What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-25 compared with 2025-02-21 · 202 added, 134 removed, 193 unchanged (64% of the section changed)

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(For a discussion of 2024 compared with 2023, refer to Part II, Item 7 contained in the company’s Form 10-K for the fiscal year ended December 31, 2024.)

In 2024, the company recorded a net loss attributable to Unisys Corporation of $193.4 million, or $2.79 per diluted share, compared with a loss of $430.7 million, or $6.31 per diluted share, in 2023.

The net loss in 2024 and 2023 included $130.6 million and $348.9 million, respectively, of defined benefit pension plan settlement losses.

The net loss in 2024 included a goodwill impairment charge of $39.1 million within the Digital Workplace Solutions (DWS) reportable segment and a tax provision established for certain foreign subsidiaries of $27.3 million as the company is no longer asserting indefinite reinvestment of the earnings of those foreign subsidiaries.

In 2025, the company recorded a net loss attributable to Unisys Corporation of $339.8 million, or $4.79 per diluted share, compared with a net loss of $193.4 million, or $2.79 per diluted share, in 2024.

The net loss in 2025 and 2024 included $228.2 million and $130.6 million, respectively, of defined benefit pension plan settlement losses and goodwill impairment charges of $55.0 million and $39.1 million, respectively, related to the Digital Workplace Solutions (DWS) reportable segment.

During 2025, the company purchased a group annuity contract, with plan assets, for approximately $316 million to transfer projected benefit obligations related to one of the company’s U.S.

defined benefit pension plans.

This action resulted in a pre-tax settlement loss of $130.1 million in 2024.

During 2023, the company purchased two group annuity contracts, with pension plan assets, for approximately $516 million to transfer projected benefit obligations related to the company’s U.S.

This action resulted in a pre-tax settlement loss of $227.7 million for the year ended December 31, 2025.

During 2024, the company purchased a group annuity contract, with plan assets, for approximately $192 million to transfer projected benefit obligations related to one of the company’s U.S.

defined benefit pension plans.

These actions resulted in pre-tax settlement losses of $348.2 million in 2023.

This action resulted in a pre-tax settlement loss of $130.1 million in 2025.

Results of operations

Company results

Revenue for 2024 was $2.01 billion compared with $2.02 billion for 2023, a decrease of 0.3%.

Revenue for 2025 was $1,950.1 million compared with $2,008.4 million for 2024, a decrease of 2.9%.

The decrease was primarily due to lower volume with clients in the Digital Workplace Solutions (DWS) and Cloud, Applications & Infrastructure Solutions (CA&I) reportable segments.

Foreign currency fluctuations had a negligible impact on revenue in 2025 compared with 2024.

Revenue from international operations for 2024 was $1.14 billion compared with $1.13 billion for 2023, an increase of 1.6%.

Foreign currency had a negligible impact on international revenue in 2024 compared with 2023.

Revenue from U.S.

operations was $864.1 million for 2024 compared with $889.0 million for 2023, a decrease of 2.8%.

During 2024, the company recognized cost-reduction charges and other costs of $20.6 million.

The net charges related to workforce reductions were $13.5 million, principally related to severance costs, and were comprised of:

(a) a charge of $23.7 million and (b) a credit of $10.2 million for changes in estimates.

In addition, the company recorded net charges of $7.1 million comprised of a charge of $4.4 million for an asset impairment, a charge of $2.6 million for net foreign currency losses related to exiting foreign countries and a net charge of $0.1 million for other expenses and changes in estimates related to other cost-reduction efforts.

During 2023, the company recognized cost-reduction charges and other costs of $9.3 million.

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.

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.

License and Support (L&S) represents software license and related support services, primarily ClearPath® Forward, within the company's Enterprise Computing Solutions (ECS) reportable segment.

Software license renewals tend to be significant and impactful to revenue and gross profit based on timing, which can fluctuate considerably from quarter to quarter.

L&S revenue for 2025 was $428.1 million compared to $431.5 million for 2024, a decrease of 0.8%.

Excluding License and Support (Ex-L&S) measures exclude revenue, gross profit and gross profit margin in connection with software license and related support services within the ECS reportable segment.

Ex-L&S revenue for 2025 was $1,522.0 million compared with $1,576.9 million for 2024, a decrease of 3.5%.

The decrease was primarily driven by lower volume with clients in the DWS and CA&I reportable segments.

During 2025, the company recognized net cost-reduction charges and other costs of $30.5 million.

The net charges related to workforce reductions were $23.0 million and were comprised of:

(a) a charge of $27.6 million for severance costs and (b) a credit of $4.6 million for changes in estimates.

In addition, the company recorded net charges of $7.5 million comprised of $4.3 million of lease abandonment costs and an asset write-off charge of $3.2 million.

During 2024, the company recognized net cost-reduction charges and other costs of $18.0 million.

The net charges related to workforce reductions were $13.5 million and were comprised of:

(a) a charge of $23.7 million for severance costs and (b) a credit of $10.2 million for changes in estimates.

In addition, the company recorded net charges of $4.5 million comprised of an asset write-off charge of $4.4 million and a net charge of $0.1 million for other expenses related to other cost-reduction efforts.

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

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Cost of revenue

Services $ 8.0 $ 4.9

Technology 4.1 0.7

$ 18.0 $ 12.1

Selling, general and administrative 9.4 6.0

Research and development 3.1 (0.1)

Other (expenses), net 2.6 (3.7)

Total $ 30.5 $ 18.0

Gross profit and gross profit margin were $549.3 million and 28.2% in 2025, respectively, and $585.9 million and 29.2% in 2024, respectively.

