ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 38-0387840 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
801 Lakeview Drive, Suite 100 Blue Bell, Pennsylvania | 19422 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ¨ | Accelerated filer | ý | |||
Non-accelerated filer | ¨ | Smaller reporting company | ¨ | |||
Emerging growth company | ¨ |
PART I - FINANCIAL INFORMATION | Page Number | ||
Item 1. | Financial Statements (Unaudited) | ||
Consolidated Statements of Income | |||
Consolidated Statements of Comprehensive Income | |||
Consolidated Balance Sheets | |||
Consolidated Statements of Cash Flows | |||
Consolidated Statements of Deficit | |||
Notes to Consolidated Financial Statements | |||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | ||
Item 4. | Controls and Procedures | ||
PART II - OTHER INFORMATION | |||
Item 1. | Legal Proceedings | ||
Item 1A. | Risk Factors | ||
Item 6. | Exhibits | ||
Exhibit Index | |||
Signatures |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Revenue | ||||||||
Services | $ | 612.1 | $ | 568.5 | ||||
Technology | 83.7 | 139.9 | ||||||
695.8 | 708.4 | |||||||
Costs and expenses | ||||||||
Cost of revenue: | ||||||||
Services | 511.9 | 470.9 | ||||||
Technology | 34.0 | 36.3 | ||||||
545.9 | 507.2 | |||||||
Selling, general and administrative | 98.0 | 90.9 | ||||||
Research and development | 9.0 | 8.5 | ||||||
652.9 | 606.6 | |||||||
Operating income | 42.9 | 101.8 | ||||||
Interest expense | 15.5 | 16.6 | ||||||
Other income (expense), net | (30.4 | ) | (22.6 | ) | ||||
Income (loss) before income taxes | (3.0 | ) | 62.6 | |||||
Provision for income taxes | 13.8 | 20.9 | ||||||
Consolidated net income (loss) | (16.8 | ) | 41.7 | |||||
Net income attributable to noncontrolling interests | 2.6 | 1.1 | ||||||
Net income (loss) attributable to Unisys Corporation | $ | (19.4 | ) | $ | 40.6 | |||
Earnings (loss) per share attributable to Unisys Corporation | ||||||||
Basic | $ | (0.38 | ) | $ | 0.80 | |||
Diluted | $ | (0.38 | ) | $ | 0.62 |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Consolidated net income (loss) | $ | (16.8 | ) | $ | 41.7 | |||
Other comprehensive income: | ||||||||
Foreign currency translation | (34.2 | ) | (5.1 | ) | ||||
Postretirement adjustments, net of tax of $(1.1) in 2019 and $1.0 in 2018 | 68.5 | 39.0 | ||||||
Total other comprehensive income | 34.3 | 33.9 | ||||||
Comprehensive income | 17.5 | 75.6 | ||||||
Less comprehensive income attributable to noncontrolling interests | 0.5 | 2.3 | ||||||
Comprehensive income attributable to Unisys Corporation | $ | 17.0 | $ | 73.3 |
March 31, 2019 | December 31, 2018 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 504.6 | $ | 605.0 | |||
Accounts receivable, net | 522.7 | 509.2 | |||||
Contract assets | 30.3 | 29.7 | |||||
Inventories: | |||||||
Parts and finished equipment | 12.3 | 14.0 | |||||
Work in process and materials | 12.6 | 13.3 | |||||
Prepaid expenses and other current assets | 124.8 | 130.2 | |||||
Total current assets | 1,207.3 | 1,301.4 | |||||
Properties | 806.4 | 800.2 | |||||
Less-Accumulated depreciation and amortization | 683.8 | 678.9 | |||||
Properties, net | 122.6 | 121.3 | |||||
Outsourcing assets, net | 216.2 | 216.4 | |||||
Marketable software, net | 170.7 | 162.1 | |||||
Operating lease right-of-use assets | 115.5 | — | |||||
Prepaid postretirement assets | 151.4 | 147.6 | |||||
Deferred income taxes | 111.0 | 109.3 | |||||
Goodwill | 177.6 | 177.8 | |||||
Restricted cash | 12.2 | 19.1 | |||||
Other long-term assets | 200.0 | 202.6 | |||||
Total assets | $ | 2,484.5 | $ | 2,457.6 | |||
Liabilities and deficit | |||||||
Current liabilities: | |||||||
Current maturities of long-term debt | $ | 7.3 | $ | 10.0 | |||
Accounts payable | 213.8 | 268.9 | |||||
Deferred revenue | 292.2 | 294.4 | |||||
Other accrued liabilities | 348.6 | 350.0 | |||||
Total current liabilities | 861.9 | 923.3 | |||||
Long-term debt | 667.1 | 642.8 | |||||
Long-term postretirement liabilities | 1,927.2 | 1,956.5 | |||||
Long-term deferred revenue | 158.1 | 157.2 | |||||
Long-term operating lease liabilities | 97.2 | — | |||||
Other long-term liabilities | 55.5 | 77.4 | |||||
Commitments and contingencies | |||||||
Deficit: | |||||||
Common stock, shares issued: | |||||||
2019; 55.3, 2018; 54.2 | 0.6 | 0.5 | |||||
Accumulated deficit | (1,713.4 | ) | (1,694.0 | ) | |||
Treasury stock, shares at cost: | |||||||
2019; 3.5, 2018; 3.1 | (109.4 | ) | (105.0 | ) | |||
Paid-in capital | 4,543.7 | 4,539.8 | |||||
Accumulated other comprehensive loss | (4,048.4 | ) | (4,084.8 | ) | |||
Total Unisys stockholders’ deficit | (1,326.9 | ) | (1,343.5 | ) | |||
Noncontrolling interests | 44.4 | 43.9 | |||||
Total deficit | (1,282.5 | ) | (1,299.6 | ) | |||
Total liabilities and deficit | $ | 2,484.5 | $ | 2,457.6 |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Cash flows from operating activities | ||||||||
Consolidated net income (loss) | $ | (16.8 | ) | $ | 41.7 | |||
Adjustments to reconcile consolidated net income (loss) to net cash used for operating activities: | ||||||||
Foreign currency transaction losses | 4.8 | 3.3 | ||||||
Non-cash interest expense | 2.7 | 2.6 | ||||||
Employee stock compensation | 4.7 | 4.0 | ||||||
Depreciation and amortization of properties | 9.2 | 11.2 | ||||||
Depreciation and amortization of outsourcing assets | 15.8 | 16.1 | ||||||
Amortization of marketable software | 9.5 | 14.7 | ||||||
Other non-cash operating activities | (0.6 | ) | (0.9 | ) | ||||
Loss on disposal of capital assets | 1.2 | 0.2 | ||||||
Postretirement contributions | (23.1 | ) | (30.9 | ) | ||||
Postretirement expense | 23.5 | 19.3 | ||||||
(Increase) decrease in deferred income taxes, net | (3.1 | ) | 6.0 | |||||
Changes in operating assets and liabilities: | ||||||||
Receivables, net | 5.5 | (28.0 | ) | |||||
Inventories | 2.6 | 0.8 | ||||||
Accounts payable and other accrued liabilities | (121.0 | ) | (130.1 | ) | ||||
Other liabilities | 14.8 | 21.2 | ||||||
Other assets | (0.1 | ) | (1.4 | ) | ||||
Net cash used for operating activities | (70.4 | ) | (50.2 | ) | ||||
Cash flows from investing activities | ||||||||
Proceeds from investments | 893.9 | 1,222.7 | ||||||
Purchases of investments | (887.2 | ) | (1,208.7 | ) | ||||
Investment in marketable software | (18.0 | ) | (19.0 | ) | ||||
Capital additions of properties | (10.7 | ) | (5.1 | ) | ||||
Capital additions of outsourcing assets | (29.4 | ) | (24.4 | ) | ||||
Net proceeds from sale of properties | (0.1 | ) | — | |||||
Other | (0.4 | ) | (0.4 | ) | ||||
Net cash used for investing activities | (51.9 | ) | (34.9 | ) | ||||
Cash flows from financing activities | ||||||||
Proceeds from issuance of long-term debt | 27.7 | — | ||||||
Payments of long-term debt | (8.7 | ) | (0.7 | ) | ||||
Other | (4.4 | ) | (2.1 | ) | ||||
Net cash provided by (used for) financing activities | 14.6 | (2.8 | ) | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 0.4 | 6.8 | ||||||
Decrease in cash, cash equivalents and restricted cash | (107.3 | ) | (81.1 | ) | ||||
Cash, cash equivalents and restricted cash, beginning of period | 624.1 | 764.1 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 516.8 | $ | 683.0 |
Unisys Corporation | ||||||||||||||||||||||||||||||||
Total | Total Unisys Corporation | Common Stock Par Value | Accumu-lated Deficit | Treasury Stock At Cost | Paid-in Capital | Accumu-lated Other Compre-hensive Loss | Non-controlling Interests | |||||||||||||||||||||||||
Balance at January 1, 2019 | $ | (1,299.6 | ) | $ | (1,343.5 | ) | $ | 0.5 | $ | (1,694.0 | ) | $ | (105.0 | ) | $ | 4,539.8 | $ | (4,084.8 | ) | $ | 43.9 | |||||||||||
Consolidated net income (loss) | (16.8 | ) | (19.4 | ) | (19.4 | ) | 2.6 | |||||||||||||||||||||||||
Stock-based activity | (0.4 | ) | (0.4 | ) | 0.1 | (4.4 | ) | 3.9 | ||||||||||||||||||||||||
Translation adjustments | (34.2 | ) | (32.8 | ) | (32.8 | ) | (1.4 | ) | ||||||||||||||||||||||||
Postretirement plans | 68.5 | 69.2 | 69.2 | (0.7 | ) | |||||||||||||||||||||||||||
Balance at March 31, 2019 | $ | (1,282.5 | ) | $ | (1,326.9 | ) | $ | 0.6 | $ | (1,713.4 | ) | $ | (109.4 | ) | $ | 4,543.7 | $ | (4,048.4 | ) | $ | 44.4 |
Unisys Corporation | ||||||||||||||||||||||||||||||||
Total | Total Unisys Corporation | Common Stock Par Value | Accumu-lated Deficit | Treasury Stock At Cost | Paid-in Capital | Accumu-lated Other Compre-hensive Loss | Non-controlling Interests | |||||||||||||||||||||||||
Balance at January 1, 2018 | $ | (1,326.5 | ) | $ | (1,354.7 | ) | $ | 0.5 | $ | (1,963.1 | ) | $ | (102.7 | ) | $ | 4,526.4 | $ | (3,815.8 | ) | $ | 28.2 | |||||||||||
Cumulative effect adjustment - ASU No. 2014-09 | (21.4 | ) | (21.4 | ) | (21.4 | ) | ||||||||||||||||||||||||||
Consolidated net income | 41.7 | 40.6 | 40.6 | 1.1 | ||||||||||||||||||||||||||||
Stock-based activity | 1.5 | 1.5 | (2.1 | ) | 3.6 | |||||||||||||||||||||||||||
Translation adjustments | (5.1 | ) | (5.9 | ) | (5.9 | ) | 0.8 | |||||||||||||||||||||||||
Postretirement plans | 39.0 | 38.6 | 38.6 | 0.4 | ||||||||||||||||||||||||||||
Balance at March 31, 2018 | $ | (1,270.8 | ) | $ | (1,301.3 | ) | $ | 0.5 | $ | (1,943.9 | ) | $ | (104.8 | ) | $ | 4,530.0 | $ | (3,783.1 | ) | $ | 30.5 |
Three Months Ended March 31, 2019 | ||||
Operating lease cost | $ | 14.8 | ||
Finance lease cost | ||||
Amortization of right-of-use assets | 0.4 | |||
Interest on lease liabilities | — | |||
Total finance lease cost | 0.4 | |||
Short-term lease costs | 0.1 | |||
Variable lease cost | 3.9 | |||
Sublease income | (0.5 | ) | ||
Total lease cost | $ | 18.7 |
March 31, 2019 | ||||
Operating Leases | ||||
Operating lease right-of-use assets | $ | 115.5 | ||
Other accrued liabilities | 45.9 | |||
Long-term operating lease liabilities | 97.2 | |||
Total operating lease liabilities | $ | 143.1 | ||
Finance Leases | ||||
Outsourcing assets, net | $ | 4.7 | ||
Current maturities of long-term debt | $ | 1.6 | ||
Long-term debt | 3.8 | |||
Total finance lease liabilities | $ | 5.4 | ||
Weighted-Average Remaining Lease Term | ||||
Operating leases | 3.9 | |||
Finance leases | 3.3 | |||
Weighted-Average Discount Rate | ||||
Operating leases | 6.3 | % | ||
Finance leases | 2.5 | % |
Three Months Ended March 31, 2019 | ||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Cash payments for operating leases included in operating activities | $ | 13.4 | ||
Cash payments for finance leases included in financing activities | 0.5 |
Three Months Ended March 31, 2019 | ||||
Operating leases | $ | 6.7 | ||
Finance leases | — |
Year | Finance Leases | Operating Leases | ||||||
2019 | $ | 1.4 | $ | 40.4 | ||||
2020 | 1.6 | 47.0 | ||||||
2021 | 1.6 | 28.9 | ||||||
2022 | 1.0 | 17.8 | ||||||
2023 | — | 20.7 | ||||||
Thereafter | — | 6.6 | ||||||
Total lease payments | 5.6 | 161.4 | ||||||
Less imputed interest | 0.2 | 18.3 | ||||||
Total | $ | 5.4 | $ | 143.1 |
Year | Finance Leases | Operating Leases(i) | ||||||
2019 | $ | 1.6 | $ | 48.5 | ||||
2020 | 1.6 | 42.1 | ||||||
2021 | 1.6 | 30.0 | ||||||
2022 | 1.0 | 20.8 | ||||||
2023 | — | 14.3 | ||||||
Thereafter | — | 24.4 | ||||||
Total | $ | 5.8 | $ | 180.1 |
Year | |||
2019 | $ | 21.2 | |
2020 | 15.2 | ||
2021 | 10.7 | ||
2022 | 10.1 | ||
2023 | 10.2 | ||
Thereafter | 8.6 | ||
Total | $ | 76.0 |
Total | U.S. | International | ||||||||||
Balance at December 31, 2018 | $ | 86.2 | $ | 6.1 | $ | 80.1 | ||||||
Payments | (13.9 | ) | (0.5 | ) | (13.4 | ) | ||||||
Changes in estimates | (1.0 | ) | (0.8 | ) | (0.2 | ) | ||||||
Translation adjustments | (0.2 | ) | — | (0.2 | ) | |||||||
Balance at March 31, 2019 | $ | 71.1 | $ | 4.8 | $ | 66.3 | ||||||
Expected future utilization on balance at March 31, 2019: | ||||||||||||
2019 remaining nine months | $ | 59.8 | $ | 4.8 | $ | 55.0 | ||||||
Beyond 2019 | $ | 11.3 | $ | — | $ | 11.3 |
Three Months Ended March 31, 2019 | Three Months Ended March 31, 2018 | |||||||||||||||||||||||
Total | U.S. Plans | International Plans | Total | U.S. Plans | International Plans | |||||||||||||||||||
Service cost(i) | $ | 0.7 | $ | — | $ | 0.7 | $ | 0.8 | $ | — | $ | 0.8 | ||||||||||||
Interest cost | 66.7 | 49.2 | 17.5 | 64.0 | 46.6 | 17.4 | ||||||||||||||||||
Expected return on plan assets | (81.2 | ) | (54.5 | ) | (26.7 | ) | (87.2 | ) | (57.6 | ) | (29.6 | ) | ||||||||||||
Amortization of prior service benefit | (1.2 | ) | (0.6 | ) | (0.6 | ) | (1.5 | ) | (0.6 | ) | (0.9 | ) | ||||||||||||
Recognized net actuarial loss | 37.6 | 28.9 | 8.7 | 42.1 | 31.2 | 10.9 | ||||||||||||||||||
Net periodic pension expense (benefit) | $ | 22.6 | $ | 23.0 | $ | (0.4 | ) | $ | 18.2 | $ | 19.6 | $ | (1.4 | ) |
(i)Service cost is reported in selling, general and administrative expense. All other components of net periodic pension expense are reported in other income (expense), net in the consolidated statements of income. |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Service cost(i) | $ | 0.1 | $ | 0.2 | ||||
Interest cost | 1.2 | 1.2 | ||||||
Expected return on assets | (0.1 | ) | (0.1 | ) | ||||
Recognized net actuarial loss | 0.1 | 0.3 | ||||||
Amortization of prior service benefit | (0.4 | ) | (0.5 | ) | ||||
Net periodic postretirement benefit expense | $ | 0.9 | $ | 1.1 |
(i)Service cost is reported in selling, general and administrative expense. All other components of net periodic postretirement benefit expense are reported in other income (expense), net in the consolidated statements of income. |
Restricted Stock Units | Weighted- Average Grant-Date Fair Value | ||||||
Outstanding at December 31, 2018 | 2,151 | $ | 12.90 | ||||
Granted | 1,296 | 15.04 | |||||
Vested | (1,074 | ) | 13.23 | ||||
Forfeited and expired | (30 | ) | 13.47 | ||||
