Unisys Completes Lump-Sum, Cash-out Offer for Eligible Former U.S. Associates, Marking Latest Step to Reduce Pension Exposure

Rhea-AI Summary

Unisys Corporation (NYSE: UIS) announced the completion of a lump-sum cash-out offer for eligible former associates with deferred vested benefits in U.S. pension plans. Earlier in 2020, Unisys contributed approximately $800 million to its pension plans, aiming to reduce future required contributions. The current initiative is part of a broader strategy to lower global pension liabilities by $1 billion by Q1 2021, with about 3,500 former associates accepting the offer. This will lead to a one-time, non-cash pre-tax settlement charge of $150 million, with no impact on cash position.

Positive

• Completion of lump-sum cash-out offer for 3,500 former associates, reducing plans' projected benefit obligation by over $276 million.
• Reduction of gross pension liabilities as part of a strategy to lower global pension liabilities by $1 billion.
• Expected annual savings on administrative costs, including Pension Benefit Guaranty Corporation premiums.

Negative

• One-time, non-cash pre-tax settlement charge of approximately $150 million.

BLUE BELL, Pa., Dec. 18, 2020 /PRNewswire/ -- Unisys Corporation (NYSE: UIS) today announced it has completed a lump-sum, cash-out offer for eligible former associates who have deferred vested benefits under the company's U.S. pension plans and have elected to receive the value of their entire pension benefit in a lump-sum payment.

Earlier in 2020, the company reduced its required U.S. pension contributions and deficit by contributing approximately $800 million to its U.S. pension plans. Including its intended voluntary 2021 contributions of up to $200 million and based on the latest available actuarial estimates, the company will have effectively pre-funded all but approximately $50 million of its future required U.S. pension contributions.

With the action announced today, the company is working to reduce its overall gross pension liabilities. "Completing this offer represents the first step in our plan to reduce global pension liabilities by approximately $1 billion by the end of the first quarter of 2021," said Unisys Chief Financial Officer Mike Thomson. "We are taking additional steps both with respect to our U.S. plans and non-U.S. plans, including an annuity purchase transaction valued at approximately $250 million within our U.S. plans that is expected to be completed in early 2021."

Approximately 3,500 eligible former Unisys associates who received the bulk lump-sum offer have accepted it, reducing the number of participants in the plans by approximately 6 percent. Participants will receive lump-sum payments valued in total at approximately $276 million from the pension trust, reducing the plans' projected benefit obligation by slightly more than this amount by the end of 2020. Unisys expects that this action will reduce annual administrative costs, including Pension Benefit Guaranty Corporation premiums. 

Unisys expects the lump-sum payments, which will come from the pension trust, to be made by the end of the year. As discussed in its third-quarter earnings call on October 27, the company anticipates that this action will result in a one-time, non-cash, pre-tax settlement charge of approximately $150 million. Since all lump-sum payments will be made by the pension trust, there will be no impact on the company's cash position.

About Unisys
Unisys is a global IT services company that delivers successful outcomes for the most demanding businesses and governments. Unisys offerings include digital workplace services, cloud and infrastructure services and software operating environments for high-intensity enterprise computing. Unisys integrates security into all of its solutions. For more information on how Unisys delivers for its clients across the government, financial services and commercial markets, visit www.unisys.com.

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Forward-Looking Statements
Any statements contained in this release that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements rely on assumptions and are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Additional discussion of factors that could affect Unisys future results is contained in our periodic filings with the Securities and Exchange Commission.

RELEASE NO.: 1218/9808

Unisys and other Unisys products and services mentioned herein, as well as their respective logos, are trademarks or registered trademarks of Unisys Corporation. Any other brand or product referenced herein is acknowledged to be a trademark or registered trademark of its respective holder.

UIS-C

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SOURCE Unisys Corporation

FAQ

What was Unisys's recent cash-out offer for former associates?

Unisys completed a lump-sum cash-out offer for eligible former associates with deferred vested benefits under U.S. pension plans.

How much did Unisys contribute to its U.S. pension plans in 2020?

Unisys contributed approximately $800 million to its U.S. pension plans earlier in 2020.

What is Unisys's goal for reducing pension liabilities?

Unisys aims to reduce global pension liabilities by approximately $1 billion by the end of the first quarter of 2021.

How many former employees accepted the lump-sum offer?

About 3,500 eligible former Unisys associates accepted the lump-sum offer.

What financial impact will the lump-sum payment have on Unisys?

The lump-sum payments will result in a one-time, non-cash pre-tax settlement charge of approximately $150 million.