Unisys Com Stk Regulatory News (USY)

Unisys Announces First-Quarter 2014 Financial Results - Revenue declines 6 percent; 4 percent on a constant currency(1) basis - Diluted loss per share of $1.15 vs. a loss of 77 cents in 1Q 2013 - Cash from operations of $20 million vs. $14 million in 1Q 2013 BLUE BELL, Pa., April 22, 2014 -- Unisys Corporation (NYSE: UIS) today reporteda first-quarter 2014 net loss of $53.5 million, or a loss of $1.15 per dilutedshare, which included $19.3 million of pension expense. In the first quarterof 2013 the company reported a net loss of $33.9 million, or a loss of 77cents per diluted share, which included $22.3 million of pension expense.Excluding pension expense in both periods, the non-GAAP diluted loss pershare(2) in the first quarter of 2014 was 74 cents compared with a non-GAAPdiluted loss per share of 26 cents in the first quarter of 2013. First-quarter 2014 revenue declined 6 percent to $762 million from $810 millionin the year-ago quarter. On a constant currency basis, first-quarter 2014revenue declined 4 percent. "Following a strong fourth quarter of 2013, our first-quarter 2014 revenue andmargins were impacted by lower sales of technology and IT services projects,while cash from operations improved over the year ago quarter," said UnisysChairman and CEO Ed Coleman. "We look for improved results through the courseof the year, driven in part by anticipated full-year growth in our technologybusiness. We are confident in our strategy and are optimistic about theinvestments we are making in new products such as our Stealth cybersecuritysoftware, our Forward! by Unisys fabric-based server platform, and ourcloud-based offerings." First-Quarter Company and Business Segment Highlights U.S. revenue declined 5 percent in the quarter. U.S. Federal government revenuegrew 2 percent. International revenue declined 7 percent. On a constantcurrency basis, international revenue declined 4 percent. First-quarter 2014 services revenue declined 4 percent from the prior-yearquarter driven by lower outsourcing and infrastructure services revenue.Reflecting the lower services revenue, first-quarter 2014 services gross profitmargin declined to 15.8 percent from 17.4 percent a year ago while servicesoperating profit margin declined to 1.9 percent from 3.1 percent a year ago. First-quarter 2014 services orders decreased from year-ago levels primarilydriven by lower outsourcing orders. Services backlog at March 31, 2014 was $4.5billion compared to $4.8 billion at December 31, 2013. First-quarter 2014 technology revenue declined 19 percent from the prior-yearquarter driven by lower sales of ClearPath enterprise software and servers.Reflecting the lower ClearPath sales, first-quarter 2014 technology grossprofit margin declined to 42.5 percent from 45.8 percent in the year-agoquarter and technology operating profit (loss) margin declined to (21.2)percent from 0.2 percent in the year-ago quarter. The company reported an overall first-quarter 2014 gross profit margin of 17.5percent compared with 19.9 percent in the year-ago quarter. Operating expenses(SG&A and R&D expenses) declined 4 percent from the year-ago period. Thecompany reported a first-quarter 2014 operating loss of $19.9 million comparedwith an operating profit of $1.6 million in the first quarter of 2013. Cash Flow and Balance Sheet Highlights Unisys generated $20 million of cash from operations in the first quarter of2014 compared to $14 million in the first quarter of 2013. Cash from operationsincluded pension contributions of $56 million in the first quarter of 2014, anincrease from $27 million in the first quarter of 2013. Capital expenditures inthe first quarter of 2014 were $45 million compared with $26 million in theyear-ago quarter. After capital expenditures, the company used $25 million offree cash(3) in the first quarter of 2014 compared with free cash usage of $12million in the first quarter of 2013. Free cash flow before pensioncontributions increased to $31 million in the first quarter of 2014 from $15million in the year-ago quarter. At March 31, 2014, the company reported a cash balance of $614 million andtotal debt of $210 million. Non-GAAP Information Unisys reports its results in accordance with Generally Accepted AccountingPrinciples (GAAP) in the United States. However, in an effort to provideinvestors with additional perspective regarding the company's results asdetermined by GAAP, the company also discusses, in its earnings press releaseand/or earnings presentation materials, non-GAAP information which managementbelieves provides useful information to investors. Our management usessupplemental non-GAAP financial measures internally to understand, manage andevaluate our business and assess operational alternatives. These non-GAAPmeasures may include non-GAAP diluted earnings per share, free cash flow, freecash flow before pension contributions, and constant currency. Our non-GAAP measures are not intended to be considered in isolation or assubstitutes for results determined in accordance with GAAP and should be readonly in conjunction with our consolidated financial statements prepared inaccordance with GAAP. (See GAAP to non-GAAP reconciliations attached.) (1) Constant currency - The company refers to growth rates at constant currencyor adjusting for currency so that the business results can be viewed withoutthe impact of fluctuations in foreign currency exchange rates to facilitatecomparisons of the company's business performance from one period to another.Constant currency for revenue is calculated by retranslating current and priorperiod results at a consistent rate. This approach is based on the pricingcurrency for each country which is typically the functional currency.Generally, when the dollar either strengthens or weakens against othercurrencies, the growth at constant currency rates will be higher or lower,respectively, than growth reported at actual exchange rates. (2) Non-GAAP diluted earnings/loss per share - Unisys recorded pension expenseof $19.3 million and $22.3 million during the first quarters of 2014 and 2013,respectively. In an effort to provide investors with a perspective on thecompany's earnings without these charges, they are excluded from the non-GAAPdiluted earnings/loss per share calculations. (3) Free cash flow - To better understand the trends in our business, webelieve that it is helpful to present free cash flow, which we define as cashflow from operations less capital expenditures. Management believes thismeasure gives investors an additional perspective on cash flow from operatingactivities in excess of amounts required for reinvestment. Because of thesignificance of the company's pension funding obligations, free cash flowbefore pension funding is also provided. Conference Call Unisys will hold a conference call today at 5:30 p.m. Eastern Time to discussits results. The listen-only Webcast, as well as the accompanying presentationmaterials, can be accessed on the Unisys Investor Web site at www.unisys.com/investor.Following the call, an audio replay of the Webcast, and accompanying presentationmaterials, can be accessed through the same link. About Unisys Unisys is a worldwide information technology company. We provide a portfolio ofIT services, software, and technology that solves critical problems forclients. We specialize in helping clients secure their operations, increase theefficiency and utilization of their data centers, enhance support to their endusers and constituents, and modernize their enterprise applications. To providethese services and solutions, we bring together offerings and capabilities inoutsourcing services, systems integration and consulting services,infrastructure services, maintenance services, and high-end server technology.With approximately 23,000 employees, Unisys serves commercial organizations andgovernment agencies throughout the world. For more information, visitwww.unisys.com. Forward-Looking Statements Any statements contained in this release that are not historical facts areforward-looking statements as defined in the Private Securities LitigationReform Act of 1995. Forward-looking statements include, but are not limited to,any projections of earnings, revenues, or other financial items; any statementsof the company's plans, strategies or objectives for future operations;statements regarding future economic conditions or performance; and anystatements of belief or expectation. All forward-looking statements rely onassumptions and are subject to various risks and uncertainties that could causeactual results to differ materially from expectations. Risks and uncertaintiesthat could affect the company's future results include the company's ability toeffectively anticipate and respond to volatility and rapid technological changein its industry; the company's ability to drive profitable growth in consultingand systems integration; the company's ability to profitably grow itsoutsourcing business; the company's ability to maintain and grow its technologybusiness; the potential adverse effects of aggressive competition in theinformation services and technology marketplace; the company's ability toretain significant clients; the risks that the company's contracts may not beas profitable as expected or provide the expected level of revenues and thatcontracts with