Outstanding at March 31, 2019 | 2,343 | 14.11 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Weighted-average fair value of grant | $ | 16.58 | $ | 15.20 | |||
Risk-free interest rate(i) | 2.49 | % | 2.26 | % | |||
Expected volatility(ii) | 47.91 | % | 52.97 | % | |||
Expected life of restricted stock units in years(iii) | 2.87 | 2.88 | |||||
Expected dividend yield | — | % | — | % |
(i)Represents the continuously compounded semi-annual zero-coupon U.S. treasury rate commensurate with the remaining performance period |
(ii)Based on historical volatility for the company that is commensurate with the length of the performance period |
(iii)Represents the remaining life of the longest performance period |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Basic earnings (loss) per common share computation: | ||||||||
Net income (loss) attributable to Unisys Corporation | $ | (19.4 | ) | $ | 40.6 | |||
Weighted average shares | 51,418 | 50,748 | ||||||
Basic earnings (loss) per common share | $ | (0.38 | ) | $ | 0.80 | |||
Diluted earnings (loss) per common share computation: | ||||||||
Net income (loss) attributable to Unisys Corporation | $ | (19.4 | ) | $ | 40.6 | |||
Add interest expense on convertible senior notes, net of tax of zero | — | 4.8 | ||||||
Net income (loss) attributable to Unisys Corporation for diluted earnings per share | $ | (19.4 | ) | $ | 45.4 | |||
Weighted average shares | 51,418 | 50,748 | ||||||
Plus incremental shares from assumed conversions: | ||||||||
Employee stock plans | — | 327 | ||||||
Convertible senior notes | — | 21,868 | ||||||
Adjusted weighted average shares | 51,418 | 72,943 | ||||||
Diluted earnings (loss) per common share | $ | (0.38 | ) | $ | 0.62 | |||
Anti-dilutive weighted-average stock options and restricted stock units(i) | 1,401 | 2,044 | ||||||
Anti-dilutive weighted-average common shares issuable upon conversion of the 5.50% convertible senior notes(i) | 21,868 | — |
(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. |
March 31, 2019 | December 31, 2018 | ||||||
Contract assets - current | $ | 30.3 | $ | 29.7 | |||
Contract assets - long-term(i) | 21.9 | 22.2 | |||||
Deferred revenue - current | (292.2 | ) | (294.4 | ) | |||
Deferred revenue - long-term | (158.1 | ) | (157.2 | ) |
(i)Reported in other long-term assets on the company’s consolidated balance sheets |
March 31, 2019 | December 31, 2018 | |||||||
Balance Sheet Location | ||||||||
Prepaid expenses and other current assets | $ | 0.3 | $ | 3.4 | ||||
Other accrued liabilities | 3.9 | 0.3 | ||||||
Total fair value | $ | (3.6 | ) | $ | 3.1 |
Three months ended March 31, | |||||||
2019 | 2018 | ||||||
Statement of Income Location | |||||||
Other income (expense), net | $ | 0.1 | $ | 10.7 |
March 31, 2019 | December 31, 2018 | ||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
Long-term debt: | |||||||||||||||
10.75% senior secured notes due 2022 | $ | 432.6 | $ | 487.6 | $ | 432.0 | $ | 486.8 | |||||||
5.50% convertible senior notes due 2021 | $ | 196.2 | $ | 299.3 | $ | 194.2 | $ | 298.5 |
Total | Services | Technology | ||||||||||
Balance at December 31, 2018 | $ | 177.8 | $ | 69.1 | $ | 108.7 | ||||||
Translation adjustments | (0.2 | ) | (0.2 | ) | — | |||||||
Balance at March 31, 2019 | $ | 177.6 | $ | 68.9 | $ | 108.7 |
March 31, 2019 | December 31, 2018 | |||||||
10.75% senior secured notes due April 15, 2022 ($440.0 million face value less unamortized discount and fees of $7.4 million and $8.0 million at March 31, 2019 and December 31, 2018, respectively) | $ | 432.6 | $ | 432.0 | ||||
5.50% convertible senior notes due March 1, 2021 ($213.5 million face value less unamortized discount and fees of $17.3 million and $19.3 million at March 31, 2019 and December 31, 2018, respectively) | 196.2 | 194.2 | ||||||
Finance leases | 5.4 | 5.8 | ||||||
Other debt | 40.2 | 20.8 | ||||||
Total | 674.4 | 652.8 | ||||||
Less – current maturities | 7.3 | 10.0 | ||||||
Total long-term debt | $ | 667.1 | $ | 642.8 |
See Note 11 for the fair value of the notes. |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Contractual interest coupon | $ | 11.8 | $ | 11.8 | ||||
Amortization of debt issuance costs | 0.6 | 0.6 | ||||||
Total | $ | 12.4 | $ | 12.4 |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Contractual interest coupon | $ | 2.9 | $ | 2.9 | ||||
Amortization of debt discount | 1.7 | 1.6 | ||||||
Amortization of debt issuance costs | 0.3 | 0.3 | ||||||
Total | $ | 4.9 | $ | 4.8 |
Total | Translation Adjustments | Postretirement Plans | ||||||||||
Balance at December 31, 2018 | $ | (4,084.8 | ) | $ | (896.7 | ) | $ | (3,188.1 | ) | |||
Other comprehensive income before reclassifications | 1.5 | (32.8 | ) | 34.3 | ||||||||
Amounts reclassified from accumulated other comprehensive income | 34.9 | — | 34.9 | |||||||||
Current period other comprehensive income | 36.4 | (32.8 | ) | 69.2 | ||||||||
Balance at March 31, 2019 | $ | (4,048.4 | ) | $ | (929.5 | ) | $ | (3,118.9 | ) |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Postretirement Plans(i): | ||||||||
Amortization of prior service cost | $ | (1.5 | ) | $ | (1.8 | ) | ||
Amortization of actuarial losses | 37.4 | 41.8 | ||||||
Total before tax | 35.9 | 40.0 | ||||||
Income tax benefit | (1.0 | ) | (1.3 | ) | ||||
Total reclassification for the period | $ | 34.9 | $ | 38.7 |
(i)These items are included in net periodic postretirement cost (see Note 5). |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Cash paid during the period for: | |||||||
Income taxes, net of refunds | $ | 18.4 | $ | 13.6 | |||
Interest | $ | 6.0 | $ | 6.3 |
March 31, 2019 | December 31, 2018 | ||||||
Cash and cash equivalents | $ | 504.6 | $ | 605.0 | |||
Restricted cash | 12.2 | 19.1 | |||||
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows | $ | 516.8 | $ | 624.1 |
• | Cloud & infrastructure services. This represents revenue from helping clients apply cloud and as-a-service delivery models to capitalize on business opportunities, make their end users more productive and manage and secure their IT infrastructure and operations more economically. |
• | Application services. This represents revenue from helping clients transform their business processes by developing and managing new leading-edge applications for select industries, offering advanced data analytics and modernizing existing enterprise applications. |
• | Business process outsourcing (BPO) services. This represents revenue from the management of critical processes and functions for clients in target industries, helping them improve performance and reduce costs. |
• | Technology. This represents revenue from designing and developing software and offering hardware and other related products to help clients improve security and flexibility, reduce costs and improve the efficiency of their data-center environments. |
Total | Corporate | Services | Technology | |||||||||||||
Three Months Ended March 31, 2019 | ||||||||||||||||
Customer revenue | $ | 695.8 | $ | — | $ | 612.1 | $ | 83.7 | ||||||||
Intersegment | — | (2.4 | ) | — | 2.4 | |||||||||||
Total revenue | $ | 695.8 | $ | (2.4 | ) | $ | 612.1 | $ | 86.1 | |||||||
Operating income (loss) | $ | 42.9 | $ | (1.7 | ) | $ | 15.2 | $ | 29.4 | |||||||
Three Months Ended March 31, 2018 | ||||||||||||||||
Customer revenue | $ | 708.4 | $ | — | $ | 568.5 | $ | 139.9 | ||||||||
Intersegment | — | (10.0 | ) | — | 10.0 | |||||||||||
Total revenue | $ | 708.4 | $ | (10.0 | ) | $ | 568.5 | $ | 149.9 | |||||||
Operating income | $ | 101.8 | $ | 2.7 | $ | 17.1 | $ | 82.0 |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Total segment operating income | $ | 44.6 | $ | 99.1 | ||||
Interest expense | (15.5 | ) | (16.6 | ) | ||||
Other income (expense), net | (30.4 | ) | (22.6 | ) | ||||
Cost-reduction (charges) benefit | (2.6 | ) | 2.9 | |||||
Corporate and eliminations | 0.9 | (0.2 | ) | |||||
Total income (loss) before income taxes | $ | (3.0 | ) | $ | 62.6 |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Services | ||||||||
Cloud & infrastructure services | $ | 361.2 | $ | 318.4 | ||||
Application services | 189.1 | 192.9 | ||||||
Business process outsourcing services | 61.8 | 57.2 | ||||||
612.1 | 568.5 | |||||||
Technology | 83.7 | 139.9 | ||||||
Total | $ | 695.8 | $ | 708.4 |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
United States | $ | 332.6 | $ | 286.5 | ||||
United Kingdom | 95.3 | 114.8 | ||||||
Other foreign | 267.9 | 307.1 | ||||||
Total | $ | 695.8 | $ | 708.4 |
• | Cloud & infrastructure services. This represents revenue from helping clients apply cloud and as-a-service delivery models to capitalize on business opportunities, make their end users more productive and manage and secure their IT infrastructure and operations more economically. |
• | Application services. This represents revenue from helping clients transform their business processes by developing and managing new leading-edge applications for select industries, offering advanced data analytics and modernizing existing enterprise applications. |
• | Business process outsourcing (BPO) services. This represents revenue from the management of critical processes and functions for clients in target industries, helping them improve performance and reduce costs. |
• | Technology. This represents revenue from designing and developing software and offering hardware and other related products to help clients improve security and flexibility, reduce costs and improve the efficiency of their data-center environments. |
Total | Eliminations | Services | Technology | |||||||||||||
Three Months Ended March 31, 2019 | ||||||||||||||||
Customer revenue | $ | 695.8 | $ | — | $ | 612.1 | $ | 83.7 | ||||||||
Intersegment | — | (2.4 | ) | — | 2.4 | |||||||||||
Total revenue | $ | 695.8 | $ | (2.4 | ) | $ | 612.1 | $ | 86.1 | |||||||
Gross profit percent | 21.5 | % | 15.4 | % | 58.1 | % | ||||||||||
Operating profit percent | 6.2 | % | 2.5 | % | 34.1 | % | ||||||||||
Three Months Ended March 31, 2018 | ||||||||||||||||
Customer revenue | $ | 708.4 | $ | — | $ | 568.5 | $ | 139.9 | ||||||||
Intersegment | — | (10.0 | ) | — | 10.0 | |||||||||||
Total revenue | $ | 708.4 | $ | (10.0 | ) | $ | 568.5 | $ | 149.9 | |||||||
Gross profit percent | 28.4 | % | 16.6 | % | 68.9 | % | ||||||||||
Operating profit percent | 14.4 | % | 3.0 | % | 54.7 | % |
Gross profit and operating profit percent are as a percent of total revenue. |
Three Months Ended March 31, | Percent Change | ||||||||||
2019 | 2018 | ||||||||||
Services | |||||||||||
Cloud & infrastructure services | $ | 361.2 | $ | 318.4 | 13.4 | % | |||||
Application services | 189.1 | 192.9 | (2.0 | )% | |||||||
Business process outsourcing services | 61.8 | 57.2 | 8.0 | % | |||||||
612.1 | 568.5 | 7.7 | % | ||||||||
Technology | 83.7 | 139.9 | (40.2 | )% | |||||||
Total | $ | 695.8 | $ | 708.4 | (1.8 | )% |
(a) | The company’s management, with the participation of the company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based on this evaluation, the company’s Chief Executive Officer and Chief Financial Officer concluded that, as of the end of such period, the company’s disclosure controls and procedures are effective. Such evaluation did not identify any change in the company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting. |
(b) | No change in our internal control over financial reporting occurred during the quarter ended March 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We implemented internal controls to ensure we adequately evaluated our leases and properly assessed the impact of the new accounting standard related to leases on our consolidated financial statements to facilitate the adoption of this standard on January 1, 2019 as well as the ongoing accounting under the new standard. There were no significant changes to our internal control over financial reporting during 2019 as a result of the ongoing accounting under the new accounting standard. |
(a) | Exhibits |
Exhibit Number | Description |
Restated Certificate of Incorporation of Unisys Corporation (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on April 30, 2010) | |
Certificate of Amendment of the Restated Certificate of Incorporation of Unisys Corporation (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on April 28, 2011) | |
Certificate of Amendment of the Restated Certificate of Incorporation of Unisys Corporation (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on April 28, 2017) | |
Bylaws of Unisys Corporation, as amended through April 30, 2015 (incorporated by reference to Exhibit 3.3 to the registrant’s Quarterly Report on Form 10-Q filed on April 30, 2015) | |
Certification of Peter A. Altabef required by Rule 13a-14(a) or Rule 15d-14(a) | |
Certification of Michael M. Thomson required by Rule 13a-14(a) or Rule 15d-14(a) | |
Certification of Peter A. Altabef required by Rule 13a-14(b) or Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 | |
Certification of Michael M. Thomson required by Rule 13a-14(b) or Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 | |
101.INSXBRL | Instance Document |
101.SCHXBRL | Taxonomy Extension Schema Document |
101.CALXBRL | Taxonomy Extension Calculation Linkbase Document |
101.LABXBRL | Taxonomy Extension Labels Linkbase Document |
101.PREXBRL | Taxonomy Extension Presentation Linkbase Document |
101.DEFXBRL | Taxonomy Extension Definition Linkbase Document |
UNISYS CORPORATION | ||
Date: May 3, 2019 | By: | /s/ Michael M. Thomson |
Michael M. Thomson | ||
Interim Chief Financial Officer, | ||
Vice President and Corporate Controller | ||
(Principal Financial and Accounting Officer) |
/s/ Peter A. Altabef | ||
Name: | Peter A. Altabef | |