The increases in gross profit and gross profit margin in 2024 were primarily due to delivery modernization

and labor cost savings initiatives, partially offset by higher cost reduction charges in 2024.

Prior year gross profit margin was negatively impacted by certain adjustments related to a previously exited contract.

The decreases in gross profit and gross profit margin in 2025 were primarily driven by a higher proportion of hardware revenue within the ECS reportable segment.

Ex-L&S gross profit and gross profit margin were $255.4 million and 16.8% in 2025, respectively, compared with $277.6 million and 17.6% in 2024, respectively.

The decreases in Ex-L&S gross profit and gross profit margin in 2025 were primarily driven by lower volume with clients in the DWS and CA&I reportable segments.

Selling, general and administrative expenses were $391.2 million in 2025 (20.1% of revenue) and $424.2 million in 2024 (21.1% of revenue).

The decrease was primarily driven by lower professional services.

The decrease in 2025 was primarily attributable to a reduction in variable compensation expense of $17.2 million and lower professional services expense of $7.4 million, in addition to cost savings achieved through prior cost reduction actions.

Research and development (R&D) expenses in 2025 were $24.6 million compared with $25.2 million in 2024.

In 2025, the company reported an operating profit of $78.5 million compared with an operating profit of $97.4 million in 2024.

The increase in 2024 was primarily driven by higher gross profit and lower selling, general and administrative expenses as discussed above, partially offset by a goodwill impairment charge of $39.1 million related to the DWS reportable segment.

See Note 1, “Summary of significant accounting policies” of the Notes to Consolidated Financial Statements for details on the goodwill impairment.

The decrease in 2025 was primarily due to a higher goodwill impairment charge of $55.0 million in 2025, compared to $39.1 million in 2024, both related to the DWS reportable segment.

See Note 1, “Description of business and significant accounting policies” of the Notes to Consolidated Financial Statements for details on the goodwill impairments.

Interest expense was $53.4 million in 2025 compared with $31.9 million in 2024.

Other (expense), net was expense of $140.8 million in 2024 compared with expense of $393.9 million in 2023.

Other (expense), net in 2024 and 2023 included $130.6 million and $348.9 million, respectively, of pension settlement losses.

Additionally, other (expense), net in 2024 included a gain of $40.0 million related to a favorable settlement of a litigation matter and a net gain of $14.9 million related to a favorable judgment received in a Brazilian services tax matter.

The increase in 2025 was primarily due to increased long-term debt balance and higher interest rate following the issuance of $700 million aggregate principal amount of the 10.625% Senior Secured Notes due 2031 (the 2031 Notes) in June 2025.

Other (expense), net was expense of $297.3 million in 2025, which included pension plan settlement losses of $228.2 million, compared with expense of $140.8 million in 2024, which included pension plan settlement losses of $130.6 million.

In 2025, other (expense), net also included a loss on debt extinguishment of $7.0 million related to the repurchase, satisfaction and discharge of the 6.875% Senior Secured Notes due 2027 (the 2027 Notes).

In 2024, other (expense), net included a $40.0 million gain related to a favorable settlement of a litigation matter and a net gain of $14.9 million related to a favorable judgment received in a Brazilian services tax matter.

See Note 5, “Other (expense), net,” of the Notes to Consolidated Financial Statements for details of other (expense), net.

Pension expense in 2024 was $182.8 million compared with $391.3 million in 2023.

Pension expense in 2024 and 2023 included $130.6 million and $348.9 million, respectively, of settlement losses primarily related to the company’s U.S.

defined benefits plans.

See Note 17, “Employee plans,” of the Notes to Consolidated Financial Statements for details of the settlement losses.

The loss before income taxes in 2025 was $272.2 million compared with a loss of $75.3 million in 2024.

The net loss in 2024 and 2023 included $130.6 million and $348.9 million, respectively, of settlement losses related to the company’s defined benefit pension plans.

Additionally, the loss before income taxes in 2024 included a goodwill impairment charge of $39.1 million related to the DWS reportable segment.

The loss in 2025 and 2024 included pension plan settlement losses of $228.2 million and $130.6 million, respectively, and goodwill impairment charges of $55.0 million and $39.1 million, respectively, related to the DWS reportable segment.

The provision for income taxes in 2025 was $67.8 million compared with a provision of $117.9 million in 2024.

The change in the tax provision was primarily driven by a provision of $27.3 million established for certain foreign subsidiaries for which the company is no longer asserting indefinite reinvestment of earnings, the geographic distribution of income and the net change in the valuation allowances of approximately $7.9 million, primarily in the United Kingdom.

The change in the tax provision was driven by a the geographic distribution of income, the prior year provision of $27.7 million established for certain foreign subsidiaries for which the company is no longer asserting indefinite reinvestment of earnings and net changes in the valuation allowance.

The net change in the valuation allowance impacting the effective tax rate was a tax benefit of $5.3 million in 2025, primarily related to the company’s German operations, compared to a tax expense of $7.9 million in 2024, primarily related to the company’s United Kingdom’s operations.

The effective tax rate in 2025 and 2024 was (24.9)% and (156.6)%, respectively, primarily driven by U.S.

operating losses with no tax benefit as the deferred tax assets are subject to a full valuation allowance and non-creditable withholding taxes in the U.S.

and jurisdictions with no valuation allowance that are subject to tax.

