million in the fair value of the acquired intangible assets.

The goodwill represents expected synergies, intellectual capital and the acquired assembled workforce, none of which qualify for recognition as a separate intangible asset.

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The following table summarizes the fair value of the intangible assets acquired and the related weighted average amortization period:

Weighted Average Amortization Period in Years

Weighted Average Amortization Period in Years Fair Value

Technology 3.2 $ 10.0

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Customer relationships - Consulting 10.0 3.0

During 2021, the company incurred and expensed acquisition-related costs of $ 2.4 million, included within selling, general and administrative expense on the consolidated statements of income (loss).

During 2021, the company incurred and expensed acquisition-related costs of $ 2.4 million, included within selling, general and administrative expense in the consolidated statements of income (loss).

The company’s consolidated financial statements include the results of Unify Square commencing as of the acquisition date.

Pro forma information and revenue and operating results of Unify Square have not been presented as the impact is not material to the company’s consolidated financial statements.

On December 14, 2021, the company acquired 100 % of CompuGain LLC (CompuGain), a leading cloud solutions provider, for a purchase price consideration of $ 87.0 million on a cash-free, debt-free basis.

The purchase price is subject to customary adjustments based on closing cash, indebtedness and working capital.

The company funded the cash consideration and acquisition-related costs with cash on hand.

The acquisition is expected to enhance the company’s delivery of rapid and agile cloud migration, application modernization and data value realization to our clients.

The preliminary fair values of the total net assets acquired was a follows:

Receivables $ 7.8

Prepaid expenses and other current assets 0.7

Properties and other long-term assets 0.2

Operating lease right-of-use assets 0.2

Accounts payable and accruals ( 5.6 )

Long-term operating lease liabilities ( 0.1 )

Intangible assets 18.3

Goodwill 65.5

At December 31, 2021, the company has not finalized the purchase accounting related to CompuGain and the above amounts represent preliminary estimated values.

The preliminary purchase price allocation is subject to change as the company completes its determination of the final working capital and the fair values of the acquired assets and liabilities assumed, the impact of which could be material.

The goodwill represents expected synergies, intellectual capital and the acquired assembled workforce, none of which qualify for recognition as a separate intangible asset.

Goodwill determined by the allocation of the purchase price will be recorded in the company’s C&I segment and is expected to be deductible for tax purposes.

The following table summarizes the preliminary fair value of the intangible assets acquired and the related weighted average amortization period:

Weighted Average Amortization Period in Years

Customer Relationships 8.5 $ 17.4

Marketing 4.0 0.9

During 2021, the company incurred and expensed acquisition-related costs of $ 1.1 million, included within selling, general and administrative expense on the consolidated statements of income (loss).

The company’s consolidated financial statements include the results of CompuGain commencing as of the acquisition date.

Pro forma information and revenue and operating results of CompuGain have not been presented as the impact is not material to the company’s consolidated financial statements.

On November 18, 2021, the company acquired 100 % of the Mobinergy group of companies (Mobinergy), a leader in unified endpoint management.

The purchase price consideration was not material.

The acquisition is expected to enhance the company’s digital workplace solutions and enable the company to deliver higher value solutions to its clients.

The acquisition enhanced the company’s digital workplace solutions and enabled the company to deliver higher value solutions to its clients.

The company’s consolidated financial statements include the results of Mobinergy commencing as of the acquisition date.

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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 $ 12.3 million and (b) a credit of $ 11.9 million for changes in estimates.

In addition, the company recorded charges of $ 22.8 million comprised of $ 4.0 million for net foreign currency losses related to exiting foreign countries, $ 12.6 million for asset impairments and $ 6.2 million for other expenses related to cost-reduction efforts.

(a) a charge of $ 7.1 million and (b) a charge of $ 0.4 million for changes in estimates.

In addition, the company recorded net charges of $ 47.4 million comprised of charges of $ 13.6 million related to held-for-sale assets (see Note 14, “Properties” for further details), $ 10.9 million for asset impairments, $ 11.3 million for idle leased facilities costs, $ 9.3 million for contract exit costs, $ 2.9 million for net foreign currency losses related to exiting foreign countries and a credit of $ 0.6 million for changes in estimates related to other cost-reduction efforts.

During 2021, the company recognized cost-reduction charges and other costs of $ 23.2 million.

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(a) a charge of $ 12.3 million and (b) a credit of $ 11.9 million for changes in estimates.