U.S. governmental agencies may subject it to audits, criminalpenalties, sanctions and other expenses and fines; the risk that the companymay face damage to its reputation or legal liability if its clients are notsatisfied with its services or products; the performance and capabilities ofthird parties with whom the company has commercial relationships; the company'sability to attract, motivate and retain experienced and knowledgeable personnelin key positions; the company's significant pension obligations and potentialrequirements to make significant cash contributions to its defined benefitpension plans; the company's ability to continue to simplify its operations andprovide services more cost efficiently; the adverse effects of global economicconditions; the risk that breaches of data security could expose the company tolegal liability and could harm its business and reputation; the risks of doingbusiness internationally when more than half of the company's revenue isderived from international operations; the company's ability to access capitaland credit markets to address its liquidity needs; the potential forintellectual property infringement claims to be asserted against the company orits clients; the possibility that pending litigation could affect the company'sresults of operations or cash flow; the business and financial risk inimplementing future dispositions or acquisitions; and the company'sconsideration of all available information following the end of the quarter andbefore the filing of the Form 10-Q and the possible impact of this subsequentevent information on its financial statements for the reporting period.Additional discussion of factors that could affect the company's future resultsis contained in its periodic filings with the Securities and ExchangeCommission. The company assumes no obligation to update any forward-lookingstatements. RELEASE NO.: 0422/9244 Unisys is a registered trademark of Unisys Corporation. All other brands andproducts referenced herein are acknowledged to be trademarks or registeredtrademarks of their respective holders. UNISYS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Millions, except per share data) Three Months Ended March 31 --------------- 2014 2013 ---- ----Revenue Services $690.9 $723.0 Technology 70.8 86.9 ---- ---- 761.7 809.9 Costs and expenses Cost of revenue: Services 592.2 602.8 Technology 36.5 46.3 ---- ---- 628.7 649.1Selling, general and administrative 138.5 142.2Research and development 14.4 17.0 ---- ---- 781.6 808.3 ----- -----Operating profit (loss) (19.9) 1.6 Interest expense 2.0 2.7Other income (expense), net (9.8) (4.9) ---- ----Loss before income taxes (31.7) (6.0) Provision for income taxes 16.0 21.4 ---- ----Consolidated net loss (47.7) (27.4) Net income attributable to noncontrolling interests 3.1 2.5 ---- ---Net loss attributable to Unisys Corporation (50.8) (29.9) Preferred stock dividend 2.7 4.0 --- ---Net loss attributable to Unisys Corporation common shareholders ($53.5) ($33.9) ------- ------- Loss per common share attributable to Unisys Corporation Basic ($ 1.15) ($ .77) -------- ------- Diluted ($ 1.15) ($ .77) ---------- -------- Shares used in the per share computations (thousands): Basic 46,343 44,054 Diluted 46,343 44,054 UNISYS CORPORATION SEGMENT RESULTS (Unaudited) (Millions) Total Eliminations Services TechnologyThree Months Ended ---- ------------ -------- ----------March 31, 2014--------------Customer revenue $761.7 $690.9 $70.8Intersegment ($9.6) 0.2 9.4 ------ ----- --- ---Total revenue $761.7 ($9.6) $691.1 $80.2 ------ ----- ------ ----- Gross profit percent 17.5% 15.8% 42.5% ----- ----- ----Operating profit (loss) percent (2.6%) 1.9% (21.2%) ------ ---- ----- Three Months EndedMarch 31, 2013--------------Customer revenue $809.9 $723.0 $86.9Intersegment ($17.3) 0.5 16.8 ----- ----- --- ----Total revenue $809.9 ($17.3) $723.5 $103.7 ----- ------ ----- ------ Gross profit percent 19.9% 17.4% 45.8% ---- ----- -----Operating profit percent 0.2% 3.1% 0.2% ---- ---- ---- UNISYS CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) (Millions) March 31, December 31, 2014 2013 ---- ----AssetsCurrent assetsCash and cash equivalents $613.8 $639.8Accounts and notes receivable, net 564.9 683.1 Inventories Parts and finished equipment 29.2 32.8 Work in process and materials 23.0 22.3 Deferred income taxes 19.1 24.1Prepaid expense and other current assets 139.4 138.7 ----- -----Total 1,389.4 1,540.8 ------- ------- Properties 1,117.3 1,095.5Less accumulated depreciation and amortization 939.6 920.8 ----- -----Properties, net 177.7 174.7 ----- -----Outsourcing assets, net 110.8 115.5Marketable software, net 135.1 129.1Prepaid