Additionally, the effective tax rate in 2024 was impacted by a change in the company’s indefinite reinvestment assertion of the earnings in certain foreign subsidiaries.

See Note 7, “Income taxes,” of the Notes to Consolidated Financial Statements for further details.

operating losses with no tax benefit as the deferred tax assets are subject to a full valuation allowance, non-creditable withholding taxes in the U.S., jurisdictions with no valuation allowance that are subject to tax and the prior year change in the company’s indefinite reinvestment assertion of the earnings in certain foreign subsidiaries.

See Note 6, “Income taxes,” of the Notes to Consolidated Financial Statements for details on the effective income tax rate reconciliation.

The company evaluates quarterly the realizability of its deferred tax assets by assessing its valuation allowance and by adjusting such amount, if necessary.

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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, 2024 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.

During 2024 and 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 allowance impacting the effective tax rate in 2024 was approximately $7.9 million, primarily in the United Kingdom, and in 2023, the net change was approximately $2.1 million, primarily in Latin America.

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.

In 2021, the Organization for Economic Cooperation and Development introduced a framework to implement a global minimum corporate tax of 15%, referred to as Pillar Two, effective January 1, 2024, and onward.

While it is uncertain whether the U.S.

will enact legislation to adopt Pillar Two, certain countries in which the company operates have adopted such legislation, and other countries are in the process of introducing legislation to implement this minimum tax directive.

Pillar Two did not have a material effect on the company’s global effective tax rate and its consolidated financial statements.

The net loss attributable to Unisys Corporation for 2024 was $193.4 million, or $2.79 per diluted share, compared with a net loss of $430.7 million, or $6.31 per diluted share in 2023.

The net loss in 2024 and 2023 included $130.6 million and $348.9 million, respectively, of settlement losses, net of tax, related to the company’s defined benefit pension plans.

Additionally, the net loss in 2024 included a goodwill impairment charge of $39.1 million related to the DWS reportable segment and a tax provision of $27.3 million established for certain foreign subsidiaries for which the company is no longer asserting indefinite reinvestment of earnings.

The realization of the company’s net deferred tax assets is primarily dependent on its 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 operating results, strategic operational and tax initiatives, legislative, and other economic factors and developments.

The Organization for Economic Co-operation and Development (OECD) and participating countries continue to work toward the enactment of a 15% global minimum corporate tax rate.

Many countries where the company operates have enacted or are in the process of enacting laws based on the OECD’s proposals.

These tax changes did not have a material impact to the company’s effective income tax rate in 2025.

Net loss attributable to Unisys Corporation for 2025 was $339.8 million, or $4.79 per diluted share, compared with a net loss of $193.4 million, or $2.79 per diluted share in 2024.

In 2025 and 2024, the net loss included pension plan settlement losses, net of tax, of $228.2 million and $130.6 million, respectively, and goodwill impairment charges of $55.0 million and $39.1 million,

respectively, related to the DWS reportable segment.

Additionally in 2024, the net loss included a tax provision of $27.7 million established for certain foreign subsidiaries for which the company is no longer asserting indefinite reinvestment of earnings.

The following table represents Ex-L&S and L&S financial measures:

Year ended December 31, 2025 2024

(In millions, except for numbers presented as percentages)

L&S revenue $ 428.1 $ 431.5

Ex-L&S revenue

1,522.0 1,576.9

Revenue $ 1,950.1 $ 2,008.4

L&S gross profit $ 293.9 $ 308.3

Ex-L&S gross profit 255.4 277.6

Gross profit $ 549.3 $ 585.9

L&S gross profit percent

68.7 % 71.4 %

Ex-L&S gross profit percent 16.8 % 17.6 %

Gross profit percent 28.2 % 29.2 %

Segment results

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The company evaluates the performance of the segments based on segment revenue and segment gross profit.

Segment revenue and segment gross profit are exclusive of certain activities and expenses that are not allocated to specific segments related to certain non-core business activities including the company’s business process solutions, which primarily provides for the management of processes and functions for clients in select industries, and a U.K.

business process outsourcing consolidated joint venture.

Additionally, certain expenses such as restructuring charges, amortization of purchased intangibles and unusual and nonrecurring items are not allocated to specific segments.

Segment revenue and segment gross profit are exclusive of certain activities and expenses that are not allocated to specific segments including the business activities related to the company’s United Kingdom business process outsourcing consolidated joint venture and certain expenses such as cost reduction charges, amortization of purchased intangibles and unusual and nonrecurring items that are not allocated to specific segments.

These amounts are combined within other revenue and other gross profit (loss) to arrive at consolidated revenue and consolidated gross profit (loss).

See Note 18, “Segment information,” of the Notes to Consolidated Financial Statements for the reconciliations of segment revenue to total consolidated revenue and segment gross profit to total consolidated loss before income taxes.

Information by reportable segment is presented below:

(millions) Total Segments DWS CA&I ECS

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

(In millions, except numbers presented as percentages)

Total Segments DWS CA&I ECS

$ 1,870.1 $ 508.4 $ 732.8 $ 628.9

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DWS revenue was $508.4 million in 2025 and $523.5 million in 2024, a decrease of 2.9%.

