UNISYS CORPUIS

UNISYS CORP Income Taxes Disclosure

10-KFiled Feb 25, 20269 min read
Income taxes
The components of the loss before income taxes and the provision for income taxes for the year ended December 31, 2025 in accordance with the disclosure requirements of ASU 2023-09 are as follows:
Year ended December 31,2025
Income (loss) before income taxes
United States$(451.0)
Foreign178.8 
Total loss before income taxes$(272.2)
Provision for income taxes
Current
Federal$— 
State1.2 
Foreign 58.9 
Total current60.1 
Deferred
Federal$— 
State— 
Foreign7.7 
Total provision for income taxes$67.8 
The components of the loss before income taxes and the provision for income taxes for the years ended December 31, 2024 and 2023 as previously disclosed prior to the adoption of ASU 2023-09 are as follows:
Year ended December 31,20242023
Income (loss) before income taxes
United States$(268.7)$(545.5)
Foreign193.4 197.7 
Total loss before income taxes$(75.3)$(347.8)
Provision for income taxes
Current
United States$21.1 $8.8 
Foreign61.2 46.0 
Total current
82.3 54.8 
Deferred
United States18.7 — 
Foreign16.9 24.5 
Total provision for income taxes$117.9 $79.3 
The following table is a reconciliation of the benefit for income taxes at the United States (U.S.) statutory tax rate to the company’s effective tax rate for the year ended December 31, 2025 in accordance with the disclosure requirements of ASU 2023-09:
Year ended December 31,2025
Amount
Percent
U.S. statutory income tax benefit$(57.2)21.0 %
State and local income taxes, net of federal benefit (i)
1.0 (0.4)%
Effect of cross-border tax laws
GILTI
10.1 (3.7)%
Income from branches
3.2 (1.2)%
Other
0.5 (0.2)%
Change in valuation allowances
66.1 (24.3)%
Nontaxable and nondeductible items:
Goodwill impairment
11.6 (4.3)%
Limitation on deduction for executive compensation
3.1 (1.1)%
Other
0.7 (0.3)%
Other adjustments
(0.4)0.1 %
Foreign tax effects
Brazil
Effect of rates different than statutory7.2 (2.6)%
Income tax withholding3.2 (1.2)%
Other(0.7)0.3 %
Costa Rica
Income tax withholding3.7 (1.4)%
Other1.6 (0.6)%
Germany
Changes in valuation allowances(4.3)1.6 %
Other0.4 (0.1)%
India
Income tax withholding3.3 (1.2)%
Other1.0 (0.4)%
Philippines
Changes in valuation allowances3.6 (1.3)%
Other(1.1)0.4 %
United Kingdom
Effect of rates different than statutory4.1 (1.5)%
Changes in valuation allowances(6.2)2.3 %
Other(0.4)0.1 %
Other foreign jurisdictions
13.4 (4.9)%
Changes in unrecognized tax benefits
0.3 (0.1)%
Provision for income taxes$67.8 (24.9)%
(i) State and local income taxes in California, Connecticut and Pennsylvania comprise the majority of the state taxes, net of federal benefit in this category.
The following table is a reconciliation of the benefit for income taxes at the U.S statutory tax rate to the provision for income taxes as reported for the years ended December 31, 2024 and 2023 as previously disclosed prior to the adoption of ASU 2023-09:
Year ended December 31,20242023
U.S. statutory income tax benefit$(15.8)$(73.0)
Income and losses for which no provision or benefit has been recognized63.0 123.2 
Foreign rate differential and other foreign tax expense8.9 12.7 
Income tax withholdings23.0 14.0 
Additional tax expense on undistributed foreign earnings27.3 — 
Permanent items1.2 (3.0)
Change in uncertain tax positions1.3 3.8 
Change in valuation allowances7.9 2.1 
United States income tax benefit— (0.6)
Other1.1 0.1 
Provision for income taxes$117.9 $79.3 
The tax effects of temporary differences and carryforwards that give rise to significant portions of deferred tax assets and liabilities were as follows:
As of December 31,20252024
Deferred tax assets
Tax loss carryforwards$841.4 $787.6 
Pension and postretirement benefits
123.9 196.5 
Foreign tax credit carryforwards41.8 61.9 
Other tax credit carryforwards30.0 29.5 
Deferred revenue34.4 48.2 
Employee benefits and compensation25.0 31.2 
Purchased capitalized software16.2 18.4 
Depreciation23.4 28.6 
Capitalized costs28.8 9.3 
Capitalized research and development19.6 6.7 
Warranty, bad debts and other reserves5.5 2.9 
Other103.3 76.0 
1,293.3 1,296.8 