In addition, the company recorded charges of $ 70.0 million

comprised of $ 32.3 million for net foreign currency losses related to exiting foreign countries, $ 24.0 million for asset impairments and $ 13.7 million for other expenses related to cost-reduction efforts.

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.

During 2020, the company recognized cost-reduction charges and other costs of $ 95.5 million.

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(a) a charge of $ 39.0 million and (b) a credit of $ 13.5 million for changes in estimates.

In addition, the company recorded charges of $ 6.6 million comprised of $ 4.6 million for lease abandonment costs, $ 1.1 million for asset write-offs and $ 0.9 million for other expenses related to cost-reduction efforts.

In addition, the company recorded charges of $ 70.0 million comprised of $ 32.3 million for net foreign currency losses related to exiting foreign countries, $ 24.0 million for asset impairments and $ 13.7 million for other expenses related to cost-reduction efforts.

The charges (credits) were recorded in the following statement of income (loss) classifications:

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2024 0.4 19.7

2024 0.5 15.8

Thereafter — 0.1

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For transactions where the company is considered the lessor, revenue for operating leases is recognized on a monthly basis over the term of the lease and for sales-type leases at the inception of the lease term.

These amounts were immaterial for all periods presented.

As of December 31, 2022, receivables under sales-type leases before the allowance for unearned income were collectible as follows:

Thereafter 0.5

Other Commitments

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Postretirement expense* $ ( 43.2 ) $ ( 548.6 ) $ ( 235.9 )

Debt extinguishment charge — ( 28.5 ) ( 20.1 )

Foreign exchange losses** ( 6.8 ) ( 2.5 ) ( 36.2 )

Debt extinguishment charge — — ( 28.5 )

Environmental costs and other, net*** ( 32.4 ) ( 29.2 ) ( 29.0 )

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See Note 18, “Employee plans.”

**Includes charges of $ 4.0 million and $ 32.3 million, respectively, in 2021 and 2020 for net foreign currency losses related to substantial completion of liquidation of foreign subsidiaries.

**Includes charges of $ 2.9 million, $ 4.0 million and $ 32.3 million respectively, in 2022, 2021 and 2020 for net foreign currency losses related to substantial completion of liquidation of foreign subsidiaries.

***Environmental costs relates to a previously disposed business.

Note 8 — Income taxes

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Foreign 114.6 ( 18.2 ) 44.5

Total income (loss) from continuing operations before income taxes $ ( 461.7 ) $ ( 271.8 ) $ ( 60.6 )

Total loss from continuing operations before income taxes $ ( 62.6 ) $ ( 461.7 ) $ ( 271.8 )

Provision (benefit) for income taxes

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Foreign ( 8.3 ) ( 59.1 ) ( 13.4 )

Total (benefit) provision for income taxes $ ( 11.9 ) $ 45.4 $ 27.7

Following is a reconciliation of the provision (benefit) for income taxes at the United States statutory tax rate to the provision (benefit) for income taxes as reported:

Total provision (benefit) for income taxes $ 42.3 $ ( 11.9 ) $ 45.4

Following is a reconciliation of the benefit for income taxes at the United States statutory tax rate to the provision (benefit) for income taxes as reported:

Year ended December 31, 2022 2021 2020

United States statutory income tax provision (benefit) $ ( 96.9 ) $ ( 57.1 ) $ ( 12.7 )

United States statutory income tax benefit $ ( 13.2 ) $ ( 96.9 ) $ ( 57.1 )

Income and losses for which no provision or benefit has been recognized 40.9 91.1 78.6

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Change in uncertain tax positions 0.4 ( 0.3 ) 3.6

Change in valuation allowances due to changes in judgment ( 0.8 ) 2.9 ( 2.3 )

Change in valuation allowances ( 9.8 ) ( 0.8 ) 2.9

Income tax credits, U.S.

— ( 2.1 ) ( 0.2 )

(Benefit) provision for income taxes $ ( 11.9 ) $ 45.4 $ 27.7

Provision (benefit) for income taxes $ 42.3 $ ( 11.9 ) $ 45.4

The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities were as follows:

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Net deferred tax assets $ 108.4 $ 106.1

During 2021, the company’s valuation allowance declined by $ 45.3 million principally due to the recognition of a net income tax expense of $( 102.1 ) million including net tax benefit of $ 0.8 million, expired net operating losses/tax credits of $ 50.0 million, translation adjustments of $ 18.4 million and other activity of $ 79.0 million.