The decline in revenue in 2024 was primarily driven by lower volume with existing clients, partially offset by revenue from expansion and new scope for existing clients and new logo contracts, as compared to the prior-year period.

Foreign currency fluctuations had a negligible impact on DWS revenue in 2025 compared with 2024.

Gross profit percent was 14.5% in 2025 and 15.7% in 2024.

The increase in gross profit percent in 2024 compared with 2023 was primarily driven by delivery modernization and efficiency initiatives.

The decreases in revenue and gross profit percent were primarily driven by lower volume with clients.

CA&I revenue was $732.8 million in 2025 and $764.4 million in 2024, a decrease of 4.1%.

Foreign currency fluctuations had a negligible impact on CA&I revenue in 2024 compared with 2023.

The decrease in revenue was primarily driven by lower volume with clients in the public sector.

Foreign currency fluctuations had a negligible impact on

CA&I revenue in 2025 compared with 2024.

Gross profit percent was 20.2% in 2025 and 19.6% in 2024.

The increase in gross profit percent in 2024 compared with 2023 was primarily driven by labor cost savings initiatives.

ECS revenue was $651.3 million in 2024 and $648.0 million in 2023, an increase of 0.5%.

The increase in gross profit percent was primarily driven by labor cost savings initiatives.

ECS revenue was $628.9 million in 2025, which remained relatively flat compared to revenue in 2024 of $627.5 million.

Foreign currency fluctuations had a negligible impact on ECS revenue in 2025 compared with 2024.

Gross profit percent was 55.5% in 2025 and 58.0% in 2024.

The decrease in gross profit percent in 2024 compared with 2023 was primarily driven by a higher proportion of hardware revenue, which has a lower gross margin relative to license renewals.

The decrease in gross profit percent was primarily driven by a higher proportion of hardware revenue, which has a lower gross margin profile relative to license renewals.

Total Contract Value and Backlog

Total Contract Value (TCV) represents the initial estimated revenue related to contracts signed in the period without regard for early termination or revenue recognition rules.

Changes to contracts and scope are treated as TCV only to the extent of the incremental new value.

New Business TCV represents TCV attributable to expansion and new scope for existing clients and new logo contracts.

L&S TCV is driven by software license renewals, and as such, changes in timing or terms of renewals can lead to fluctuations from period to period.

Measuring TCV involves the use of estimates and judgments and the extent and timing of conversion of TCV to revenue may be impacted by, among other factors, the types of services and solutions sold, contract duration, the pace of client spending, actual volumes of services delivered as compared to the volumes anticipated at the time of contract signing, and contract modifications, including, without limitation, contract nullification and termination, over the lifetime of a contract.

Backlog represents the estimated amount of future revenue to be recognized under contracted work, which has not yet been delivered or performed.

The timing of conversion of backlog to revenue may be impacted by, among other factors, the timing of execution, the extension, nullification or early termination of existing contracts with or without penalty, adjustments to estimates in pricing or volumes for previously included contracts, seasonality and foreign currency exchange rates.

The following table summarizes the company’s TCV metrics.

Year ended December 31, 2025 2024 % Change

(In millions, except numbers presented as percentages)

New Business (i)(ii)

$ 491 $ 791 (38) %

Ex-L&S renewals

1,353 633 114 %

363 522 (30) %

$ 2,207 $ 1,946 13 %

(i) New Business relates to expansion and new scope for existing clients and new logo contracts.

(ii) In 2025, New Business TCV includes a mutually agreed-upon client termination adjustment of $228 million that was previously recorded in the first quarter of 2025.

Accordingly, adjusted prior periods amounts for New Business TCV are $109 million for the three months ended March 31, 2025, $231 million for six months ended June 30, 2025, and $355 million for the nine months ended September 30, 2025.

In 2025, total TCV was $2,207 million and $1,946.0 million in 2024, an increase of 13%.

The increase was primarily driven by a higher concentration of Ex-L&S renewals, partially offset by a decrease in New Business.

The decrease in New Business reflects elongated sales cycles with prospective clients.

Backlog was $3.16 billion as of December 31, 2025 compared to $2.84 billion as of December 31, 2024.

The increase was primarily due to Ex-L&S renewal signings.

The company believes that actual revenue reflects the most relevant measure necessary to understand the company’s results of operations, but TCV can be a useful leading indicator of the company’s ability to generate future revenue over time and backlog can be a useful metric and indicator of the company’s estimate of contracted revenue to be realized in the future, in each case subject to certain inherent limitations as explained above.

TCV and backlog should not be relied upon as substitutes for, or considered in isolation from, measures in accordance with generally accepted accounting principles in the United States of America.

New accounting pronouncements

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As of December 31, 2025, $234.1 million of cash and cash equivalents were held by the company’s foreign subsidiaries and branches operating outside of the U.S.

The company may not be able to readily transfer approximately one-fifth of these funds out of the country in which they are located as a result of local restrictions, contractual or other legal arrangements or commercial considerations.

Additionally, any transfers of these funds to the U.S.

in the future may require the company to accrue or pay withholding or other taxes on a portion of the amount transferred.

The company may not be able to readily transfer approximately one-third of these funds out of the country in which they are located as a result of local restrictions, contractual or other legal arrangements or commercial considerations.

At December 31, 2025, the deferred tax liability on undistributed earnings was $31.3 million.

Transfers of international cash and cash equivalents to the U.S.

will require the company to pay withholding or other taxes on a portion of the amount transferred.