Title: | Chairman, President and | |
Chief Executive Officer |
/s/ Michael M. Thomson | ||
Name: | Michael M. Thomson | |
Title: | Interim Chief Financial Officer, | |
Vice President and Corporate Controller |
/s/ Peter A. Altabef | |
Peter A. Altabef | |
Chairman, President and | |
Chief Executive Officer |
/s/ Michael M. Thomson | |
Michael M. Thomson | |
Interim Chief Financial Officer, | |
Vice President and Corporate Controller |
Document and Entity Information |
3 Months Ended |
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Mar. 31, 2019
shares
| |
Document And Entity Information [Abstract] | |
Entity Registrant Name | UNISYS CORP |
Trading Symbol | UIS |
Entity Central Index Key | 0000746838 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Accelerated Filer |
Document Type | 10-Q |
Document Period End Date | Mar. 31, 2019 |
Document Fiscal Year Focus | 2019 |
Document Fiscal Period Focus | Q1 |
Amendment Flag | false |
Entity Emerging Growth Company | false |
Entity Small Business | false |
Entity Common Stock, Shares Outstanding | 51,767,382 |
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2019 |
Mar. 31, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||
Consolidated net income (loss) | $ (16.8) | $ 41.7 |
Other comprehensive income: | ||
Foreign currency translation | (34.2) | (5.1) |
Postretirement adjustments, net of tax of $(1.1) in 2019 and $1.0 in 2018 | 68.5 | 39.0 |
Total other comprehensive income | 34.3 | 33.9 |
Comprehensive income | 17.5 | 75.6 |
Less comprehensive income attributable to noncontrolling interests | 0.5 | 2.3 |
Comprehensive income attributable to Unisys Corporation | $ 17.0 | $ 73.3 |
Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2019 |
Mar. 31, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||
Postretirement adjustments, tax | $ (1.1) | $ 1.0 |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - shares shares in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, shares issued (in shares) | 55.3 | 54.2 |
Treasury stock, shares (in shares) | 3.5 | 3.1 |
Basis of Presentation |
3 Months Ended |
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Mar. 31, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements and footnotes of Unisys Corporation have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP). The financial statements and footnotes are unaudited. In the opinion of management, the financial information furnished herein reflects all adjustments necessary for a fair presentation of the results of operations, comprehensive income, financial position, cash flows and deficit for the interim periods specified. These adjustments consist only of normal recurring accruals except as disclosed herein. Because of seasonal and other factors, results for interim periods are not necessarily indicative of the results to be expected for the full year. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events. These estimates and assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities and the reported amounts of revenue and expenses. Such estimates include the valuation of accounts receivable, contract assets, inventories, operating lease right-of-use assets, outsourcing assets, marketable software, goodwill and other long-lived assets, legal contingencies, indemnifications, assumptions used in the calculation for systems integration projects, income taxes and retirement and other post-employment benefits, among others. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly 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’s accounting policies are set forth in detail in Note 1 of the Notes to Consolidated Financial Statements in the company’s Annual Report on Form 10-K for the year ended December 31, 2018 (2018 Form 10-K) filed with the Securities and Exchange Commission. Such Annual Report also contains a discussion of the company’s critical accounting policies and estimates. The company believes that these critical accounting policies and estimates affect its more significant estimates and judgments used in the preparation of the company’s consolidated financial statements. As described in Note 3, effective January 1, 2019 the company adopted the requirements of Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) using the effective date transition method. The company’s updated accounting policy on leases is described in Note 2 of this Form 10-Q. |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Leases The company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the company the right to control the use of an explicitly or implicitly identified asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the company if the company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. The company has lease agreements that include lease and non-lease components, which the company accounts for as a single lease component for all personal property leases. Lease expense for variable leases and short-term leases is recognized when the expense is incurred. Operating leases are included in operating lease right-of-use (ROU) assets, other accrued liabilities and long-term operating lease liabilities on the consolidated balance sheets. Operating lease ROU assets and lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line basis over the lease term. Finance leases are included in outsourcing assets, net and long-term debt on the consolidated balance sheets. Finance lease ROU assets and lease liabilities are initially measured in the same manner as operating leases. Finance lease ROU assets are amortized using the straight-line method. Finance lease liabilities are measured at amortized cost using the effective interest method. The company has not capitalized leases with terms of twelve months or less. As most of the company’s leases do not provide an implicit rate, the company uses its incremental borrowing rate, based on the information available at the lease commencement date, in determining the present value of lease payments. The lease term for all of the company’s leases includes the non-cancelable period of the lease plus any additional periods covered by either a company option to extend (or not to terminate) the lease that the company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. Lease payments included in the measurement of the lease liability are comprised of fixed payments, variable payments that depend on index or rate, amounts expected to be payable under a residual value guarantee and the exercise of the company option to purchase the underlying asset, if reasonably certain. Variable lease payments associated with the company’s leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed occurs. Variable lease payments are presented as an operating expense in the company’s consolidated results of operations in the same line item as expense arising from fixed lease payments (operating leases) or amortization of the ROU asset (finance leases). The company uses the long-lived assets impairment guidance in ASC Subtopic 360-10 Property, Plant, and Equipment to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize. If impaired, ROU assets for operating and finance leases are reduced for any impairment losses. The company monitors for events or changes in circumstances that require a reassessment of its leases. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in the consolidated statement of income. The company has commitments under operating leases for certain facilities and equipment used in its operations. The company also has finance leases for equipment. The company’s leases generally have initial lease terms ranging from 1 year to 8 years, most of which include options to extend or renew the leases for up to 5 years, and some of which may include options to terminate the leases within 1 year. Certain lease agreements contain provisions for future rent increases. The components of lease expense for the three months ended March 31, 2019 are as follows:
Supplemental balance sheet information related to leases is as follows:
Supplemental cash flow information related to leases is as follows:
Right-of-use assets obtained in exchange for lease obligations are as follows:
Maturities of lease liabilities as of March 31, 2019 are as follows:
Maturities of lease liabilities as of December 31, 2018, prior to the adoption of ASU No. 2016-02 as described in Note 3, “Accounting Standards,” are as follows:
(i)Such rental commitments have been reduced by minimum sublease rentals of $2.7 million, due in the future under noncancelable leases. 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 the three months ended March 31, 2019. As of March 31, 2019, receivables under sales-type leases before the allowance for unearned income were collectible as follows:
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. 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. Previously, the estimated revenue-producing lives of the company’s proprietary enterprise software was three years. Due to the maturity of the company’s proprietary enterprise software product, the company increased the time between its major releases as its product has a longer useful life. In addition, the company modified its commitment to provide post-contract support from an average of three years to five years following each new proprietary enterprise software release. In the first quarter of 2019, the company validated that the revised extended timeline between major product releases and the revised post-contract support period has achieved market acceptance. The company’s historical experience is that its significant customers typically renew the software on average every five years. As a result, the company adjusted the remaining useful life of its proprietary enterprise software product, which represents approximately 64% of the company’s marketable software, to five years. This change in estimate was applied prospectively effective January 1, 2019. The adjustment resulted in a $4.4 million decrease to cost of revenue in the three months ended March 31, 2019, and accordingly decreased consolidated net loss by $4.4 million or $0.08 per diluted loss per share. The useful lives of the remaining products classified as marketable software remain at three years, which is consistent with prior years. As of March 31, 2019, $90.1 million of marketable software was in process and the remaining $80.6 million has a weighted-average remaining life of 3.03 years. The company performs quarterly reviews to ensure that unamortized costs remain recoverable from future revenue. As of March 31, 2019, the company believes that all unamortized costs are fully recoverable. |
Accounting Standards |
3 Months Ended |
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Mar. 31, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Accounting Standards | Accounting Standards Accounting Pronouncements Adopted Effective January 1, 2019, the company adopted ASU No. 2016-02 Leases (Topic 842) issued by the Financial Accounting Standards Board (FASB) which is intended to improve financial reporting about leasing transactions. The ASU requires organizations that lease assets, referred to as lessees, to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The standard also requires disclosures to help investors and other financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases. The company adopted the new standard using the effective date transition method by applying a cumulative-effect adjustment to the balance sheet through the addition of ROU assets and lease liabilities at January 1, 2019. Prior-period results were not restated. The company applied certain practical expedients, including the package of practical expedients, permitted under the transition guidance within Topic 842 to leases that commenced before January 1, 2019. The election of the package of practical expedients resulted in the company not reassessing prior conclusions under FASB Topic 840 Leases related to lease identification, lease classification and initial direct costs for existing leases at January 1, 2019. The adoption had a material impact on the consolidated financial position and did not have a material impact on the consolidated results of operations or cash flows as of and for the three months ended March 31, 2019. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while the company’s accounting for finance leases remained substantially unchanged. Accounting Pronouncements Not Yet Adopted In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract which clarifies the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This update is effective for fiscal years ending after December 15, 2019, with earlier adoption permitted, including adoption in any interim period. The new guidance can be applied retrospectively or prospectively to all implementation costs incurred after the date of adoption. The company is currently assessing when it will choose to adopt, and is currently evaluating the impact of the adoption on its consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments which introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected losses. This includes trade and other receivables, loans and other financial instruments. This update is effective for annual periods beginning after December 15, 2019, with earlier adoption permitted. The company will adopt the new guidance on January 1, 2020 through a cumulative-effect adjustment to retained earnings. The company is currently evaluating the impact of the adoption on its consolidated financial statements. |
Cost-Reduction Actions |