During 2020, the company’s valuation allowance declined by $ 253.2 million principally due to the recognition of a net income tax benefit of $ 189.0 million including net tax expense of $ 2.9 million, expired net operating losses/tax credits of $ 28.9 million, translation adjustments of $( 20.9 ) million and other activity of $ 56.2 million.

Changes in the valuation allowance was as follows:

Year ended December 31, 2022 2021 2020

Valuation allowance, at beginning of year $ ( 1,226.2 ) $ ( 1,271.5 ) $ ( 1,524.7 )

Actuarial pension adjustments 70.7 99.5 41.8

Expired net operating losses/tax credits 52.3 50.0 28.9

Foreign exchange 14.8 18.4 ( 20.9 )

Recognition of income tax benefit (expense) (i)

( 43.9 ) ( 102.1 ) 189.0

Other 21.8 ( 20.5 ) 14.4

Valuation allowance, at end of year $ ( 1,110.5 ) $ ( 1,226.2 ) $ ( 1,271.5 )

(i) Includes U.S pension activity of $( 11.3 ) million, $( 84.9 ) million and $ 141.7 million for the years ended December 31, 2022, 2021 and 2020, respectively.

At December 31, 2022, the company has tax effected tax loss carryforwards as follows:

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Total $ 141.9

A full valuation allowance is currently maintained for all U.S.

and certain foreign deferred tax assets in excess of deferred tax liabilities.

The company will record a tax provision or benefit for those international subsidiaries that do not have a full valuation allowance against their net deferred tax assets.

Any profit or loss recorded for the company’s U.S.

operations will have no provision or benefit associated with it due to such valuation allowance, except with respect to withholding taxes not creditable against future taxable income.

As a result, the company’s provision or benefit for taxes may vary significantly depending on the geographic distribution of income.

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.

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.

It is at least reasonably possible that the company’s judgment about the need for, and level of, existing valuation allowances could change in the near term based on changes in objective evidence such as further sustained income or loss in certain jurisdictions, as well as the other factors discussed above, primarily in certain jurisdictions outside of the United States.

As such, the company will continue to monitor income levels and mix among jurisdictions, potential changes to the company’s operating and tax model, and other legislative or global developments in its determination.

It is reasonably possible that such changes could result in a material impact to the company’s valuation allowance within the next 12 months.

Any increase or decrease in the valuation allowance would result in additional or lower income tax expense in such 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.

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 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.

tax law, distributions from foreign subsidiaries to U.S.

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The company is under an audit in India, for which years prior to 2007 are closed.

For the most significant jurisdictions outside the U.S., the audit periods through 2016 are closed

for Brazil, and the audit periods through 2017 are closed for the United Kingdom.

For the most significant jurisdictions outside the U.S., the audit periods through 2017 are closed for Brazil, and the audit periods through 2018 are closed for the United Kingdom.

All of the various ongoing income tax audits throughout the world are not expected to have a material impact on the company’s financial position.

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cash tax liability in the near term.

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.

Note 9 — Earnings (loss) per common share

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Anti-dilutive weighted-average stock options and restricted stock units (i)

871 579 1,393

Anti-dilutive weighted-average common shares issuable upon conversion of the 5.50 % convertible senior notes (i) (see Note 16, “Debt”)

557 3,425 16,578

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

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Credit losses relating to these receivables consistently have been within management’s expectations.

Expected credit losses are recorded as an allowance for doubtful accounts in the consolidated balance sheets.

Expected credit losses are recorded as an allowance for credit losses in the consolidated balance sheets.

Estimates of expected credit losses are based primarily on the aging of the accounts receivable balances.

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Revenue recognized in excess of billings on services contracts, or unbilled accounts receivable, was $ 87.9 million and $ 73.1 million at December 31, 2022 and 2021, respectively.

The allowance for doubtful accounts, which is reported as a deduction from accounts receivable, was $ 8.0 million and $ 9.2 million at December 31, 2021 and 2020, respectively.

The provision for doubtful accounts, which is reported in selling, general and administrative expenses in the consolidated statements of income (loss), was (income) expense of $( 0.6 ) million, $( 0.3 ) million and $( 1.6 ) million, in 2021, 2020 and 2019, respectively.