At December 31, 2025, the company maintained cash balances in various operating accounts in excess of federally insured limits.

The company monitors this risk by evaluating the creditworthiness of the financial institutions.

During 2024, cash provided by operating activities was $135.1 million compared with cash provided by operations of $74.2 million during 2023.

The increase in operating cash in 2024 was primarily due to lower international pension contributions and favorable settlements of legal and other matters.

Cash used for investing activities during 2024 was $97.4 million compared with cash used for investing activities of $69.6 million during 2023.

Net purchases of foreign exchange forward contracts were $17.3 million in 2024 compared with net proceeds of $11.2 million in 2023.

During 2025, cash used for operating activities was $140.0 million compared with cash provided by operations of $135.1 million during 2024.

The decline in operating cash in 2025 was primarily driven by cash contributions to the company's defined benefit pension plans, including a discretionary cash contribution of $250 million to its U.S.

defined benefit pension plans, partially offset by changes in working capital.

During 2025, cash used for investing activities was $31.8 million compared with cash used for investing activities of $97.4 million during 2024.

Net proceeds of foreign exchange forward contracts were $37.0 million in 2025 compared with net purchases of $17.3 million in 2024.

Proceeds from foreign exchange forward contracts and purchases of foreign exchange forward contracts represent derivative financial instruments used to manage the company’s currency exposure to market risks from changes in foreign currency exchange rates.

In addition, capital additions of properties were $16.0 million in 2024 compared with $21.3 million in 2023, capital additions of outsourcing assets were $16.3 million in 2024 compared with $11.4 million in 2023 and the investment in marketable software was $47.5 million in 2024 compared with $46.0 million in 2023.

Cash used for financing activities during 2024 was $18.1 million compared with cash used for financing activities of $17.3 million during 2023.

In March 2024, the company purchased a group annuity contract, with plan assets, for approximately $192 million to transfer projected benefit obligations related to approximately 3,800 retirees of one of the company’s U.S defined benefit pension plans.

This action resulted in a pre-tax settlement loss of $130.1 million for the year ended December 31, 2024.

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.

In November 2023, the company purchased a group annuity contract, with plan assets, for approximately $253 million to transfer projected benefit obligations related to approximately 3,900 retirees of one of the company’s U.S.

defined benefit pension plans.

This action resulted in a pre-tax settlement loss of $167.2 million for the year ended December 31, 2023.

After considering the most recent group annuity contract purchase, the company has successfully reduced its global defined benefit pension obligations since December 2020 by approximately $2.2 billion, including approximately $1.5 billion in the U.S.

The company will continue to evaluate opportunities for additional reduction of its global defined benefit pension obligations in future periods depending on overall market conditions.

Due to the company’s significant pension and 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 global defined benefit pension plans based on year-end pension data, assumptions and agreements.

In 2024, the company made cash contributions of $21.9 million, primarily for its international defined benefit pension plans.

Based on current legislation, global regulations, recent interest rates and expected returns, the company estimates future cash contributions of approximately $92 million in 2025, primarily for its U.S.

defined benefit pension plans.

The company estimates totaled cash contributions to its U.S.

defined benefit pension plans of approximately $120 million in 2026 and approximately $750 million in the aggregate from 2027 through 2034.

If the company is not able to generate sufficient cash flows from operations, it may need to obtain additional funding in order to make these contributions.

Any material deterioration in the value of the company’s global 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 in different amounts and on a different schedule than previously estimated.

During 2025, the company ceased its use of foreign currency forward contracts.

In the current period, the investment in marketable software was $47.6 million in 2025 compared with $47.5 million in 2024 and capital additions of properties and other assets were $30.0 million in 2025 compared with $32.3 million in 2024.

During 2025, cash provided by financing activities was $186.0 million compared with cash used for financing activities of $18.1 million during 2024, primarily driven by the net proceeds received from the issuance of the 2031 Notes, partially offset by the repurchase, satisfaction and discharge of the 2027 Notes, both of which are described below.

At December 31, 2025, total debt was $741.7 million compared with $493.2 million at December 31, 2024.

See Note 13, “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.

As of December 31, 2024, the company’s operating lease liabilities were $43.9 million.

The company also has a number of finance leases for equipment, with lease liabilities totaling $2.8 million as of December 31, 2024.

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.

Additionally, as described in Note 4, “Cost-reduction actions,” of the Notes to Consolidated Financial Statements, the company expects to make payments of approximately $13.0 million in 2025 related to the company’s workforce reduction actions.

The company has a secured revolving credit facility (the Amended and Restated ABL Credit Facility), which was amended in October 2024 (the Amendment).

Among other things, the Amendment extended the maturity from October 29, 2025 to October 29, 2027 and reduced the aggregate amount of loans and letters of credit available under the Amended and Restated ABL Credit Facility to $125.0 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 $155.0 million upon the satisfaction of certain specified conditions.

Senior Secured Notes due 2031

In June 2025, the company completed a private placement offering of $700.0 million aggregate principal amount of the 2031 Notes.

The 2031 Notes will pay interest semiannually on January 15 and July 15, commencing on January 15, 2026.

The 2031 Notes are fully and unconditionally guaranteed on a senior secured basis by Unisys Holding Corporation, Unisys AP Investment Company I and Unisys NPL, Inc., each a Delaware corporation that is directly or indirectly wholly owned by the company (the Subsidiary Guarantors).