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Cost-Reduction Actions | Cost-Reduction Actions During the three months ended March 31, 2019, the company recognized cost-reduction charges and other costs of $2.6 million. Charges were comprised of $3.5 million for lease abandonment and asset write-offs and $(0.9) million for changes in estimates principally related to work-force reductions. The charges were recorded in the following statement of income classifications: cost of revenue – services, $(3.7) million; selling, general and administrative expenses, $5.0 million; and research and development expenses, $1.3 million. No provisions for cost-reduction actions were recorded during the three months ended March 31, 2018; however, a benefit of $2.9 million was recorded in the prior period for changes in estimates. The benefit was recorded in the following statement of income classifications: cost of revenue - services, $(3.0) million and selling, general and administrative expenses, $0.1 million. Liabilities and expected future payments related to the company’s work-force reduction actions are as follows:
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pension and Postretirement Benefits | Pension and Postretirement Benefits Net periodic pension expense for the three months ended March 31, 2019 and 2018 is presented below:
In 2019, the company expects to make cash contributions of approximately $105.0 million to its worldwide defined benefit pension plans, which are comprised of $67.2 million for the company’s U.S. qualified defined benefit pension plans and $37.8 million primarily for the company’s international defined benefit pension plans. In 2018, the company made cash contributions of $129.7 million to its worldwide defined benefit pension plans. For the three months ended March 31, 2019 and 2018, the company made cash contributions of $21.2 million and $27.4 million, respectively. Net periodic postretirement benefit expense for the three months ended March 31, 2019 and 2018 is presented below:
The company expects to make cash contributions of approximately $8.0 million to its postretirement benefit plans in 2019 compared to $9.0 million in 2018. For the three months ended March 31, 2019 and 2018, the company made cash contributions of $1.9 million and $3.5 million, respectively. |
Stock Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Compensation | Stock Compensation Under stockholder approved stock-based plans, stock options, stock appreciation rights, restricted stock and restricted stock units may be granted to officers, directors and other key employees. At March 31, 2019, 1.6 million shares of unissued common stock of the company were available for granting under these plans. As of March 31, 2019, the company has granted non-qualified stock options and restricted stock units under these plans. The company recognizes compensation cost, net of a forfeiture rate, in selling, general and administrative expense, and recognizes compensation cost only for those awards expected to vest. The company estimates the forfeiture rate based on its historical experience and its expectations about future forfeitures. During the three months ended March 31, 2019 and 2018, the company recorded $4.7 million and $4.0 million of share-based compensation expense, respectively, which was comprised of $4.7 million and $3.9 million of restricted stock unit expense and zero and $0.1 million of stock option expense, respectively. There were no grants of stock option awards during the three months ended March 31, 2019 and 2018. As of March 31, 2019, 554,407 stock option awards with a weighted-average exercise price of $23.49 are outstanding. Restricted stock unit awards may contain time-based units, performance-based units, total shareholder return market-based units, or a combination of these units. Each performance-based and market-based unit will vest into zero to two shares depending on the degree to which the performance or market conditions are met. Compensation expense for performance-based awards is recognized as expense ratably for each installment from the date of grant until the date the restrictions lapse, and is based on the fair market value at the date of grant and the probability of achievement of the specific performance-related goals. Compensation expense for market-related awards is recognized as expense ratably over the measurement period, regardless of the actual level of achievement, provided the service requirement is met. Time-based restricted stock unit grants for the company’s directors vest upon award and compensation expense for such awards is recognized upon grant. A summary of restricted stock unit activity for the three months ended March 31, 2019 follows (shares in thousands):
The aggregate weighted-average grant-date fair value of restricted stock units granted during the three months ended March 31, 2019 and 2018 was $16.5 million and $17.3 million, respectively. The fair value of restricted stock units with time and performance conditions was determined based on the trading price of the company’s common shares on the date of grant. The fair value of awards with market conditions was estimated using a Monte Carlo simulation with the following weighted-average assumptions:
As of March 31, 2019, there was $23.9 million of total unrecognized compensation cost related to outstanding restricted stock units granted under the company’s plans. That cost is expected to be recognized over a weighted-average period of 2.4 years. The aggregate weighted-average grant-date fair value of restricted stock units vested during the three months ended March 31, 2019 and 2018 was $14.2 million and $9.1 million, respectively. Common stock issued upon exercise of stock options or upon lapse of restrictions on restricted stock units are newly issued shares. In light of its tax position, the company is currently not recognizing any tax benefits from the exercise of stock options or upon issuance of stock upon lapse of restrictions on restricted stock units. |
Income Taxes |
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Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Accounting rules governing income taxes require that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities. These rules also require that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some portion or the entire deferred tax asset will not be realized. The company evaluates the realizability of its deferred tax assets by assessing its valuation allowance and by adjusting the amount of such allowance, if necessary. The factors used to assess the likelihood of realization are the company’s historical profitability, forecast of future taxable income and available tax-planning strategies that could be implemented to realize the net deferred tax assets. The company uses tax-planning strategies to realize or renew net deferred tax assets to avoid the potential loss of future tax benefits. A full valuation allowance is currently maintained for all U.S. and certain foreign deferred tax assets in excess of deferred tax liabilities. The company will record a tax provision or benefit for those international subsidiaries that do not have a full 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. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share The following table shows how earnings (loss) per share attributable to Unisys Corporation was computed for the three months ended March 31, 2019 and 2018 (shares in thousands):
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Contract Assets and Contract Liabilities |
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Contract Assets and Contract Liabilities | Contract Assets and Contract Liabilities Contract assets represent rights to consideration in exchange for goods or services transferred to a customer when that right is conditional on something other than the passage of time. Contract liabilities represent deferred revenue. Net contract assets (liabilities) as of March 31, 2019 and December 31, 2018 are as follows:
As of March 31, 2019 and December 31, 2018, deposit liabilities of $16.5 million and $21.2 million, respectively, were principally included in current deferred revenue. These deposit liabilities represent upfront consideration received from customers for services such as post-contract support and maintenance that allow the customer to terminate the contract at any time for convenience. Significant changes during the three months ended March 31, 2019 and 2018 in the above contract asset and liability balances were as follows: revenue of $104.9 million and $104.6 million was recognized that was included in deferred revenue at December 31, 2018 and 2017, respectively. Capitalized Contract Costs The company’s incremental direct costs of obtaining a contract consist of sales commissions which are deferred and amortized ratably over the initial contract life. These costs are classified as current or noncurrent based on the timing of when the company expects to recognize the expense. The current and noncurrent portions of deferred commissions are included in prepaid expenses and other current assets and in other long-term assets, respectively, in the company’s consolidated balance sheets. At March 31, 2019 and December 31, 2018, the company had $12.2 million and $12.1 million, respectively, of deferred commissions. For the three months ended March 31, 2019 and 2018, $1.0 million and $1.7 million, respectively, of amortization expense related to deferred commissions was recorded in selling, general and administrative expense in the company’s consolidated statements of income. Costs on outsourcing contracts are generally expensed as incurred. However, certain costs incurred upon initiation of an outsourcing contract (costs to fulfill a contract), principally initial customer setup, are capitalized and expensed over the initial contract life. These costs are included in outsourcing assets, net in the company’s consolidated balance sheets. The amount of such cost at March 31, 2019 and December 31, 2018 was $79.3 million and $79.5 million, respectively. These costs are amortized over the initial contract life and reported in Services cost of sales. During the three months ended March 31, 2019 and 2018, $6.2 million and $3.6 million, respectively, was amortized. The remaining balance of outsourcing assets, net is comprised of fixed assets and software used in connection with outsourcing contracts. These costs are capitalized and depreciated over the shorter of the initial contract life or in accordance with the company’s fixed asset policy. Remaining Performance Obligations Remaining performance obligations represent the transaction price of firm orders for which work has not been performed and excludes (1) contracts with an original expected length of one year or less and (2) contracts for which the company recognizes revenue at the amount to which it has the right to invoice for services performed. At March 31, 2019, the company had approximately $1.1 billion of remaining performance obligations of which approximately 36% is estimated to be recognized as revenue by the end of 2019. |
Capitalized Contract Costs |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized Contract Costs | Contract Assets and Contract Liabilities Contract assets represent rights to consideration in exchange for goods or services transferred to a customer when that right is conditional on something other than the passage of time. Contract liabilities represent deferred revenue. Net contract assets (liabilities) as of March 31, 2019 and December 31, 2018 are as follows:
As of March 31, 2019 and December 31, 2018, deposit liabilities of $16.5 million and $21.2 million, respectively, were principally included in current deferred revenue. These deposit liabilities represent upfront consideration received from customers for services such as post-contract support and maintenance that allow the customer to terminate the contract at any time for convenience. Significant changes during the three months ended March 31, 2019 and 2018 in the above contract asset and liability balances were as follows: revenue of $104.9 million and $104.6 million was recognized that was included in deferred revenue at December 31, 2018 and 2017, respectively. Capitalized Contract Costs The company’s incremental direct costs of obtaining a contract consist of sales commissions which are deferred and amortized ratably over the initial contract life. These costs are classified as current or noncurrent based on the timing of when the company expects to recognize the expense. The current and noncurrent portions of deferred commissions are included in prepaid expenses and other current assets and in other long-term assets, respectively, in the company’s consolidated balance sheets. At March 31, 2019 and December 31, 2018, the company had $12.2 million and $12.1 million, respectively, of deferred commissions. For the three months ended March 31, 2019 and 2018, $1.0 million and $1.7 million, respectively, of amortization expense related to deferred commissions was recorded in selling, general and administrative expense in the company’s consolidated statements of income. Costs on outsourcing contracts are generally expensed as incurred. However, certain costs incurred upon initiation of an outsourcing contract (costs to fulfill a contract), principally initial customer setup, are capitalized and expensed over the initial contract life. These costs are included in outsourcing assets, net in the company’s consolidated balance sheets. The amount of such cost at March 31, 2019 and December 31, 2018 was $79.3 million and $79.5 million, respectively. These costs are amortized over the initial contract life and reported in Services cost of sales. During the three months ended March 31, 2019 and 2018, $6.2 million and $3.6 million, respectively, was amortized. The remaining balance of outsourcing assets, net is comprised of fixed assets and software used in connection with outsourcing contracts. These costs are capitalized and depreciated over the shorter of the initial contract life or in accordance with the company’s fixed asset policy. Remaining Performance Obligations Remaining performance obligations represent the transaction price of firm orders for which work has not been performed and excludes (1) contracts with an original expected length of one year or less and (2) contracts for which the company recognizes revenue at the amount to which it has the right to invoice for services performed. At March 31, 2019, the company had approximately $1.1 billion of remaining performance obligations of which approximately 36% is estimated to be recognized as revenue by the end of 2019. |
Financial Instruments and Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments and Fair Value Measurements | Financial Instruments and Fair Value Measurements Due to its foreign operations, the company is exposed to the effects of foreign currency exchange rate fluctuations on the U.S. dollar, principally related to intercompany account balances. The company uses derivative financial instruments to reduce its exposure to market risks from changes in foreign currency exchange rates on such balances. The company enters into foreign exchange forward contracts, generally having maturities of three months or less, which have not been designated as hedging instruments. At March 31, 2019 and December 31, 2018, the notional amount of these contracts was $385.4 million and $384.7 million, respectively. The fair value of these forward contracts is based on quoted prices for similar but not identical financial instruments; as such, the inputs are considered Level 2 inputs. The following table summarizes the fair value of the company’s foreign exchange forward contracts as of March 31, 2019 and December 31, 2018.
The following table summarizes the location and amount of gains and losses recognized on foreign exchange forward contracts for the three months ended March 31, 2019 and 2018.
Financial assets with carrying values approximating fair value include cash and cash equivalents and accounts receivable. Financial liabilities with carrying values approximating fair value include accounts payable and other liabilities. The carrying amounts of these financial assets and liabilities approximate fair value due to their short maturities. Such financial instruments are not included in the following table that provides information about the estimated fair values of other financial instruments that are not measured at fair value in the consolidated balance sheets as of March 31, 2019 and December 31, 2018.
Long-term debt is carried at amortized cost and its estimated fair value is based on market prices classified as Level 2 in the fair value hierarchy. |
Goodwill |
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Goodwill | Goodwill At March 31, 2019, the amount of goodwill allocated to reporting units with negative net assets was as follows: Business Process Outsourcing Services, $10.3 million. Changes in the carrying amount of goodwill by segment for the three months ended March 31, 2019 were as follows:
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Debt |
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Debt | Debt Long-term debt is comprised of the following:
Senior Secured Notes In 2017, the company issued $440.0 million aggregate principal amount of 10.75% Senior Secured Notes due 2022 (the “2022 Notes”). The 2022 Notes are initially fully and unconditionally guaranteed on a senior secured basis by Unisys Holding Corporation, Unisys AP Investment Company I and Unisys NPL, Inc. (together with the Company, the “Grantors”). In the future, the 2022 Notes will be guaranteed by each material domestic subsidiary and each restricted subsidiary that guarantees the secured revolving credit facility and other indebtedness of the company or another subsidiary guarantor. The 2022 Notes and the guarantees will rank equally in right of payment with all of the existing and future senior debt of the company and the subsidiary guarantors. The 2022 Notes and the guarantees will be structurally subordinated to all existing and future liabilities (including preferred stock, trade payables and pension liabilities) of the company’s subsidiaries that are not subsidiary guarantors. The 2022 Notes pay interest semiannually on April 15 and October 15 at an annual rate of 10.75%, and will mature on April 15, 2022, unless earlier repurchased or redeemed. The company may, at its option, redeem some or all of the 2022 Notes at any time on or after April 15, 2020 at a redemption price determined in accordance with the redemption schedule set forth in the indenture governing the 2022 Notes (the “indenture”), plus accrued and unpaid interest, if any. Prior to April 15, 2020, the company may, at its option, redeem some or all of the 2022 Notes at any time, at a price equal to 100% of the principal amount of the 2022 Notes redeemed plus a “make-whole” premium, plus accrued and unpaid interest, if any. The company may also redeem, at its option, up to 35% of the 2022 Notes at any time prior to April 15, 2020, using the proceeds of certain equity offerings at a redemption price of 110.75% of the principal amount thereof, plus accrued and unpaid interest, if any. In addition, the company may redeem all (but not less than all) of the 2022 Notes at any time that the Collateral Coverage Ratio is less than the Required Collateral Coverage Ratio (as such terms are described below and further defined in the indenture) at a price equal to 100% of the principal amount of the 2022 Notes plus accrued and unpaid interest, if any. The indenture contains covenants that limit the ability of the company and its restricted subsidiaries to, among other things: (i) incur additional indebtedness and guarantee indebtedness; (ii) pay dividends or make other distributions or repurchase or redeem its capital stock; (iii) prepay, redeem or repurchase certain debt; (iv) make certain prepayments in respect of pension obligations; (v) issue certain preferred stock or similar equity securities; (vi) make loans and investments (including investments by the company and subsidiary guarantors in subsidiaries that are not guarantors); (vii) sell assets; (viii) create or incur liens; (ix) enter into transactions with affiliates; (x) enter into agreements restricting its subsidiaries’ ability to pay dividends; and (xi) consolidate, merge or sell all or substantially all of its assets. These covenants are subject to several important limitations and exceptions. The indenture also includes a covenant requiring that the company maintain a Collateral Coverage Ratio of not less than 1.50:1.00 (the “Required Collateral Coverage Ratio”) as of any test date. The Collateral Coverage Ratio is based on the ratio of (A) Grantor unrestricted cash and cash equivalents plus 4.75 multiplied by of the greater of (x) Grantor EBITDA for the most recently ended four fiscal quarters and (y) (i) the average quarterly Grantor EBITDA for the most recently ended seven fiscal quarters, multiplied by (ii) four, to (B) secured indebtedness of the Grantors. The Collateral Coverage Ratio is tested quarterly. If the Collateral Coverage Ratio is less than the Required Collateral Coverage Ratio as of any test date, and the company has not redeemed the 2022 Notes within 90 days thereafter, this will be an event of default under the indenture. If the company experiences certain kinds of changes of control, it must offer to purchase the 2022 Notes at 101% of the principal amount of the 2022 Notes, plus accrued and unpaid interest, if any. In addition, if the company sells assets under certain circumstances it must apply the proceeds towards an offer to repurchase the 2022 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 occurs, would permit or require the principal, premium, if any, interest and any other monetary obligations on all the then outstanding 2022 Notes to be due and payable immediately. Interest expense related to the 2022 notes for the three month periods ended March 31, 2019 and 2018 was as follows:
Convertible Senior Notes In 2016, the company issued $213.5 million aggregate principal amount of Convertible Senior Notes due 2021 (the “2021 Notes”). The 2021 Notes, which are senior unsecured obligations, bear interest at a coupon rate of 5.50% (or 9.5% effective interest rate) per year until maturity, payable semiannually in arrears on March 1 and September 1 of each year. The 2021 Notes are not redeemable prior to maturity and are convertible into shares of the company’s common stock. The conversion rate for the 2021 Notes is 102.4249 shares of the company’s common stock per $1,000 principal amount of the 2021 Notes (or a total amount of 21,867,716 shares), which is equivalent to an initial conversion price of approximately $9.76 per share of the company’s common stock. Upon any conversion, the company will settle its conversion obligation in cash, shares of its common stock, or a combination of cash and shares of its common stock, at its election. In connection with the issuance of the 2021 Notes, the company also paid $27.3 million to enter into privately negotiated capped call transactions with the initial purchasers and/or affiliates of the initial purchasers. The capped call transactions will cover, subject to customary anti-dilution adjustments, the number of shares of the company’s common stock that will initially underlie the 2021 Notes. The capped call transactions will effectively raise the conversion premium on the 2021 Notes from approximately 22.5% to approximately 60%, which raises the initial conversion price from approximately $9.76 per share of common stock to approximately $12.75 per share of common stock. The capped call transactions are expected to reduce potential dilution to the company’s common stock and/or offset potential cash payments the company is required to make in excess of the principal amount upon any conversion of the 2021 Notes. Interest expense related to the 2021 notes for the three month periods ended March 31, 2019 and 2018 was as follows:
Revolving Credit Facility The company has a secured revolving credit facility (the “Credit Agreement”) that provides for loans and letters of credit up to an aggregate amount of $145.0 million (with a limit on letters of credit of $30.0 million). The Credit Agreement includes an accordion feature allowing for an increase in the amount of the facility up to $150.0 million. Availability under the credit facility is subject to a borrowing base calculated by reference to the company’s receivables. At March 31, 2019, the company had no borrowings and $6.4 million of letters of credit outstanding, and availability under the facility was $132.7 million net of letters of credit issued. The Credit Agreement expires October 5, 2022, subject to a springing maturity (i) on the date that is 91 days prior to the maturity date of the 2021 Notes unless, on such date, certain conditions are met; or (ii) on the date that is 60 days prior to the maturity date of the 2022 Notes unless, by such date, such secured notes have been redeemed or refinanced. The credit facility is guaranteed by Unisys Holding Corporation, Unisys NPL, Inc., Unisys AP Investment Company I and any future material domestic subsidiaries. The facility is secured by the assets of the company and the subsidiary guarantors, other than certain excluded assets, under a security agreement entered into by the company and the subsidiary guarantors in favor of JPMorgan Chase Bank, N.A., as agent for the lenders under the credit facility. The company is required to maintain a minimum fixed charge coverage ratio if the availability under the credit facility falls below the greater of 10% of the lenders’ commitments under the facility and $15.0 million. The Credit Agreement contains customary representations and warranties, including that there has been no material adverse change in the company’s business, properties, operations or financial condition. The Credit Agreement includes limitations on the ability of the company and its subsidiaries to, among other things, incur other debt or liens, dispose of assets and make acquisitions, loans and investments, repurchase its equity, and prepay other debt. Events of default include non-payment, failure to comply with covenants, materially incorrect representations and warranties, change of control and default under other debt aggregating at least $50.0 million. Other On March 27, 2019, the company entered into an Installment Payment Agreement (IPA) with a syndicate of financial institutions to finance the acquisition of certain software licenses necessary for the provision of services to a client. The IPA was in the amount of $27.7 million, of which $4.8 million matures on March 30, 2022 and $22.9 million matures on December 30, 2023. 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. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies There are various lawsuits, claims, investigations and proceedings that have been brought or asserted against the company, which arise in the ordinary course of business, including actions with respect to commercial and government contracts, labor and employment, employee benefits, environmental matters, intellectual property and non-income tax matters. The company records a provision for these matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Any provisions are reviewed at least quarterly and are adjusted to reflect the impact and status of settlements, rulings, advice of counsel and other information and events pertinent to a particular matter. The company believes that it has valid defenses with respect to legal matters pending against it. Based on its experience, the company also believes that the damage amounts claimed in the lawsuits disclosed below are not a meaningful indicator of the company’s potential liability. Litigation is inherently unpredictable, however, and it is possible that the company’s results of operations or cash flow could be materially affected in any particular period by the resolution of one or more of the legal matters pending against it. In April 2007, the Ministry of Justice of Belgium sued Unisys Belgium SA-NV, a Unisys subsidiary (Unisys Belgium), in the Court of First Instance of Brussels. The Belgian government had engaged the company to design and develop software for a computerized system to be used to manage the Belgian court system. The Belgian State terminated the contract and in its lawsuit has alleged that the termination was justified because Unisys Belgium failed to deliver satisfactory software in a timely manner. It claims damages of approximately €28 million. Unisys Belgium filed its defense and counterclaim in April 2008, in the amount of approximately €18.5 million. The company believes it has valid defenses to the claims and contends that the Belgian State’s termination of the contract was unjustified. The company’s Brazilian operations, along with those of many other companies doing business in Brazil, are involved in various litigation matters, including numerous governmental assessments related to indirect and other taxes, as well as disputes associated with former employees and contract labor. The tax-related matters pertain to value-added taxes, customs, duties, sales and other non-income-related tax exposures. The labor-related matters include claims related to compensation matters. The company believes that appropriate accruals have been established for such matters based on information currently available. At March 31, 2019, excluding those matters that have been assessed by management as being remote as to the likelihood of ultimately resulting in a loss, the amount related to unreserved tax-related matters, inclusive of any related interest, is estimated to be up to approximately $102 million. On June 26, 2014, the State of Louisiana filed a Petition for Damages against, among other defendants, the company and Molina Information Systems, LLC, in the Parish of East Baton Rouge, 19th Judicial District. The State alleged that between 1989 and 2012 the defendants, each acting successively as the State’s Medicaid fiscal intermediary, utilized an incorrect reimbursement formula for the payment of pharmaceutical claims causing the State to pay excessive amounts for prescription drugs. The State contends overpayments of approximately $68 million for the period January 2002 through July 2011 and sought data to identify the claims at issue for the remaining time period. On August 14, 2018, the Louisiana Court of Appeal for the First Circuit dismissed the case. On September 27, 2018, the Court denied the State’s motion for a rehearing. On October 26, 2018, the State applied for a writ of review to the Louisiana Supreme Court, which was granted on January 18, 2019. The Louisiana Supreme Court heard oral argument in the case on March 25, 2019. With respect to the specific legal proceedings and claims described above, except as otherwise noted, either (i) the amount or range of possible losses in excess of amounts accrued, if any, is not reasonably estimable or (ii) the company believes that the amount or range of possible losses in excess of amounts accrued that are estimable would not be material. Litigation is inherently unpredictable and unfavorable resolutions could occur. Accordingly, it is possible that an adverse outcome from such matters could exceed the amounts accrued in an amount that could be material to the company’s financial condition, results of operations and cash flows in any particular reporting period. Notwithstanding that the ultimate results of the lawsuits, claims, investigations and proceedings that have been brought or asserted against the company are not currently determinable, the company believes that at March 31, 2019, it has adequate provisions for any such matters. |
Accumulated Other Comprehensive Income |
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Accumulated Other Comprehensive Income | Accumulated Other Comprehensive Income Accumulated other comprehensive income (loss) as of December 31, 2018 and March 31, 2019 is as follows:
Amounts reclassified out of accumulated other comprehensive income for the three months ended March 31, 2019 and 2018 are as follows:
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Supplemental Cash Flow Information |
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Supplemental Cash Flow Information | Supplemental Cash Flow Information
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the total of the amounts shown in the consolidated statements of cash flows.
Cash and cash equivalents subject to contractual restrictions and not readily available are classified as restricted cash. Restricted cash includes cash the company is contractually obligated to maintain in accordance with the terms of its U.K. business process outsourcing joint venture agreement and other cash that is restricted from withdrawal. |
Segment Information |
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Segment Information | Segment Information Effective January 1, 2018, the company adopted the requirements of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which resulted in an adjustment to Technology revenue and profit of $53.0 million in the first quarter of 2018. The adjustment represents revenue from software license extensions and renewals, which were contracted for in the fourth quarter of 2017 and properly recorded as revenue at that time under the revenue recognition rules then in effect (Topic 605). Topic 606 requires revenue related to software license renewals or extensions to be recorded when the new license term begins, which in the case of the $53.0 million, was January 1, 2018. The company has two business segments: Services and Technology. Revenue classifications within the Services and Technology segment are as follows:
The accounting policies of each business segment are the same as those followed by the company as a whole. Intersegment sales and transfers are priced as if the sales or transfers were to third parties. Accordingly, the Technology segment recognizes intersegment revenue and manufacturing profit on hardware and software shipments to customers under Services contracts. The Services segment, in turn, recognizes customer revenue and marketing profits on such shipments of company hardware and software to customers. The Services segment also includes the sale of hardware and software products sourced from third parties that are sold to customers through the company’s Services channels. In the company’s consolidated statements of income, the manufacturing costs of products sourced from the Technology segment and sold to Services customers are reported in cost of revenue for Services. Also included in the Technology segment’s sales and operating profit are sales of hardware and software sold to the Services segment for internal use in Services engagements. The amount of such profit included in operating income of the Technology segment for the three months ended March 31, 2019 and 2018 was $0.2 million and zero, respectively. The sales and profit on these transactions are eliminated in Corporate. The company evaluates business segment performance based on operating income exclusive of the service cost component of postretirement income or expense, restructuring charges and unusual and nonrecurring items, which are included in Corporate. All other corporate and centrally incurred costs are allocated to the business segments based principally on revenue, employees, square footage or usage. A summary of the company’s operations by business segment for the three month periods ended March 31, 2019 and 2018 is presented below:
Presented below is a reconciliation of total business segment operating income to consolidated income (loss) before income taxes:
Customer revenue by classes of similar products or services, by segment, is presented below:
Geographic information about the company’s revenue, which is principally based on location of the selling organization, is presented below:
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Remaining Performance Obligations |
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Remaining Performance Obligations | Contract Assets and Contract Liabilities Contract assets represent rights to consideration in exchange for goods or services transferred to a customer when that right is conditional on something other than the passage of time. Contract liabilities represent deferred revenue. Net contract assets (liabilities) as of March 31, 2019 and December 31, 2018 are as follows:
As of March 31, 2019 and December 31, 2018, deposit liabilities of $16.5 million and $21.2 million, respectively, were principally included in current deferred revenue. These deposit liabilities represent upfront consideration received from customers for services such as post-contract support and maintenance that allow the customer to terminate the contract at any time for convenience. Significant changes during the three months ended March 31, 2019 and 2018 in the above contract asset and liability balances were as follows: revenue of $104.9 million and $104.6 million was recognized that was included in deferred revenue at December 31, 2018 and 2017, respectively. Capitalized Contract Costs The company’s incremental direct costs of obtaining a contract consist of sales commissions which are deferred and amortized ratably over the initial contract life. These costs are classified as current or noncurrent based on the timing of when the company expects to recognize the expense. The current and noncurrent portions of deferred commissions are included in prepaid expenses and other current assets and in other long-term assets, respectively, in the company’s consolidated balance sheets. At March 31, 2019 and December 31, 2018, the company had $12.2 million and $12.1 million, respectively, of deferred commissions. For the three months ended March 31, 2019 and 2018, $1.0 million and $1.7 million, respectively, of amortization expense related to deferred commissions was recorded in selling, general and administrative expense in the company’s consolidated statements of income. Costs on outsourcing contracts are generally expensed as incurred. However, certain costs incurred upon initiation of an outsourcing contract (costs to fulfill a contract), principally initial customer setup, are capitalized and expensed over the initial contract life. These costs are included in outsourcing assets, net in the company’s consolidated balance sheets. The amount of such cost at March 31, 2019 and December 31, 2018 was $79.3 million and $79.5 million, respectively. These costs are amortized over the initial contract life and reported in Services cost of sales. During the three months ended March 31, 2019 and 2018, $6.2 million and $3.6 million, respectively, was amortized. The remaining balance of outsourcing assets, net is comprised of fixed assets and software used in connection with outsourcing contracts. These costs are capitalized and depreciated over the shorter of the initial contract life or in accordance with the company’s fixed asset policy. Remaining Performance Obligations Remaining performance obligations represent the transaction price of firm orders for which work has not been performed and excludes (1) contracts with an original expected length of one year or less and (2) contracts for which the company recognizes revenue at the amount to which it has the right to invoice for services performed. At March 31, 2019, the company had approximately $1.1 billion of remaining performance obligations of which approximately 36% is estimated to be recognized as revenue by the end of 2019. |
Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leases The company determines if an arrangement is a lease at inception. This determination generally depends on whether the arrangement conveys to the company the right to control the use of an explicitly or implicitly identified asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the company if the company obtains the rights to direct the use of and to obtain substantially all of the economic benefits from using the underlying asset. The company has lease agreements that include lease and non-lease components, which the company accounts for as a single lease component for all personal property leases. Lease expense for variable leases and short-term leases is recognized when the expense is incurred. Operating leases are included in operating lease right-of-use (ROU) assets, other accrued liabilities and long-term operating lease liabilities on the consolidated balance sheets. Operating lease ROU assets and lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. Operating lease payments are recognized as lease expense on a straight-line basis over the lease term. Finance leases are included in outsourcing assets, net and long-term debt on the consolidated balance sheets. Finance lease ROU assets and lease liabilities are initially measured in the same manner as operating leases. Finance lease ROU assets are amortized using the straight-line method. Finance lease liabilities are measured at amortized cost using the effective interest method. The company has not capitalized leases with terms of twelve months or less. As most of the company’s leases do not provide an implicit rate, the company uses its incremental borrowing rate, based on the information available at the lease commencement date, in determining the present value of lease payments. The lease term for all of the company’s leases includes the non-cancelable period of the lease plus any additional periods covered by either a company option to extend (or not to terminate) the lease that the company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor. Lease payments included in the measurement of the lease liability are comprised of fixed payments, variable payments that depend on index or rate, amounts expected to be payable under a residual value guarantee and the exercise of the company option to purchase the underlying asset, if reasonably certain. Variable lease payments associated with the company’s leases are recognized when the event, activity, or circumstance in the lease agreement on which those payments are assessed occurs. Variable lease payments are presented as an operating expense in the company’s consolidated results of operations in the same line item as expense arising from fixed lease payments (operating leases) or amortization of the ROU asset (finance leases). The company uses the long-lived assets impairment guidance in ASC Subtopic 360-10 Property, Plant, and Equipment to determine whether an ROU asset is impaired, and if so, the amount of the impairment loss to recognize. If impaired, ROU assets for operating and finance leases are reduced for any impairment losses. The company monitors for events or changes in circumstances that require a reassessment of its leases. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in the consolidated statement of income. The company has commitments under operating leases for certain facilities and equipment used in its operations. The company also has finance leases for equipment. The company’s leases generally have initial lease terms ranging from 1 year to 8 years, most of which include options to extend or renew the leases for up to 5 years, and some of which may include options to terminate the leases within 1 year. Certain lease agreements contain provisions for future rent increases. The components of lease expense for the three months ended March 31, 2019 are as follows:
Supplemental balance sheet information related to leases is as follows:
Supplemental cash flow information related to leases is as follows:
Right-of-use assets obtained in exchange for lease obligations are as follows:
Maturities of lease liabilities as of March 31, 2019 are as follows:
Maturities of lease liabilities as of December 31, 2018, prior to the adoption of ASU No. 2016-02 as described in Note 3, “Accounting Standards,” are as follows:
(i)Such rental commitments have been reduced by minimum sublease rentals of $2.7 million, due in the future under noncancelable leases. 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 the three months ended March 31, 2019. As of March 31, 2019, receivables under sales-type leases before the allowance for unearned income were collectible as follows:
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New accounting pronouncements | Accounting Pronouncements Adopted Effective January 1, 2019, the company adopted ASU No. 2016-02 Leases (Topic 842) issued by the Financial Accounting Standards Board (FASB) which is intended to improve financial reporting about leasing transactions. The ASU requires organizations that lease assets, referred to as lessees, to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases. The standard also requires disclosures to help investors and other financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases. The company adopted the new standard using the effective date transition method by applying a cumulative-effect adjustment to the balance sheet through the addition of ROU assets and lease liabilities at January 1, 2019. Prior-period results were not restated. The company applied certain practical expedients, including the package of practical expedients, permitted under the transition guidance within Topic 842 to leases that commenced before January 1, 2019. The election of the package of practical expedients resulted in the company not reassessing prior conclusions under FASB Topic 840 Leases related to lease identification, lease classification and initial direct costs for existing leases at January 1, 2019. The adoption had a material impact on the consolidated financial position and did not have a material impact on the consolidated results of operations or cash flows as of and for the three months ended March 31, 2019. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases, while the company’s accounting for finance leases remained substantially unchanged. Accounting Pronouncements Not Yet Adopted In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract which clarifies the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This update is effective for fiscal years ending after December 15, 2019, with earlier adoption permitted, including adoption in any interim period. The new guidance can be applied retrospectively or prospectively to all implementation costs incurred after the date of adoption. The company is currently assessing when it will choose to adopt, and is currently evaluating the impact of the adoption on its consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments which introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected losses. This includes trade and other receivables, loans and other financial instruments. This update is effective for annual periods beginning after December 15, 2019, with earlier adoption permitted. The company will adopt the new guidance on January 1, 2020 through a cumulative-effect adjustment to retained earnings. The company is currently evaluating the impact of the adoption on its consolidated financial statements. |
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Marketable software | 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. 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. |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Lease Expense and Supplemental Cash Flow Information Related to Leases | The components of lease expense for the three months ended March 31, 2019 are as follows:
Supplemental cash flow information related to leases is as follows:
Right-of-use assets obtained in exchange for lease obligations are as follows:
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Supplemental Balance Sheet Information Related to Leases | Supplemental balance sheet information related to leases is as follows:
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Maturities of Operating Lease Liabilities - Topic 842 | Maturities of lease liabilities as of March 31, 2019 are as follows:
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Maturities of Finance Lease Liabilities - Topic 842 | Maturities of lease liabilities as of March 31, 2019 are as follows:
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Maturities of Operating Lease Liabilities - Topic 840 | Maturities of lease liabilities as of December 31, 2018, prior to the adoption of ASU No. 2016-02 as described in Note 3, “Accounting Standards,” are as follows:
(i)Such rental commitments have been reduced by minimum sublease rentals of $2.7 million, due in the future under noncancelable leases. |
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Maturities of Finance Lease Liabilities - Topic 840 | Maturities of lease liabilities as of December 31, 2018, prior to the adoption of ASU No. 2016-02 as described in Note 3, “Accounting Standards,” are as follows:
(i)Such rental commitments have been reduced by minimum sublease rentals of $2.7 million, due in the future under noncancelable leases. |
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Schedule of Receivables Under Sales-Type Leases Before Allowance for Unearned Income | As of March 31, 2019, receivables under sales-type leases before the allowance for unearned income were collectible as follows:
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Cost-Reduction Actions (Tables) |
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Individual Components of Work Force Reduction and Idle Lease Cost | Liabilities and expected future payments related to the company’s work-force reduction actions are as follows:
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Pension and Postretirement Benefits (Tables) |
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Pension Plans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Expense | Net periodic pension expense for the three months ended March 31, 2019 and 2018 is presented below:
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Postretirement Benefit Plans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Periodic Benefit Expense | Net periodic postretirement benefit expense for the three months ended March 31, 2019 and 2018 is presented below:
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Stock Compensation (Tables) |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Restricted Stock Unit Activity | A summary of restricted stock unit activity for the three months ended March 31, 2019 follows (shares in thousands):
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Schedule of Assumptions Used | The fair value of awards with market conditions was estimated using a Monte Carlo simulation with the following weighted-average assumptions:
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Earnings (Loss) Per Common Share Attributable to Unisys Corporation | The following table shows how earnings (loss) per share attributable to Unisys Corporation was computed for the three months ended March 31, 2019 and 2018 (shares in thousands):
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Contract Assets and Contract Liabilities (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Contract Assets (Liabilities) | Net contract assets (liabilities) as of March 31, 2019 and December 31, 2018 are as follows:
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Financial Instruments and Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value by Balance Sheet Location | The following table summarizes the fair value of the company’s foreign exchange forward contracts as of March 31, 2019 and December 31, 2018.
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Gains and Losses Recognized on Foreign Exchange Forward Contracts | The following table summarizes the location and amount of gains and losses recognized on foreign exchange forward contracts for the three months ended March 31, 2019 and 2018.
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Fair Values of Other Financial Instruments Not Measured at Fair Value in Consolidated Balance Sheets | Financial assets with carrying values approximating fair value include cash and cash equivalents and accounts receivable. Financial liabilities with carrying values approximating fair value include accounts payable and other liabilities. The carrying amounts of these financial assets and liabilities approximate fair value due to their short maturities. Such financial instruments are not included in the following table that provides information about the estimated fair values of other financial instruments that are not measured at fair value in the consolidated balance sheets as of March 31, 2019 and December 31, 2018.
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Goodwill (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Carrying Amount of Goodwill by Segment | Changes in the carrying amount of goodwill by segment for the three months ended March 31, 2019 were as follows:
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Debt (Tables) |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Long-term Debt | Long-term debt is comprised of the following:
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Schedule of Interest Expense | Interest expense related to the 2021 notes for the three month periods ended March 31, 2019 and 2018 was as follows:
Interest expense related to the 2022 notes for the three month periods ended March 31, 2019 and 2018 was as follows:
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Accumulated Other Comprehensive Income (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Accumulated other comprehensive income (loss) as of December 31, 2018 and March 31, 2019 is as follows:
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Amounts Reclassified Out of Accumulated Other Comprehensive Income | Amounts reclassified out of accumulated other comprehensive income for the three months ended March 31, 2019 and 2018 are as follows:
|
Supplemental Cash Flow Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Supplemental Cash Flow Information |
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Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the total of the amounts shown in the consolidated statements of cash flows.
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Schedule of Restricted Cash and Cash Equivalents | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the total of the amounts shown in the consolidated statements of cash flows.