Valuation allowance(1,172.0)(1,168.6)
Total deferred tax assets$121.3 $128.2 
Deferred tax liabilities
Undistributed earnings of foreign subsidiaries$31.3 $27.7 
Other24.5 32.6 
Total deferred tax liabilities$55.8 $60.3 
Net deferred tax assets$65.5 $67.9 
Changes in the valuation allowance were as follows:
Year ended December 31,202520242023
Valuation allowance, at beginning of year$(1,168.6)$(1,150.1)$(1,110.5)
Actuarial pension adjustments63.8 24.8 84.5 
Expired net operating losses/tax credits46.3 35.2 42.9 
Foreign exchange(28.2)15.5 (6.8)
Recognition of income tax benefit (expense)(i)
(80.1)(56.0)(125.9)
Other(5.2)(38.0)(34.3)
Valuation allowance, at end of year$(1,172.0)$(1,168.6)$(1,150.1)
(i) Includes U.S. pension activity of $3.8 million, ($44.8) million and ($95.9) million in 2025, 2024 and 2023, respectively.
The company has tax effected tax loss carryforwards as follows:
As of December 31, 2025
Federal
$381.5 
State and local201.1 
Foreign258.8 
Total tax loss carryforwards$841.4 
These carryforwards will expire as follows:
Year
2026$13.7 
202716.8 
202895.8 
20294.5 
203048.5 
Thereafter326.2 
Unlimited335.9 
Total$841.4 
The company also has available tax credit carryforwards, which will expire as follows:
Year
2026$33.7 
20279.1 
20280.3 
20290.6 
20300.4 
Thereafter27.7 
Total$71.8 
A full valuation allowance is currently maintained for all U.S. and certain foreign deferred tax assets in excess of deferred tax liabilities. The company will record a tax provision or benefit for those international subsidiaries that do not have a full valuation allowance against their net deferred tax assets. Any profit or loss recorded for the company’s U.S. operations will have no provision or benefit associated with it due to such valuation allowance, except with respect to withholding taxes not creditable against future taxable income. As a result, the company’s provision or benefit for taxes may vary significantly depending on the geographic distribution of income.
The realization of the company’s net deferred tax assets as of December 31, 2025, is primarily dependent on the ability to generate sustained taxable income in various jurisdictions. Judgment is required to estimate forecasted future taxable income, which may be impacted by future business developments, actual operating results, strategic operational and tax initiatives, legislative, and other economic factors and developments. During 2025, the company determined that a portion of its non-U.S.
net deferred tax assets no longer required a valuation allowance. The net change in the valuation allowances impacting the effective tax rate in 2025 was approximately $5.3 million tax benefit, primarily in Germany. During 2024, the company determined that a portion of its non-U.S. net deferred tax assets required an additional valuation allowance. The net change in the valuation allowances impacting the effective tax rate in 2024 was approximately $7.9 million tax expense, primarily in the United Kingdom.
Under U.S. tax law, distributions from foreign subsidiaries to U.S. shareholders are generally exempt from taxation, except for certain federal and states taxes. Consequently, the deferred income tax liability on undistributed earnings is generally limited to any foreign withholding or other foreign taxes that will be imposed on such distributions. The company is no longer asserting indefinite reinvestment of earnings of certain foreign subsidiaries. At December 31, 2025 and 2024, the related deferred tax liability was $31.3 million and $27.7 million, respectively, which is included within other long-term liabilities on the company’s consolidated balance sheets. At December 31, 2025, the unrecognized deferred income tax liability was approximately $7.7 million for those foreign subsidiaries for which the company currently intends to indefinitely reinvest the earnings and for which no provision has been made for income taxes that may become payable upon distribution of the earnings of such subsidiaries .
Cash paid for income taxes, net of refunds in accordance with the disclosure requirements of ASU 2023-09 was as follow for the year ended December 31, 2025:
Year ended December 31,2025
Federal
$— 
State
2.5 
Foreign:
Brazil
23.9 
Costa Rica
11.8 
India
7.9 
Mexico
7.5 
United Kingdom
6.8 
Other
14.4 
Total cash paid for income taxes, net of refunds
$74.8 
Cash paid for income taxes as reported for the years ended December 31, 2024 and 2023 as previously disclosed prior to the adoption of ASU 2023-09 was as follows:
Year ended December 31,20242023
Cash paid for income taxes, net of refunds$56.4 $63.4 
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Year ended December 31,202520242023
Balance at January 1$13.5 $20.9 $17.8 
Additions based on tax positions related to the current year2.0 2.5 4.6 
Changes for tax positions of prior years0.5 (3.4)2.6 
Reductions as a result of a lapse of applicable statute of limitations(2.2)(5.8)(4.6)
Settlements(0.3)(0.5)— 
Changes due to foreign currency0.4 (0.2)0.5 
Balance at December 31$13.9 $13.5 $20.9 
The company recognizes penalties and interest accrued related to income tax liabilities in the provision for income taxes in its consolidated statements of income (loss). At December 31, 2025 and 2024, the company had an accrual of $5.5 million and $5.0 million, respectively, for the payment of penalties and interest. For the years ended December 31, 2025, 2024 and 2023, the company recognized tax expense related to interest of $0.5 million, $0.4 million and $0.8 million, respectively.
At December 31, 2025, all of the company’s liability for unrecognized tax benefits, if recognized, would affect the company’s effective tax rate.
The company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. The company is currently undergoing audits in several of its foreign jurisdictions. Ongoing income tax audits throughout the world are not expected to have a material impact on the company’s financial position.
Internal Revenue Code Sections 382 and 383 provide annual limitations with respect to the ability of a corporation to utilize its net operating loss (as well as certain built-in losses) and tax credit carryforwards, respectively (Tax Attributes), against future U.S. taxable income, if the corporation experiences an “ownership change.” In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period. The company regularly monitors ownership changes (as calculated for purposes of Section 382). The company has determined that, for purposes of the rules of Section 382 described above, an ownership change occurred in 2011. Any future transaction or transactions and the timing of such transaction or transactions could trigger additional ownership changes under Section 382.
As a result of the ownership change in 2011, utilization for certain of the company’s Tax Attributes, U.S. net operating losses and tax credits, is subject to an overall annual limitation of $70.6 million. The cumulative limitation as of December 31, 2025, is approximately $456 million. This limitation will be applied to any net operating losses and then to any other Tax Attributes. Any unused limitation may be carried over to later years. Based on presently available information and the existence of tax planning strategies, the company does not expect to incur a U.S. federal cash tax liability in the near term.
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act of 2017, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The company does not anticipate any material impact to our financial statements, due to the valuation allowance in the U.S., and no material permanent tax differences are expected. The company continues to assess the impact of these new provisions on the company’s consolidated financial statements for future reporting periods.

Historical Timeline

Fiscal YearFiled
2025Feb 25, 2026Showing above
2024Feb 21, 2025
2023Feb 26, 2024
2022Mar 1, 2023
2021Feb 22, 2022
2020Feb 26, 2021
2019Feb 28, 2020
2018Mar 4, 2019
2017Mar 12, 2018
2016Feb 21, 2017
2015Feb 29, 2016

About Income Taxes Disclosures

The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.

Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.

Other Available Disclosures

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