The net proceeds from the issuance of the 2031 Notes, together with cash on hand, were used to finance the company’s tender offer to purchase for cash any and all of its outstanding 2027 Notes and solicitation of consents from holders of the 2027 Notes to amendments to the indenture governing the 2027 Notes (the Tender Offer) and the payment of related premiums, fees and expenses.

The company also used the net proceeds from the issuance of the 2031 Notes to redeem, on or about November 1, 2025, any 2027 Notes that remained outstanding following the Tender Offer, as explained under the Senior Secured Notes due 2027 section below, and to fund, together with cash on hand a portion of the company’s U.S.

defined benefit pension plans deficit and postretirement liabilities.

The 2031 Notes and the guarantees by the Subsidiary Guarantors rank equally in right of payment with all of the existing and future senior debt of the company and the Subsidiary Guarantors and senior in right of payment to any future subordinated debt of the company and the Subsidiary Guarantors.

The 2031 Notes and the guarantees are structurally subordinated to all existing and future liabilities (including preferred stock, trade payables and pension liabilities) of the subsidiaries of the company that are not Subsidiary Guarantors.

The 2031 Notes and the guarantees are secured by liens on substantially all assets of the company and the Subsidiary Guarantors, other than certain excluded assets (the collateral).

The liens securing the 2031 Notes on certain Asset Based Lending (ABL) collateral are subordinated to the liens on ABL collateral in favor of the ABL secured parties, subject to certain limitations and permitted liens.

The company may, at its option, redeem some or all of the 2031 Notes at any time on or after January 15, 2028, at a redemption price determined in accordance with the redemption schedule, plus accrued and unpaid interest, if any.

Prior to January 15, 2028, the company may, at its option, redeem some or all of the 2031 Notes at any time, at a price equal to 100% of the principal amount of the 2031 Notes redeemed plus a “make-whole” premium, plus accrued and unpaid interest, if any.

The company may also redeem, at its option, up to 40% of the 2031 Notes at any time prior to January 15, 2028, using the proceeds of certain equity offerings at a redemption price of 110.625% of the principal amount thereof, plus accrued and unpaid interest, if any.

On or after January 15, 2028, the company may, on any one or more occasions, redeem all or part of the 2031 Notes at specified redemption premiums, declining to par for any redemptions on or after January 15, 2030.

Prior to January 15, 2028, the company may redeem up to 10% of the aggregate principal amount of the 2031 Notes during each calendar year, commencing in 2025, at a purchase price equal to 103% of the principal amount of the 2031 Notes, plus accrued and unpaid interest, if any.

The indenture relating to the 2031 Notes contains covenants that limit the ability of the company and its restricted subsidiaries (as defined therein) to, among other things:

(i) incur additional indebtedness and guarantee indebtedness;

(ii) pay dividends or make other distributions or repurchase or redeem its capital stock;

(iii) prepay, redeem or repurchase certain debt;

(iv) make loans and investments (including investments by the company and the Subsidiary Guarantors in subsidiaries that are not guarantors);

(v) sell assets;

(vi) create or incur liens;

(vii) enter into transactions with affiliates;

(viii) enter into agreements restricting its subsidiaries’ ability to pay dividends;

and (ix) consolidate, merge or sell all or substantially all of its assets.

These covenants are subject to several important limitations and exceptions.

If the company experiences certain kinds of changes of control (as defined in the indenture), it must offer to purchase the 2031 Notes at 101% of the principal amount of the 2031 Notes, plus accrued and unpaid interest, if any.

In addition, if the company sells assets under certain circumstances, it must apply the proceeds of such asset sales towards an offer to repurchase the 2031 Notes at a price equal to par plus accrued and unpaid interest, if any.

The indenture also provides for events of default, which, if any of them occur, would permit or require the principal, premium, if any, interest and any other monetary obligations on all the then outstanding 2031 Notes to be due and payable immediately.

Senior Secured Notes due 2027

On June 11, 2025, the company commenced the Tender Offer.

The purchase price offered per $1,000 principal amount of 2027 Notes pursuant to the Tender Offer was $1,006.25, which included an early tender premium of $30.00 per $1,000 principal amount of 2027 Notes.

Concurrent with the closing of the issuance of the 2031 Notes, the company paid an aggregate amount of $488.6 million, including $3.0 million of early tender premium and $5.5 million of accrued interest and other expenses through June 27, 2025, to purchase $480.1 million of aggregate principal amount outstanding of the 2027 Notes tender in the Tender Offer.

On June 27, 2025, the company satisfied and discharged the indenture relating to the 2027 Notes, issued a notice of redemption for its remaining outstanding principal amount, and deposited U.S.

government securities with the trustee of the 2027 Notes to

cover the remaining outstanding aggregate principal amount of $4.9 million, plus accrued but unpaid interest on the 2027 Notes to be redeemed to, but not including, the redemption date.

As a result of the satisfaction and discharge, the indenture relating to the 2027 Notes ceased to be of further effect except as to rights of registration of transfer or exchange of 2027 Notes, which survive until all 2027 Notes have been canceled and the rights, protections and immunities of the trustee, as expressly provided for in the indenture relating to the 2027 Notes.

The satisfaction and discharge of the 2027 Notes resulted in a loss on debt extinguishment of $7.0 million in 2025, reported in other (expense), net in the company’s consolidated statements of income (loss), which included $4.0 million in unamortized debt issuance costs write-off and other expenses and an early tender premium of $3.0 million paid to repurchase a portion of the 2027 Notes.