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Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Operations by Business Segment | A summary of the company’s operations by business segment for the three month periods ended March 31, 2019 and 2018 is presented below:
|
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Reconciliation of Segment Operating Income to Consolidated Income (Loss) Before Income Taxes | Presented below is a reconciliation of total business segment operating income to consolidated income (loss) before income taxes:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Customer Revenue by Classes of Similar Products or Services | Customer revenue by classes of similar products or services, by segment, is presented below:
|
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Revenue by Geographic Segment | Geographic information about the company’s revenue, which is principally based on location of the selling organization, is presented below:
|
Summary of Significant Accounting Policies - Additional Information (Details) |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Lessee, Lease, Description [Line Items] | |
Optional extension or renewal term (up to) | 5 years |
Optional termination period | 1 year |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Initial lease terms | 1 year |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Initial lease terms | 8 years |
Summary of Significant Accounting Policies - Components of Lease Expense (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Accounting Policies [Abstract] | |
Operating lease cost | $ 14.8 |
Finance lease cost | |
Amortization of right-of-use assets | 0.4 |
Interest on lease liabilities | 0.0 |
Total finance lease cost | 0.4 |
Short-term lease costs | 0.1 |
Variable lease cost | 3.9 |
Sublease income | (0.5) |
Total lease cost | $ 18.7 |
Summary of Significant Accounting Policies - Supplemental Balance Sheet Information (Details) $ in Millions |
Mar. 31, 2019
USD ($)
|
---|---|
Operating Leases | |
Operating lease right-of-use assets | $ 115.5 |
Other accrued liabilities | 45.9 |
Long-term operating lease liabilities | 97.2 |
Total operating lease liabilities | 143.1 |
Finance Leases | |
Outsourcing assets, net | 4.7 |
Current maturities of long-term debt | 1.6 |
Long-term debt | 3.8 |
Total finance lease liabilities | $ 5.4 |
Weighted-Average Remaining Lease Term | |
Operating leases | 3 years 10 months 25 days |
Finance leases | 3 years 3 months 19 days |
Weighted-Average Discount Rate | |
Operating leases | 6.30% |
Finance leases | 2.50% |
Summary of Significant Accounting Policies - Supplemental Cash Flow Information (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Cash paid for amounts included in the measurement of lease liabilities: | |
Cash payments for operating leases included in operating activities | $ 13.4 |
Cash payments for finance leases included in financing activities | 0.5 |
Right-of-use assets obtained in exchange for lease obligations: | |
Operating leases | 6.7 |
Finance leases | $ 0.0 |
Summary of Significant Accounting Policies - Maturities of Lease Liabilities, Topic 842 (Details) $ in Millions |
Mar. 31, 2019
USD ($)
|
---|---|
Finance Leases | |
2019 | $ 1.4 |
2020 | 1.6 |
2021 | 1.6 |
2022 | 1.0 |
2023 | 0.0 |
Thereafter | 0.0 |
Total lease payments | 5.6 |
Less imputed interest | 0.2 |
Total | 5.4 |
Operating Leases | |
2019 | 40.4 |
2020 | 47.0 |
2021 | 28.9 |
2022 | 17.8 |
2023 | 20.7 |
Thereafter | 6.6 |
Total lease payments | 161.4 |
Less imputed interest | 18.3 |
Total | $ 143.1 |
Summary of Significant Accounting Policies - Maturities of Lease Liabilities, Topic 840 (Details) $ in Millions |
Dec. 31, 2018
USD ($)
|
---|---|
Finance Leases | |
2019 | $ 1.6 |
2020 | 1.6 |
2021 | 1.6 |
2022 | 1.0 |
2023 | 0.0 |
Thereafter | 0.0 |
Total | 5.8 |
Operating Leases | |
2019 | 48.5 |
2020 | 42.1 |
2021 | 30.0 |
2022 | 20.8 |
2023 | 14.3 |
Thereafter | 24.4 |
Total | 180.1 |
Minimum sublease rentals due in the future under noncancelable operating leases | $ 2.7 |
Summary of Significant Accounting Policies - Receivables Under Sales-Type Lease (Details) $ in Millions |
Mar. 31, 2019
USD ($)
|
---|---|
Accounting Policies [Abstract] | |
2019 | $ 21.2 |
2020 | 15.2 |
2021 | 10.7 |
2022 | 10.1 |
2023 | 10.2 |
Thereafter | 8.6 |
Total | $ 76.0 |
Cost-Reduction Actions - Additional Information (Detail) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 2,600,000 | $ 0 |
Charges related to work-force reductions | (900,000) | |
Expense (benefit) for changes in estimates | (2,900,000) | |
Cost of Revenue | Services | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | (3,700,000) | (3,000,000) |
Selling, general and administrative expenses | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 5,000,000 | 100,000 |
Research and development expenses | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 1,300,000 | |
Lease abandonment and asset write-offs | ||
Restructuring Cost and Reserve [Line Items] | ||
Other expenses related to the cost-reduction effort | $ 3,500,000 |
Stock Compensation - Summary of Restricted Stock Unit Activity (Detail) - $ / shares shares in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Weighted- Average Grant-Date Fair Value | ||
Granted (in dollars per share) | $ 16.58 | $ 15.20 |
Restricted Stock Units | ||
Restricted Stock Units | ||
Outstanding at beginning of period (in shares) | 2,151 | |
Granted (in shares) | 1,296 | |
Vested (in shares) | (1,074) | |
Forfeited and expired (in shares) | (30) | |
Outstanding at end of period (in shares) | 2,343 | |
Weighted- Average Grant-Date Fair Value | ||
Outstanding at beginning of period (in dollars per share) | $ 12.90 | |
Granted (in dollars per share) | 15.04 | |
Vested (in dollars per share) | 13.23 | |
Forfeited and expired (in dollars per share) | 13.47 | |
Outstanding at end of period (in dollars per share) | $ 14.11 |
Stock Compensation Stock Compensation - Weighted Average Assumptions (Details) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Weighted-average fair value of grant (in dollars per share) | $ 16.58 | $ 15.20 |
Risk-free interest rate | 2.49% | 2.26% |
Expected volatility | 47.91% | 52.97% |
Expected life of restricted stock units in years | 2 years 10 months 13 days | 2 years 10 months 17 days |
Expected dividend yield | 0.00% | 0.00% |
Contract Assets and Contract Liabilities (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Revenue from Contract with Customer [Abstract] | |||
Contract assets - current | $ 30.3 | $ 29.7 | |
Contract assets - long-term | 21.9 | 22.2 | |
Deferred revenue - current | (292.2) | (294.4) | |
Deferred revenue - long-term | (158.1) | (157.2) | |
Deposit liabilities principally included in current deferred revenue | 16.5 | $ 21.2 | |
Revenue recognized, previously included in deferred revenue | $ 104.9 | $ 104.6 |
Capitalized Contract Costs (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Capitalized Contract Cost [Line Items] | |||
Amortization of costs to fulfill contracts | $ 6.2 | $ 3.6 | |
Cost to fulfill contract, net | 79.3 | $ 79.5 | |
Sales Commissions | |||
Capitalized Contract Cost [Line Items] | |||
Deferred commissions | 12.2 | $ 12.1 | |
Amortization of costs to fulfill contracts | $ 1.0 | $ 1.7 |
Financial Instruments and Fair Value Measurements - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Fair Value Measurements [Line Items] | ||
Maturity period limit of foreign currency exchange instruments (in months) | 3 months | |
Foreign Exchange Forward Contract | ||
Fair Value Measurements [Line Items] | ||
Notional amount of foreign exchange forward contracts not designated as hedging instruments | $ 385.4 | $ 384.7 |
Financial Instruments and Fair Value Measurements - Fair Value of Foreign Exchange Forward Contracts by Balance Sheet Location (Details) - Foreign Exchange Forward Contract - Level 2 - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total fair value | $ (3.6) | $ 3.1 |
Prepaid expenses and other current assets | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative asset | 0.3 | 3.4 |
Other accrued liabilities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Derivative liability | $ 3.9 | $ 0.3 |
Financial Instruments and Fair Value Measurements - Gains and Losses Recognized on Foreign Exchange Forward Contracts (Details) - Other income (expense), net - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Fair Value, Measured on Recurring Basis, Gain (Loss) Included in Earnings [Line Items] | ||
Amount of gain (loss) recognized | $ 0.1 | |
Amount of gain (loss) recognized | $ 10.7 |
Goodwill (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Goodwill [Line Items] | ||
Goodwill | $ 177.6 | $ 177.8 |
Services | ||
Goodwill [Line Items] | ||
Goodwill | 68.9 | $ 69.1 |
Business process outsourcing services | Services | ||
Goodwill [Line Items] | ||
Goodwill | $ 10.3 |
Goodwill - Schedule of Changes in Carrying Amount of Goodwill by Segment (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Goodwill [Roll Forward] | |
Beginning balance | $ 177.8 |
Translation adjustments | (0.2) |
Ending balance | 177.6 |
Services | |
Goodwill [Roll Forward] | |
Beginning balance | 69.1 |
Translation adjustments | (0.2) |
Ending balance | 68.9 |
Technology | |
Goodwill [Roll Forward] | |
Beginning balance | 108.7 |
Translation adjustments | 0.0 |
Ending balance | $ 108.7 |
Debt - Schedule of Components of Long-term Debt (Details) - USD ($) |
Mar. 31, 2019 |
Dec. 31, 2018 |
Dec. 31, 2016 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Finance leases | $ 5,400,000 | ||
Finance leases | $ 5,800,000 | ||
Other debt | 40,200,000 | 20,800,000 | |
Total | 674,400,000 | 652,800,000 | |
Less – current maturities | 7,300,000 | 10,000,000 | |
Total long-term debt | $ 667,100,000 | 642,800,000 | |
5.50% convertible senior notes due March 1, 2021 | |||
Debt Instrument [Line Items] | |||
Face value | $ 1,000 | ||
Senior Notes | 10.75% senior notes due April 15, 2022 | |||
Debt Instrument [Line Items] | |||
Interest rate | 10.75% | ||
Face value | $ 440,000,000 | 440,000,000 | |
Unamortized discount and fees | 7,400,000 | 8,000,000 | |
Senior notes | $ 432,600,000 | 432,000,000 | |
Senior Notes | 5.50% convertible senior notes due March 1, 2021 | |||
Debt Instrument [Line Items] | |||
Interest rate | 5.50% | 5.50% | |
Face value | $ 213,500,000 | 213,500,000 | $ 213,500,000 |
Unamortized discount and fees | 17,300,000 | 19,300,000 | |
Senior notes | $ 196,200,000 | $ 194,200,000 |
Debt - Schedule of Interest Expense (Details) - Senior Notes - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
5.50% convertible senior notes due 2021 | ||
Debt Instrument [Line Items] | ||
Contractual interest coupon | $ 2.9 | $ 2.9 |
Amortization of debt discount | 1.7 | 1.6 |
Amortization of debt issuance costs | 0.3 | 0.3 |
Total | 4.9 | 4.8 |
2022 Notes | ||
Debt Instrument [Line Items] | ||
Contractual interest coupon | 11.8 | 11.8 |
Amortization of debt issuance costs | 0.6 | 0.6 |
Total | $ 12.4 | $ 12.4 |
Commitments and Contingencies - Additional Information (Detail) € in Millions, $ in Millions |
1 Months Ended | 115 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2007
EUR (€)
|
Jul. 31, 2011
USD ($)
|
Mar. 31, 2019
USD ($)
|
Apr. 30, 2008
EUR (€)
|
|
Loss Contingencies [Line Items] | ||||
Amount related to unreserved tax-related matters, inclusive of interest (up to) | $ | $ 102 | |||
Ministry of Justice of Belgium | ||||
Loss Contingencies [Line Items] | ||||
Loss contingency, damages sought value | € | € 28.0 | |||
Counterclaim against termination of contract | € | € 18.5 | |||
Pharmaceutical Claims | ||||
Loss Contingencies [Line Items] | ||||
Loss contingency, damages sought value | $ | $ 68 |
Accumulated Other Comprehensive Income - Amounts Reclassified Out of Accumulated Other Comprehensive Income (Detail) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Postretirement Plans: | ||
Total reclassification for the period | $ 34.9 | $ 38.7 |
Postretirement Plans | ||
Postretirement Plans: | ||
Amortization of postretirement plan items, before tax | 35.9 | 40.0 |
Income tax benefit | (1.0) | (1.3) |
Total reclassification for the period | 34.9 | |
Amortization of prior service cost | ||
Postretirement Plans: | ||
Amortization of postretirement plan items, before tax | (1.5) | (1.8) |
Amortization of actuarial losses | ||
Postretirement Plans: | ||
Amortization of postretirement plan items, before tax | $ 37.4 | $ 41.8 |
Supplemental Cash Flow Information - Schedule of Supplemental Cash Flow Information (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Cash paid during the period for: | ||
Income taxes, net of refunds | $ 18.4 | $ 13.6 |
Interest | $ 6.0 | $ 6.3 |
Supplemental Cash Flow Information - Reconciliation of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Millions |
Mar. 31, 2019 |
Dec. 31, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Supplemental Cash Flow Elements [Abstract] | ||||
Cash and cash equivalents | $ 504.6 | $ 605.0 | ||
Restricted cash | 12.2 | 19.1 | ||
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows | $ 516.8 | $ 624.1 | $ 683.0 | $ 764.1 |
Segment Information - Additional Information (Detail) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Jan. 01, 2018
USD ($)
|
Mar. 31, 2019
USD ($)
segment
|
Mar. 31, 2018
USD ($)
|
|
Segment Reporting Information [Line Items] | |||
Revenue | $ 695.8 | $ 708.4 | |
Number of business segments | segment | 2 | ||
Operating income (loss) | $ 42.9 | 101.8 | |
Other Technology | Segment Reconciling Items | |||
Segment Reporting Information [Line Items] | |||
Operating income (loss) | 0.2 | 0.0 | |
Technology | |||
Segment Reporting Information [Line Items] | |||
Revenue | 83.7 | 139.9 | |
Operating income (loss) | $ 29.4 | 82.0 | |
Technology | Software License Extensions and Renewals | |||
Segment Reporting Information [Line Items] | |||
Revenue | $ 53.0 | $ 53.0 |
Segment Information - Customer Revenue by Classes of Similar Products or Services (Detail) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Revenue from External Customer [Line Items] | ||
Revenues | $ 695.8 | $ 708.4 |
Services | ||
Revenue from External Customer [Line Items] | ||
Revenues | 612.1 | 568.5 |
Technology | ||
Revenue from External Customer [Line Items] | ||
Revenues | 83.7 | 139.9 |
Cloud & infrastructure services | Services | ||
Revenue from External Customer [Line Items] | ||
Revenues | 361.2 | 318.4 |
Application services | Services | ||
Revenue from External Customer [Line Items] | ||
Revenues | 189.1 | 192.9 |
Business process outsourcing services | Services | ||
Revenue from External Customer [Line Items] | ||
Revenues | $ 61.8 | $ 57.2 |
Segment Information - Revenue, Properties and Outsourcing Assets by Geographic Segment (Detail) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 695.8 | $ 708.4 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 332.6 | 286.5 |
United Kingdom | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | 95.3 | 114.8 |
Other foreign | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Revenues | $ 267.9 | $ 307.1 |
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