Unearned income, which is reported as a deduction from accounts receivable, was $ 13.9 million and $ 4.1 million at December 31, 2022 and 2021, respectively.

The allowance for credit losses, which is reported as a deduction from accounts receivable, was $ 9.1 million and $ 8.0 million at December 31, 2022 and 2021, respectively.

The provision for credit losses, which is reported in selling, general and administrative expenses in the consolidated statements of income (loss), was expense (income) of $ 0.3 million, $( 0.6 ) million and $( 0.3 ) million, in 2022, 2021 and 2020, respectively.

Additionally, long-term receivables were $ 85.3 million and $ 49.1 million at December 31, 2022 and 2021, respectively, and are reported in other long-term assets on the company’s consolidated balance sheets.

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Other (expense), net $ ( 39.3 ) $ ( 18.8 ) $ 7.6

Financial instruments include temporary cash investments and customer accounts receivable.

Other financial instruments include temporary cash investments and customer accounts receivable.

Temporary investments are placed with creditworthy financial institutions, primarily in money market funds, time deposits and certificate of deposits which may be withdrawn at any time at the discretion of the company without penalty.

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As of December 31, 2022 2021

Land $ — $ 2.3

Buildings $ 0.3 $ 0.3

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Additionally, the company determined that such assets comprise operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the company.

In September 2021, the company entered into a letter of intent (LOI) with a third party for the sale of certain facilities, land and equipment related to a data center facility located in Eagan, Minnesota.

Upon the execution of the LOI, these assets were classified as held-for-sale in the company’s consolidated balance sheet and measured at the lower of their carrying amount or fair value less cost to sell.

In 2021, as part of continued cost reduction initiatives, the company decided to exit a data center facility located in Eagan, Minnesota and move the activities to lower cost centers.

As a result, the company entered into a letter of intent (LOI) in September 2021 with a third party for the sale of land and building at this location.

Upon the execution of the LOI, these assets were classified as held-for-sale in the company’s consolidated balance sheet.

As the sale was not consummated and the assets have been held-for-sale for more than a year, the company evaluated whether (i) the company has taken all necessary actions to respond to the change in circumstances;

(ii) the company is actively marketing the data center facility at a price that is reasonable;

and (iii) the company continues to meet all of the criteria to continue to classify the assets as held for sale.

The company is actively marketing this facility for sale and continues to identify interested parties.

Additionally, during the fourth quarter of 2022, the company obtained an updated valuation report and recognized an asset held-for-sale write-down of $ 13.6 million, reducing the assets to its estimated current fair market value less costs to sell.

The valuation report is considered a Level 2 input.

The company believes the classification continues to be appropriate and that all the criteria has been met to classify these assets as held-for-sale at December 31, 2022.

Note 15 — Goodwill and intangible assets

Changes in the carrying amount of goodwill by reporting unit were as follows:

Total DWS C&I ECS Other

Total DWS CA&I ECS Other

Balance at December 31, 2020 $ 108.6 $ — $ — $ 98.3 $ 10.3

Acquisitions (i)

206.3 140.8 65.5 — —

Translation adjustments 0.1 0.1 — — —

Balance at December 31, 2021 315.0 140.9 65.5 98.3 10.3

Acquisitions (i)

Acquisition - Measurement period adjustments (ii)

( 27.5 ) — ( 27.5 ) — —

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Balance at December 31, 2022 $ 287.1 $ 140.5 $ 38.0 $ 98.3 $ 10.3

(i) During 2021, the company acquired Unify Square and Mobinergy resulting in goodwill of $ 132.9 million and $ 7.9 million, respectively, recorded in the company’s DWS segment and CompuGain resulting in goodwill of $ 65.5 million recorded in the company’s C&I segment.

See Note 4, “Acquisitions.”

(ii) During 2022, the company finalized its valuation of assets and liabilities assumed in the CompuGain acquisition resulting in measurement period adjustments that decreased goodwill by $ 27.5 million.

See Note 4, “Acquisitions.”

At December 31, 2021, the amount of goodwill allocated to reporting units with negative net assets within Other was $ 10.3 million.

At December 31, 2022 , there was no goodwill allocated to reporting units with negative net assets.