Asset Based Lending (ABL) Credit Facility

Concurrently with the issuance of the 2031 Notes, the company entered into an amendment of the company’s Amended and Restated ABL Credit Facility that extended the maturity date from October 2027 to June 2030 and modified certain other terms and covenants.

The secured revolving credit facility continues to provide for revolving loans and letters of credit up to an aggregate amount of $125.0 million (with a limit on letters of credit of $40.0 million), with an uncommitted accordion feature allowing for the aggregate amount available to be increased up to $155.0 million upon the satisfaction of certain specified conditions.

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

At December 31, 2024, the company had no borrowings and no letters of credit outstanding, and availability under the facility was $117.1 million.

Any borrowings under the facility will be subject to variable interest rates.

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 the maturity of the company’s 6.875% Senior Secured Notes due 2027 (the 2027 Notes) or 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 remaining outstanding balance of the

2027 Notes or the amount of such pension payments, as applicable, 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.

At December 31, 2025, the company had no borrowings and $13.5 million of letters of credit outstanding.

Availability under the credit facility was $92.2 million, net of letters of credit issued.

Any borrowings under the credit facility will be subject to variable interest rates.

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, as applicable, 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 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).

corporation that is directly or indirectly owned by the company (the subsidiary guarantors) and any future material domestic subsidiaries.

The facility is secured by the assets of the company and the subsidiary guarantors, other than certain excluded assets, under a security agreement entered into by the company and the subsidiary guarantors in favor of Bank of America, N.A., as agent for the lenders under the credit facility.

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The company expects to continue to meet these covenants and conditions through at least the next twelve months.

Pension and Postretirement Benefits

In September 2025, the company purchased a group annuity contract, with plan assets, for approximately $316 million to transfer projected benefit obligations related to approximately 3,150 retirees of one of the company’s U.S.

defined benefit pension plans.

This action resulted in a pre-tax settlement loss of $227.7 million for the year ended December 31, 2025.

This annuity contract purchase transaction was the first step in the company's plan to reduce approximately $600 million of U.S.

qualified defined benefit pension plan liabilities through the end of 2026.

In 2025, the company made cash pension plan contributions totaling $343.7 million, which included a discretionary contribution of $250 million to its U.S.

defined benefit pension plans.

The discretionary contribution was funded with approximately $200 million from the net proceeds of issuance of the 2031 Notes and $50 million from cash on hand.

result, the company’s pension and postretirement liabilities and projected future required cash contributions were reduced.

The company also made strategic changes to its underlying investments in its U.S.

qualified defined benefit pension plans, leading to a future expected return on plan assets in 2026 of 4.85%.

At the end of each year, the company estimates its future cash contributions to its global defined benefit pension plans based on year-end pension data, assumptions and agreements.

Based on current legislation, global regulations, recent interest rates and expected returns, the company estimates future total cash contributions to its global defined benefit pension plans of approximately $87 million in 2026, including approximately $47 million to the company’s U.S.

defined benefit pension plans and approximately $40 million primarily to the company’s international defined benefit pension plans.

The company estimates totaled cash contributions to its global defined benefit pension plans of approximately $105 million in 2027 and approximately $241 million in the aggregate from 2028 through 2030.

If the company is not able to generate sufficient cash flows from operations, it may need to obtain additional funding in order to make these contributions.

Any material deterioration in the value of the company’s global defined benefit pension plan assets, as well as changes in pension legislation, market volatility, discount rate changes, asset return changes, or changes in economic or demographic trends, could require the company to make cash contributions in different amounts and on a different schedule than previously estimated.

The company will continue to evaluate opportunities for additional reduction of its global defined benefit pension obligations in future periods depending on overall market conditions.

As a result of the company’s significant accumulated other comprehensive losses associated with its pension and postretirement plans, any future group annuity contract purchase could result in material non-cash settlement losses, if executed.

Other Commitments

The company has commitments under operating leases for certain facilities and equipment used in its operations.

As of December 31, 2025, the company’s operating lease liabilities were $46.6 million.

The company also has a number of finance leases for equipment, with lease liabilities totaling $41.2 million as of December 31, 2025.

See Note 4, “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.

Additionally, as described in Note 3, “Cost-reduction actions,” of the Notes to Consolidated Financial Statements, the company expects to make payments of approximately $24.8 million in 2026 related to the company’s workforce reduction actions.

At December 31, 2025, the company had outstanding standby letters of credit and surety bonds totaling approximately $234 million related to performance and payment guarantees.

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however, to the extent there are material differences between these estimates, judgments and assumptions and actual results, the financial statements will be affected.

Although there are a number of accounting policies, methods and estimates affecting the company’s financial statements as described in Note 1, “Summary of significant accounting policies,” of the Notes to Consolidated Financial Statements, the following critical accounting policies reflect the significant estimates, judgments and assumptions.

Although there are a number of accounting policies, methods and estimates affecting the company’s financial statements as described in Note 1, “Description of business and significant accounting policies,” of the Notes to Consolidated Financial Statements, the following critical accounting policies reflect the significant estimates, judgments and assumptions.

The development and selection of these critical accounting policies have been determined by management of the company and the related disclosures have been reviewed with the Audit and Finance Committee of the Board of Directors.

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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.

As discussed in Note 1, “Description of business and 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.

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.