postretirement assets 106.5 83.7Deferred income taxes 125.7 112.3Goodwill 189.7 188.7Other long-term assets 164.3 165.2 ----- -----Total $2,399.2 $2,510.0 -------- -------- Liabilities and deficitCurrent liabilitiesAccounts payable $221.4 $246.7Deferred revenue 407.2 402.4Other accrued liabilities 339.4 375.7 ----- -----Total 968.0 1,024.8 ----- ------- Long-term debt 210.0 210.0Long-term postretirement liabilities 1,648.1 1,697.2Long-term deferred revenue 119.7 122.7Other long-term liabilities 113.0 119.2 Commitments and contingenciesTotal deficit (659.6) (663.9) ----- -----Total $2,399.2 $2,510.0 -------- -------- UNISYS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Millions) Three Months Ended March 31 -------- 2014 2013 * ---- ----Cash flows from operating activitiesConsolidated net loss ($47.7) ($27.4)Add (deduct) items to reconcile consolidated net loss to net cash provided by operating activities:Foreign currency transaction loss 5.8 6.5Employee stock compensation 7.2 5.9Depreciation and amortization of properties 12.0 11.9Depreciation and amortization of outsourcing assets 13.3 12.8Amortization of marketable software 14.7 15.5Disposals of capital assets 0.3 0.1Gain on sale of business (0.7) -Pension contributions (55.5) (26.6)Pension expense 19.5 23.2Decrease in deferred income taxes, net 2.8 11.7Decrease in receivables, net 121.2 69.5Decrease (increase) in inventories 3.0 (0.8)Decrease in accounts payable and other accrued (66.0) (76.9)liabilitiesDecrease in other liabilities (9.6) (4.6)Increase in other assets (0.1) (6.6)Other (0.1) (0.1) ----- -----Net cash provided by operating activities 20.1 14.1 ----- ----- Cash flows from investing activities Proceeds from investments 1,431.6 1,224.8 Purchases of investments (1,429.0) (1,223.7) Investment in marketable software (20.7) (14.8) Capital additions of properties (15.2) (3.6) Capital additions of outsourcing assets (8.7) (7.5) Other 0.9 0.2 --- ---Net cash used for investing activities (41.1) (24.6) ---- ---- Cash flows from financing activities Purchases of common stock (0.9) - Dividends paid on preferred shares (4.0) (4.0) Proceeds from exercise of stock options 2.6 0.5 Net proceeds from short-term borrowings - 0.4 ----- -----Net cash used for financing activities (2.3) (3.1) ----- ----- Effect of exchange rate changes on cash and cash (2.7) (13.4)equivalents ----- ------ Decrease in cash and cash equivalents (26.0) (27.0)Cash and cash equivalents, beginning of period 639.8 655.6 ----- -----Cash and cash equivalents, end of period $613.8 $628.6 ----- ----- * Certain components of net cash provided by operating activities werechanged to present pension expense separately, consistent with the 2014presentation. ( 1 ) UNISYS CORPORATION RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (Unaudited) (Millions, except per share data) Three Months Ended March 31 -------------- 2014 2013 ---- ----GAAP net loss attributable to Unisys Corporation common shareholders ($53.5) ($33.9) FAS87 pension charges, net of tax 19.3 22.3 ---- ---- Non-GAAP net loss attributable to Unisys Corporation common shareholders (34.2) (11.6) Add preferred stock dividend 0.0 0.0 --- ---Non-GAAP net loss attributable to Unisys Corporation for diluted earnings per share ($34.2) ($11.6) ----- ----Weighted average shares (thousands) 46,343 44,054 Plus incremental shares from assumed conversion: Employee stock plans 0 0 Preferred stock 0 0 -- -- GAAP Adjusted weighted average shares 46,343 44,054 ------ ------ Diluted earnings (loss) per shareGAAP basis----------GAAP net loss attributable to Unisys Corporation for diluted earnings per share ($53.5) ($33.9) Divided by adjusted weighted average shares 46,343 44,054 GAAP net loss per diluted share ($ 1.15) ($ .77) -------- ------- Non-GAAP basis--------------Non-GAAP net loss attributable to Unisys Corporation for diluted earnings per share ($34.2) ($11.6) Divided by Non-GAAP adjusted weighted average shares 46,343 44,054 Non-GAAP net loss per diluted share ($ .74) ($ .26) -------- ------- ( 2 ) UNISYS CORPORATION RECONCILIATION OF GAAP TO NON-GAAP (Unaudited) (Millions) FREE CASH FLOW-------------- Three Months Ended March 31 -------------- 2014 2013 ---- ----Cash provided by operations $20.1 $14.1Additions to marketable software (20.7) (14.8)Additions to properties (15.2) (3.6)Additions to outsourcing assets (8.7) (7.5) ----- -----Free cash flow (24.5) (11.8)Pension funding 55.5 26.6 ---- ----Free cash flow before pension funding $31.0 $14.8 ----- ----- SOURCE Unisys Corporation CONTACT: Investor Contact: Niels Christensen, 215-986-6651,Niels.Christensen@unisys.com, or Media Contact: Jim Kerr, 215-986-5795,Jim.Kerr@unisys.com