Intangible Assets, Net

Intangible assets, net (see Note 4, “Acquisitions”) at December 31, 2021 consists of the following:

Intangible assets, net at December 31, 2022 and 2021 consists of the following:

As of December 31, 2022

Gross Carrying Amount Accumulated Amortization Net Carrying Amount

Technology $ 10.0 $ 1.8 $ 8.2

Customer Relationships 27.0 1.2 25.8

Marketing 0.9 — 0.9

Technology (i)

$ 10.0 $ 4.9 $ 5.1

Customer relationships (ii) (iii)

54.2 7.9 46.3

Marketing (iii)

Total $ 65.5 $ 13.1 $ 52.4

Amortization expense was $ 3.0 million for the year ended December 31, 2021.

As of December 31, 2021

Gross Carrying Amount Accumulated Amortization Net Carrying Amount

Technology (iii)

$ 10.0 $ 1.8 $ 8.2

Customer relationships (iii)

27.0 1.2 25.8

Marketing (iii)

Total $ 37.9 $ 3.0 $ 34.9

(i) Amortization expense is included within cost of revenue - technology in the consolidated statements of income (loss).

(ii) During 2022, the company finalized its valuation of assets and liabilities assumed in the CompuGain acquisition resulting in measurement period adjustments that increased the fair value of the acquired intangible assets by $ 27.6 million.

See Note 4, “Acquisitions.”

(iii) Amortization expense is included within selling, general and administrative expense in the consolidated statements of income (loss).

Amortization expense was $ 10.1 million and $ 3.0 million for the year ended December 31, 2022 and 2021, respectively.

The future amortization relating to acquired intangible assets at December 31, 2022 was estimated as follows:

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$ 479.2 $ 478.1

5.50 % convertible senior notes (Face value of $ 84.2 million less unamortized discount and issuance costs of $ 0.6 million at December 31, 2020)

Finance leases 1.1 2.7

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$ 373.0 $ 527.0

5.50 % convertible senior notes due March 1, 2021

The company’s principal sources of liquidity are cash on hand, cash from operations and its Amended and Restated ABL Credit Facility, discussed below.

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2027 480.1 480.1 —

Thereafter 479.0 479.0 —

Total $ 513.1 $ 512.0 $ 1.1

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Senior Secured Notes due 2027

On October 29, 2020, the company issued $ 485.0 million aggregate principal amount of its 6.875 % Senior Secured Notes due 2027 (the 2027 Notes).

The company has $ 485.0 million aggregate principal amount of its 6.875 % Senior Secured Notes due 2027 (the 2027 Notes).

The 2027 Notes pay interest semiannually on May 1 and November 1 and will mature on November 1, 2027, unless earlier repurchased or redeemed.

The 2027 Notes are fully and unconditionally guaranteed on a senior secured basis by Unisys Holding Corporation, Unisys NPL, Inc., Unisys AP Investment Company I, CompuGain LLC and CompuGain Public Services, LLC, each of which is a U.S.

corporation or limited liability company that is directly or indirectly owned by the company (the subsidiary guarantors).

The 2027 Notes are fully and unconditionally guaranteed on a senior secured basis by Unisys Holding Corporation, Unisys NPL, Inc.

and Unisys AP Investment Company I, each of which is a U.S.

corporation that is directly or indirectly owned by the company (the subsidiary guarantors).

The 2027 Notes and the related guarantees rank equally in right of payment with all of the existing and future senior debt of the company and its subsidiary guarantors and senior in right of payment to any future subordinated debt of the company and its subsidiary guarantors.

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Senior Secured Notes due 2022

On April 15, 2020, the company redeemed all $ 440.0 million in aggregate principal amount of its outstanding 10.750 % Senior Secured Notes due 2022 (the 2022 Notes) for a redemption price equal to 105.375 % of the aggregate principal amount of the 2022 Notes redeemed plus accrued but unpaid interest to, but not including, the redemption date.

In April 2020, the company redeemed all $ 440.0 million in aggregate principal amount of its outstanding 10.750 % Senior Secured Notes due 2022 (the 2022 Notes) for a redemption price equal to 105.375 % of the aggregate principal amount of the 2022 Notes redeemed plus accrued but unpaid interest to, but not including, the redemption date.

The redemption price paid was $ 487.3 million and is made up of the following:

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In 2020, the company recorded a loss on debt extinguishment in other expense, net of $ 28.5 million consisting of the premium of $ 23.65 million and write off of $ 4.8 million of unamortized discount and fees related to the issuance of the 2022 Notes.

Interest expense related to the 2022 Notes is comprised of the following:

Interest expense related to the 2022 Notes was as follows:

Year ended December 31, 2020

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Amortization of issuance costs 0.7

Total $ 14.5 $ 49.7

Convertible Senior Notes Due 2021

In 2016, the company issued $ 213.5 million aggregate principal amount of Convertible Senior Notes due 2021 (the 2021 Notes).

Following the completion of the separate, privately negotiated exchange agreements in 2019, $ 84.2 million aggregate principal amount of 2021 Notes remained outstanding.

On March 3, 2021, the company completed the conversion of $ 84.2 million aggregate principal amount of the 2021 Notes that remained outstanding for a combination of cash and shares of the company’s common stock.

As a result of the conversion of the outstanding 2021 Notes, the company delivered to the holders of such notes (i) aggregate cash payments totaling approximately $ 86.5 million, which included an aggregate cash payment for outstanding principal of approximately $ 84.2 million, an aggregate cash payment for accrued interest of approximately $ 2.3 million and a nominal cash payment in lieu of fractional shares, and (ii) 4,537,123 shares of the company’s common stock in the aggregate.

In March 2021, the company completed the conversion of $ 84.2 million aggregate principal amount of the Convertible Senior Notes due 2021 (the 2021 Notes) that remained outstanding for a combination of cash and shares of the company’s common stock.

As a result of the conversion of the outstanding 2021 Notes, the company delivered to the holders (i) aggregate cash payments totaling approximately $ 86.5 million, which included an aggregate cash payment for outstanding principal of approximately $ 84.2 million, an aggregate cash payment for accrued interest of approximately $ 2.3 million and a nominal cash payment in lieu of fractional shares, and (ii) the issuance of 4,537,123 shares of the company’s common stock.

The issuance of the common stock was made in exchange for the 2021 Notes pursuant to an exemption from the registration requirements provided by Section 3(a)(9) of the Securities Act of 1933, as amended.

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As a result, the net number of outstanding shares of the company’s common stock following the conversion of the 2021 Notes increased by 3,285,663 shares.

Interest expense related to the 2021 Notes is comprised of the following:

Interest expense related to the 2021 Notes was as follows:

Year ended December 31, 2021 2020

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Total $ 1.4 $ 8.2

In 2019, the company entered into a $ 27.7 million Installment Payment Agreement (IPA) maturing on December 20, 2023 with a syndicate of financial institutions to finance the acquisition of certain software licenses necessary for the provision of services to a client.

The company has a $ 27.7 million Installment Payment Agreement (IPA) maturing on December 20, 2023 with a syndicate of financial institutions to finance the acquisition of certain software licenses necessary for the provision of services to a client.

Interest accrues at an annual rate of 7.0 % and the company is required to make monthly principal and interest payments on each agreement in arrears.

At December 31, 2022 and 2021, $ 5.5 million and $ 5.5 million, was reported in current maturities of long-term debt, respectively.

In 2019, the company entered into a vendor agreement in the amount of $ 19.3 million to finance the acquisition of certain software licenses used to provide services to our clients and for its own internal use.

Interest accrues at an annual rate of 5.47 % and the company is required to make annual principal and interest payments in advance with the last payment due on March 1, 2024.

The company has a vendor agreement in the amount of $ 19.3 million to finance the acquisition of certain software licenses used to provide services to our clients and for its own internal use.

Interest accrues at an annual rate of 5.47 % and the company is

required to make annual principal and interest payments in advance with the last payment due on March 1, 2024.

At December 31, 2022 and 2021, $ 4.0 million and $ 3.8 million was reported in current maturities of long-term debt, respectively.

Asset Based Lending (ABL) Credit Facility

Contemporaneously with the issuance of the 2027 Notes, the company and the subsidiary guarantors entered into an amendment and restatement of the company’s secured revolving credit facility (the Amended and Restated ABL Credit Facility) that provides for revolving loans and letters of credit up to an aggregate amount of $ 145.0 million (with a limit on letters of credit of $ 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 amendment and restatement extended the maturity from October 2022 to October 29, 2025 and modified certain other terms and covenants.

The company has a secured revolving credit facility (the Amended and Restated ABL Credit Facility) that 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 conditions specified in the Amended and Restated ABL Credit Facility.

Availability under the credit facility is subject to a borrowing base calculated by reference to the company’s receivables.

At 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.

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 Restarted ABL Credit Facility) to cash settle the amount of such pension payments, no default or event of default has occurred under the Amended and Restated ABL Credit Facility, the company’s liquidity is above $ 130.0 million and the company is in compliance with the then applicable fixed charge coverage ratio on a pro forma basis.

The 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.

The Amended and Restated ABL Credit Facility is guaranteed by the subsidiary guarantors and any future material domestic subsidiaries.

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At December 31, 2022, 6.0 million shares of unissued common stock of the company were available for granting under these plans.

As of December 31, 2021, the company has granted non-qualified stock options, restricted stock and restricted stock units under these plans.

The company recognizes compensation cost, net of a forfeiture rate, in selling, general and administrative expenses, and recognizes the compensation cost for only those awards expected to vest.

As of December 31, 2022, the company has granted restricted stock and restricted stock units under these plans.

The company recognizes compensation cost, net of a forfeiture rate, in selling, general and administrative expense, and recognizes compensation cost only for those awards expected to vest.

The company estimates the forfeiture rate based on its historical experience and its expectations about future forfeitures.

During the years ended December 31, 2021, 2020 and 2019, the company recorded $ 18.8 million, $ 14.5 million and $ 13.2 million of restricted stock and restricted stock unit compensation expense, respectively.

During the years ended December 31, 2022, 2021 and 2020, the company recorded $ 20.0 million, $ 18.8 million and $ 14.5 million of share-based restricted stock and restricted stock unit compensation expense, respectively.

Restricted stock and restricted stock unit awards may contain time-based units, performance-based units, total shareholder return market-based units, or a combination of these units.

4 unchanged sentences

A summary of restricted stock and restricted stock unit (RSU) activity for the year ended December 31, 2022 follows (shares in thousands):

Restricted Stock and RSU’s Weighted-Average Grant-Date Fair Value

Restricted Stock and RSU Weighted-Average Grant-Date Fair Value

Outstanding at December 31, 2021 2,124 $ 22.73

28 unchanged sentences

The company funds the match with cash.

The charge to income related to the company match for the years ended December 31, 2021, 2020 and 2019, was $ 7.5 million, $ 8.8 million and $ 8.2 million, respectively.

The charge related to the company match for the years ended December 31, 2022, 2021 and 2020, was $ 6.9 million, $ 7.5 million and $ 8.8 million, respectively.

The company has defined contribution plans in certain locations outside the United States.

The charge to income related to these plans was $ 16.4 million, $ 16.2 million and $ 19.3 million, for the years ended December 31, 2021, 2020 and 2019, respectively.

The charge related to these plans was $ 16.6 million, $ 16.4 million and $ 16.2 million, for the years ended December 31, 2022, 2021 and 2020, respectively.

The company has non-qualified compensation plans, which allow certain highly compensated employees and directors to defer the receipt of a portion of their salary, bonus and fees.

9 unchanged sentences

The determination of the defined benefit pension plan obligations requires the use of estimates.

The American Rescue Plan Act, which was signed into law in the U.S.

on March 11, 2021, includes a provision for pension relief that extends the amortization period for required contributions from 7 to 15 years and provides for the stabilization of interest rates used to calculate future required contributions.

As a result, the company was not required to make cash contributions to its U.S.

qualified defined benefit pension plans in 2022 and 2021.

In January of 2021, the company purchased a group annuity contract for $ 279 million to transfer projected benefit obligations related to approximately 11,600 retirees of the company’s U.S.

11 unchanged sentences

This action resulted in a pre-tax settlement loss of $ 130.1 million.

The American Rescue Plan Act, which was signed into law in the U.S.

As a result, the company was not required to make cash contributions to its U.S.

qualified defined benefit pension plans in 2021.

In December 2020, the company completed a lump-sum cash-out offer for eligible former associates who had deferred vested benefit under the company’s U.S.

9 unchanged sentences

Plan participants’ contributions — — 1.1 1.0

Plan curtailment — — — ( 1.6 )

Plan settlement — ( 513.8 ) — ( 726.8 )

Actuarial loss ( 108.4 ) 253.9 2.0 226.5

Actuarial (gain) loss ( 668.1 ) ( 108.4 ) ( 726.4 ) 2.0

Benefits paid ( 303.2 ) ( 331.1 ) ( 86.4 ) ( 106.5 )

28 unchanged sentences

Fair value of plan assets $ 2,960.6 $ 3,587.7

Net periodic pension cost (income) includes the following components:

Net periodic pension expense (income) includes the following components:

Plans International Plans

6 unchanged sentences

Recognized net actuarial loss 125.9 135.6 135.5 37.7 48.3 43.2

Curtailment gain — — — — — ( 0.1 )

Settlement loss — 288.1 142.1 — 211.3 —

Net periodic pension cost (income) $ 339.0 $ 229.0 $ 93.4 $ 214.9 $ 6.3 $ ( 0.7 )

Net periodic pension expense (income) $ 48.2 $ 339.0 $ 229.0 $ ( 1.1 ) $ 214.9 $ 6.3

(i) Service cost is reported in cost of revenue and selling, general and administrative expenses.

All other components of net periodic pension cost are reported in other (expense), net in the consolidated statements of income (loss).

Management’s significant assumption used in the determination of the defined benefit pension plan obligations, and settlement losses with respect to the U.S.

All other components of net periodic pension expense (income) are reported in other (expense) , net in the consolidated statements of income (loss).

Management’s significant assumption used in the determination of the defined benefit pension plan obligations with respect to the U.S.

pension plans, is the discount rate.

Weighted-average assumptions used to determine net periodic pension cost were as follows:

Weighted-average assumptions used to determine net periodic pension expense were as follows:

Plans International Plans

8 unchanged sentences

Equity securities 52 % 47 - 57 %

18 % 15 - 20 %

Debt securities 34 % 29 - 39 %

55 % 49 - 61 %

Real estate 0 % 0 % 1 % 0 - 1 %

Cash 0 % 0 - 5 %

29 unchanged sentences

Amendments — 1.2

Actuarial loss (gain) 1.8 ( 13.8 )

Actuarial (gain) loss ( 16.1 ) 1.8

Benefits paid ( 4.9 ) ( 5.9 )

14 unchanged sentences

Accumulated other comprehensive loss, net of tax

Net loss (income) $ 1.4 $ ( 3.0 )

Net (income) loss $ ( 7.8 ) $ 1.4

Prior service credit ( 0.7 ) ( 2.1 )

Net periodic postretirement benefit cost follows:

Net periodic postretirement benefit (income) cost follows:

Year ended December 31, 2022 2021 2020

5 unchanged sentences

Recognized net actuarial (gain) loss ( 2.2 ) ( 2.1 ) 1.0

Net periodic benefit cost $ ( 1.9 ) $ 3.9 $ 3.9

Net periodic benefit (income) cost $ ( 1.8 ) $ ( 1.9 ) $ 3.9

(i) Service cost is reported in selling, general and administrative expenses.

All other components of net periodic benefit cost are reported in other (expense), net in the consolidated statements of income (loss).

Weighted-average assumptions used to determine net periodic postretirement benefit cost were as follows:

All other components of net periodic benefit (income) cost are reported in other (expense), net in the consolidated statements of income (loss).

Weighted-average assumptions used to determine net periodic postretirement benefit (income) cost were as follows:

Year ended December 31, 2022 2021 2020

37 unchanged sentences

Commingled Funds – These investments are comprised of debt, equity and other securities.

The NAV is used as a practical expedient to estimate fair value.

The NAV is based on the fair value of the underlying investments held by the funds less their liabilities.

This practical expedient is not used when it is determined to be probable that the fund will sell the investment for an amount different than the reported NAV

Private Real Estate and Private Equity - These investments represent interests in limited partnerships which invest in privately-held companies or privately-held real estate or other real assets.

26 unchanged sentences

Commingled Funds

Equity $ — $ 404.5

Debt $ 65.0 $ 788.8

Other 147.4 244.4

Private Real Estate 238.9

33 unchanged sentences

Debt 78.6 1,077.3

Other 104.2 27.4

Private Real Estate 234.2

8 unchanged sentences

The following table sets forth a summary of changes in the fair value of the plans’ Level 3 assets for the year ended December 31, 2022.

2021 Realized

(losses) Purchases

acquisitions Sales

dispositions Currency and unrealized gains (losses) relating to instruments still held at December 31, 2021 December 31, 2021

dispositions Currency and unrealized gains (losses) relating to instruments still held at December 31, 2022

December 31, 2022

What changed 10-K

Item 8. Financial Statements and Supplementary Data