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The realization of the company’s deferred tax assets is primarily dependent on the ability to generate sustained taxable income in various jurisdictions.

See “Risk Factors” (Part I, Item 1A of this Form 10-K).

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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.

Additionally, 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.

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

Internal Revenue Code Sections 382 and 383 provide annual limitations with respect to the ability of a corporation to utilize its net operating loss (as well as certain built-in losses) and tax credit carryforwards, respectively (Tax Attributes), against future U.S.

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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.

The company 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.

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As permitted for purposes of computing pension expense, the company uses a calculated value of plan assets (which is further described below).

This allows the effects of the performance of the pension plan’s assets on the company’s computation of

pension income or expense to be amortized over future periods.

A substantial portion of the company’s pension plan assets relates to its qualified defined benefit plans in the United States.

This allows the effects of the performance of the pension plan’s assets on the company’s computation of pension income or expense to be amortized over future periods.

A substantial portion of the company’s pension plan assets relates to its qualified defined benefit plans in the U.S.

Funding requirements for its U.S.

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At December 31, 2025, the company determined this rate to be 5.73% for its U.S.

defined benefit pension plans, an increase of 39 basis points from the rate used at December 31, 2023, and 5.10% for the company’s non-U.S.

defined benefit pension plans, an increase of 86 basis points from the rate used at December 31, 2023.

defined benefit pension plans, a decrease of 36 basis points from the rate used at December 31, 2024, and 5.08% for the company’s non-U.S.

defined benefit pension plans, a decrease of 2 basis points from the rate used at December 31, 2024.

A change of 25 basis points in the U.S.

discount rates causes a change in 2025 pension expense of approximately $300 thousand in the U.S.

and a nominal change in the non-U.S pension expense, and a change in the U.S.

benefit obligation of approximately $35 million and $39 million, respectively.

discount rates causes a change in 2026 pension expense of approximately $400 thousand and $500 thousand, respectively, and a change of approximately $28 million and $39 million, respectively, in the benefit obligation.

These estimates are intended to be illustrative based on a single 25 basis point change.

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The company considers the current expectations for future returns and the actual historical returns of each asset class.

Also, because the company’s investment policy is to actively manage certain asset classes where the potential exists to outperform the broader market, the expected returns for those asset classes are adjusted to reflect the expected additional returns.

For 2026, the company has assumed that the expected long-term rate of return on U.S.

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At December 31, 2025, for the company’s U.S.

qualified defined benefit pension plans, the calculated value of plan assets was $1.61 billion and the fair value was $1.38 billion.

qualified defined benefit pension plans, the calculated value of plan assets was $1,351 million and the fair value was $1,301 million.

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.

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For the company’s U.S.

qualified defined benefit pension plans and non-U.S.

qualified defined benefit pension plans and the company’s non-U.S.

pension plans, that period is approximately 14 and 22 years, respectively.

At December 31, 2025, the estimated unrecognized loss for the company’s U.S.

qualified defined benefit pension plans and non-U.S.

pension plans was approximately $1.00 billion and $490 million, respectively.

For the year ended December 31, 2024, the company recognized consolidated pension expense of $182.8 million (which included $130.6 million of settlement losses) compared with $391.3 million for the year ended December 31, 2023 (which included $348.9 million of settlement losses).

qualified defined benefit pension plans and the company’s non-U.S.

pension plans was approximately $950 million and $770 million, respectively.

For the year ended December 31, 2025, the company recognized pension expense of $308.3 million, which included $228.2 million of settlement losses, compared with $182.8 million for the year ended December 31, 2024, which included $130.6 million of settlement losses.

For 2026, the company expects to recognize pension expense of approximately $120 million.

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The fair value of the DWS reporting unit was estimated using a combination of discounted cash flows and market-based valuation methodologies as noted above.

The discount rate and the expected gross profit margin rate applied in determining the DWS reporting unit’s fair value were 15.5% and 16.0%, respectively, with gross profit margin expected to trend up through 2028.

Based on the goodwill impairment analysis performed during the third quarter of 2025, the carrying value of the DWS reporting unit exceeded its respective fair value, resulting in the recognition of a goodwill impairment charge of $55.0 million.

During the fourth quarter of 2024, the company performed a quantitative goodwill impairment test for each reporting unit.

The quantitative assessment indicated that the DWS reporting unit had a fair value that equaled its carrying value and all the other reporting units’ fair values exceeded their carrying values, as such no additional impairment charge was recognized as of December 31, 2024.

A hypothetical 1% increase in the discount rate used in the determination of the DWS reporting unit’s fair value could have resulted in an increase in the goodwill impairment recorded of approximately $11 million.

A hypothetical 1% decrease in gross profit margin through all periods used in the determination of the DWS reporting unit’s fair value could have resulted in an increase in the goodwill impairment recorded of approximately $32 million.

During the fourth quarter of 2025, the company performed a qualitative assessment for its DWS and ECS reporting units and a quantitative goodwill impairment test for its CA&I reporting unit.

The assessments indicated that the DWS reporting unit had a fair value that equaled its carrying value and all the other reporting units’ fair values exceeded their carrying values, as such no additional impairment charge was recognized as of as of December 31, 2025.

The CA&I reporting unit had a fair value in excess of book value, including goodwill, of 20%.

The fair value of the reporting units was estimated 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 company continuously monitors and evaluates relevant events and circumstances that could unfavorably impact the significant assumptions noted above, including changes to U.S.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis