Unisys Com Stk Regulatory News (USY)

Unisys Announces First-Quarter 2015 Financial Results -- Revenue declines 5 percent (Revenue grows 1 percent on a constant currency (1) basis) -- Diluted loss per share of 87 cents vs $1.15 in 1Q 2014 -- Non-GAAP diluted loss per share(2) of 32 cents vs 74 cents in 1Q 2014 -- Company launches program to enhance competitiveness; Restructuring charge of approximately $300 million expected over the next several quarters BLUE BELL, Pa., April 23, 2015 -- Unisys Corporation (NYSE: UIS) today reporteda first-quarter 2015 net loss of $43.2 million, or 87 cents per diluted share,which included $27.4 million of pension expense. In the first quarter of 2014,the company reported a net loss of $53.5 million, or $1.15 per diluted share,which included $19.3 million of pension expense. Excluding pension expensein both periods, the non-GAAP diluted loss per share in the first quarter of2015 was 32 cents compared to 74 cents in the first quarter of 2014. First-quarter 2015 revenue declined 5 percent to $721 million from $762 millionin the year-ago quarter. First-quarter 2015 revenue grew 1 percent on aconstant currency basis. "We were pleased to see revenue growth of 1 percent on a constant currencybasis during the first quarter of 2015 and 13 percent growth in our U.S.Federal government business," said Unisys President and CEO Peter Altabef."While our technology margins increased, our service margins declined. We aretaking actions to streamline our business by enhancing our competitiveness andaccelerating the pace of innovation. Our focus is on making Unisys an agileleader that can anticipate and rapidly respond to market opportunitiesglobally." In connection with organizational initiatives designed to create a morecompetitive cost structure and rebalance the company's global skill set to takeadvantage of growth opportunities, Unisys expects to recognize a pretaxrestructuring charge currently estimated at approximately $300 million over thenext several quarters. The company expects to reduce worldwide headcount byapproximately 8 percent. As a result of these actions, the company expects togenerate annualized savings of approximately $200 million by the end of 2016. First-Quarter Company and Business Segment HighlightsU.S. and Canada revenue rose 9 percent in the quarter. Revenue from the rest ofthe world declined 16 percent. On a constant currency basis, internationalrevenue declined 5 percent. U.S. Federal government revenue in the first quarter of 2015 grew 13 percentversus the year-ago quarter. Public Sector revenue, which includes U.S. stateand local and international governments, declined 10 percent. Financialindustry revenue also declined by 10 percent. Revenue from Commercial industryclients declined 7 percent. First-quarter 2015 services revenue declined 6 percent from the prior-yearquarter. On a constant currency basis, services revenue was flat. First-quarter2015 services gross profit margin decreased to 14.1 percent from 15.8 percent ayear ago while services operating profit (loss) margin declined to (1.3)percent from 1.5 percent a year ago. First-quarter 2015 services orders increased from year-ago levels primarilydriven by higher orders for Cloud and Infrastructure Services. Services backlogat March 31, 2015 was $4.5 billion compared to $4.8 billion at December 31,2014. Services backlog at March 31, 2015 was flat compared to March 31, 2014and up on a constant currency basis. First-quarter 2015 technology revenue rose 3 percent from the prior-yearquarter driven by higher sales of our enterprise software and servers. On aconstant currency basis, technology revenue increased by 13 percent. Reflectingthe higher enterprise software and server sales, first-quarter 2015 technologygross profit margin rose to 49.6 percent from 41.3 percent in the year-agoquarter and technology operating profit (loss) margin increased to 5.2 percentfrom (16.4) percent in the year-ago quarter. The company reported an overall first-quarter 2015 gross profit margin of 16.2percent compared with 17.5 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 2015 operating loss of $30.0 million comparedwith an operating loss of $19.9 million in the first quarter of 2014. Pensionexpense was $8.4 million higher in the first quarter of 2015. The company reported a first-quarter 2015 pretax loss of $27.7 million comparedwith a pretax loss of $31.7 million in the year-ago quarter. Excluding pensionexpense in both periods, the company reported a non-GAAP pretax profit(3) of$0.2 million in the first quarter of 2015 compared with a non-GAAP pretax lossof $12.2 million in the first quarter of 2014. Cash Flow and Balance Sheet HighlightsUnisys used $43 million of cash from operations in the first quarter of 2015compared to $20 million in cash from operations generated in the first quarterof 2014. Cash from operations included pension contributions of $39 million inthe first quarter of 2015, a decrease from $56 million in the first quarter of2014. Capital expenditures in the first quarter of 2015 were $57 millioncompared with $45 million in the year-ago quarter. After capital expenditures,the company used $101 million of free cash(4) in the first quarter of 2015compared with free cash usage of $25 million in the first quarter of 2014. Thecompany had free cash usage before pension contributions of $62 million in thefirst quarter of 2015 compared with free cash flow before pension contributionsof $31 million in the year-ago quarter. At March 31, 2015, the company reported a cash balance of $402 million andtotal debt of $224 million. Non-GAAP InformationUnisys 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 constant currency, non-GAAP diluted earnings per share,non-GAAP pretax profit, free cash flow, and free cash flow before pensioncontributions. 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 currency or adjusting for currency so that the business results can be viewed without the impact of fluctuations in foreign currency exchange rates to facilitate comparisons of the company's business performance from one period to another. Constant currency for revenue is calculated by retranslating current and prior period results at a consistent rate. This approach is based on the pricing currency for each country which is typically the functional currency. Generally, when the dollar either strengthens or weakens against other currencies, 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 expense of $27.4 million and $19.3 million during the first quarters of 2015 and 2014, respectively. In an effort to provide investors with a perspective on the company's earnings without these charges, they are excluded from the non-GAAP diluted earnings/loss per share calculations. (3) Non-GAAP pretax profit/loss - Unisys recorded pension expense of $27.9 million and $19.5 million during the first quarters of 2015 and 2014, respectively. In an effort to provide investors with a perspective on the company's profitability without these charges, they are excluded from the non-GAAP pretax profit/loss calculations. (4) Free cash flow - To better understand the trends in our business, we believe that it is helpful to present free cash flow, which we define as cash flow from operations less capital expenditures. Management believes this measure gives investors an additional perspective on cash flow from operating activities in excess of amounts required for reinvestment. Because of the significance of the company's pension funding obligations, free cash flow before pension funding is also provided. Conference CallUnisys 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 accompanyingpresentation materials, can be accessed through the same link. About UnisysUnisys is a global information technology company that solves complex ITchallenges at the intersection of modern and mission critical. We work withmany of the world's largest companies and government organizations to secureand keep their mission-critical operations running at peak performance;streamline and transform their data centers; enhance support to their end usersand constituents; and modernize their enterprise applications. We do this whileprotecting and building on their legacy IT investments. Our offerings includeoutsourcing and managed services, systems integration and consulting services,high-end server technology, cybersecurity and cloud management software, andmaintenance and support services. Unisys has more than 20,000 associatesserving clients around the world. For more information, visit www.unisys.com. Forward-Looking StatementsAny 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 maintain and grow its technologybusiness; the company's ability to drive profitable growth in consulting andsystems integration; the company's ability to profitably grow its outsourcingbusiness; the company's ability to attract, motivate and retain experienced andknowledgeable personnel in key positions; the potential adverse effects ofaggressive competition in the information services and technology marketplace;the company's ability to retain significant clients; the company's contractsmay not be as profitable as expected or provide the expected level of revenues;cybersecurity breaches could result in significant costs and could harm thecompany's business and reputation; a significant disruption in the company's ITsystems could adversely affect the company's business and reputation; thecompany may face damage to its reputation or legal liability if its clients arenot satisfied with its services or products; the performance and capabilitiesof third parties with whom the company has commercial relationships; thecompany's significant pension obligations and potential requirements to makesignificant cash contributions to its defined benefit pension plans; thecompany's ability to continue to simplify its operations and provide servicesmore cost efficiently; the adverse effects of global economic conditions;contracts with U.S. governmental agencies may subject the company to audits,criminal penalties, sanctions and other expenses and fines; 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.: 0423/9330 Unisys and other Unisys products and services mentioned herein, as well astheir respective logos, are trademarks or registered trademarks of UnisysCorporation. Any other brand or product referenced herein is acknowledged to bea trademark or registered trademark of its respective holder. UNISYS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Millions, except per share data) Three Months Ended March 31 2015 2014 Revenue Services $639.0 $681.7 * Technology 82.2 80.0 * 721.2 761.7 Costs and expenses Cost of revenue: Services 564.3 583.6 * Technology 39.9 45.1 * 604.2 628.7 Selling, general and administrative 128.8 138.5 Research and development 18.2 14.4 751.2 781.6 Operating loss (30.0) (19.9) Interest expense 2.6 2.0 Other income (expense), net 4.9 (9.8) Loss before income taxes (27.7) (31.7) Provision for income taxes 13.3 16.0 Consolidated net loss (41.0) (47.7) Net income attributable to noncontrolling interests 2.2 3.1 Net loss attributable to Unisys Corporation (43.2) (50.8) Preferred stock dividend - 2.7 Net loss attributable to Unisys Corporation common shareholders ($43.2) ($53.5) Loss per common share attributable to Unisys Corporation Basic ($ .87) ($ 1.15) Diluted ($ .87) ($ 1.15) Shares used in the per share computations (thousands): Basic 49,821 46,343 Diluted 49,821 46,343 * Changed to conform with the 2015 presentation. UNISYS CORPORATION SEGMENT RESULTS (Unaudited) (Millions) Total Eliminations Services Technology Three Months EndedMarch 31, 2015Customer revenue $721.2 $639.0 $82.2 Intersegment ($6.7) - 6.7 Total revenue $721.2 ($6.7) $639.0 $88.9 Gross profit percent 16.2% 14.1% 49.6% Operating profit (loss) percent (4.2%) (1.3%) 5.2% Three Months EndedMarch 31, 2014 *Customer revenue $761.7 $681.7 $80.0 Intersegment ($6.1) 0.2 5.9 Total revenue $761.7 ($6.1) $681.9 $85.9 Gross profit percent 17.5% 15.8% 41.3% Operating profit (loss) percent (2.6%) 1.5% (16.4%) * Changed to conform with the 2015 presentation. UNISYS CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) (Millions) March 31, December 31, 2015 2014AssetsCurrent assets Cash and cash equivalents $402.0 $494.3 Accounts and notes receivable, net 484.8 619.3 Inventories Parts and finished equipment 29.0 22.2 Work in process and materials 31.3 24.5 Deferred income taxes 16.6 16.4 Prepaid expense and other current assets 142.4 140.6 Total 1,106.1 1,317.3 Properties 1,004.7 1,059.4 Less accumulated depreciation and amortization 837.4 890.7 Properties, net 167.3 168.7 Outsourcing assets, net 160.1 150.9 Marketable software, net 144.5 144.1 Prepaid postretirement assets 21.4 19.9 Deferred income taxes 152.4 154.6 Goodwill 179.6 183.9 Other long-term assets 200.1 209.3 Total $2,131.5 $2,348.7 Liabilities and deficitCurrent liabilities Current maturities of long-term debt $2.2 $1.8 Accounts payable 230.3 262.5 Deferred revenue 316.6 348.3 Other accrued liabilities 314.2 385.1 Total 863.3 997.7 Long-term debt 221.6 222.2 Long-term postretirement liabilities 2,272.1 2,369.9 Long-term deferred revenue 109.7 119.5 Other long-term liabilities 86.1 91.8 Commitments and contingencies Total deficit (1,421.3) (1,452.4) Total $2,131.5 $2,348.7 UNISYS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Millions) Three Months Ended March 31 2015 2014 Cash flows from operating activities Consolidated net loss ($41.0) ($47.7) Add (deduct) items to reconcile consolidated net loss to net cash (used for) provided by operatingactivities: Foreign currency transaction loss - 5.8 Employee stock compensation 4.4 7.2 Depreciation and amortization of properties 11.7 12.0 Depreciation and amortization of outsourcing assets 12.7 13.3 Amortization of marketable software 16.3 14.7 Other non-cash operating activities (0.1) (0.1) Disposals of capital assets 1.4 0.3 Gain on sale of business - (0.7) Pension contributions (38.7) (55.5) Pension expense 27.9 19.5 (Increase) decrease in deferred income taxes, net (4.4) 2.8 Decrease in receivables, net 106.8 121.2 (Increase) decrease in inventories (15.1) 3.0 Decrease in accounts payable and other accrued (106.4) (66.0)liabilities Decrease in other liabilities (11.1) (9.6) Increase in other assets (7.7) (0.1) Net cash (used for) provided by operating activities (43.3) 20.1 Cash flows from investing activities Proceeds from investments 1,153.4 1,431.6 Purchases of investments (1,126.7) (1,429.0) Investment in marketable software (16.7) (20.7) Capital additions of properties (13.9) (15.2) Capital additions of outsourcing assets (26.7) (8.7) Other 1.5 0.9 Net cash used for investing activities (29.1) (41.1) Cash flows from financing activities Purchases of common stock - (0.9) Payments of long-term debt (0.3) - Dividends paid on preferred shares - (4.0) Proceeds from exercise of stock options 3.5 2.6 Net cash provided by (used for) financing activities 3.2 (2.3) Effect of exchange rate changes on cash and cash (23.1) (2.7)equivalents Decrease in cash and cash equivalents (92.3) (26.0) Cash and cash equivalents, beginning of period 494.3 639.8 Cash and cash equivalents, end of period $402.0 $613.8 ( 1 ) UNISYS CORPORATION RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (Unaudited) (Millions, except per share data) Three Months Ended March 31 2015 2014GAAP net lossattributable to Unisys Corporationcommon shareholders ($43.2) ($53.5) Pension expense, net of tax 27.4 19.3 Non-GAAP net lossattributable to Unisys Corporationcommon shareholders (15.8) (34.2) Add preferred stock dividend 0.0 0.0 Non-GAAP net lossattributable to Unisys Corporationfor diluted earnings per share ($15.8) ($34.2) Weighted average shares (thousands) 49,821 46,343 Plus incremental shares from assumed conversion: Employee stock plans 0 0 Preferred stock 0 0 GAAP adjusted weighted average shares 49,821 46,343 Diluted earnings per shareGAAP basisGAAP net lossattributable to Unisys Corporationfor diluted earnings per share ($43.2) ($53.5) Divided by adjusted weighted average shares 49,821 46,343 GAAP loss per diluted share ($ .87) ($ 1.15) Non-GAAP basisNon-GAAP net lossattributable to Unisys Corporationfor diluted earnings per share ($15.8) ($34.2) Divided by Non-GAAP adjusted weighted average shares 49,821 46,343 Non-GAAP loss per diluted share ($ .32) ($ .74) ( 2 ) UNISYS CORPORATION RECONCILIATION OF GAAP TO NON-GAAP (Unaudited) (Millions) FREE CASH FLOW Three Months Ended March 31 2015 2014 Cash (used for) provided by operations ($43.3) $20.1 Additions to marketable software (16.7) (20.7) Additions to properties (13.9) (15.2) Additions to outsourcing assets (26.7) (8.7) Free cash flow (100.6) (24.5) Pension funding 38.7 55.5 Free cash flow before pension funding ($61.9) $31.0 ( 3 ) UNISYS CORPORATION RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (Unaudited) (Millions, except per share data) Three Months Ended March 31 2015 2014 GAAP lossbefore income taxes ($27.7) ($31.7) FAS87 pension charges 27.9 19.5 Non-GAAP income (loss)before income taxes $0.2 ($12.2) SOURCE Unisys Corporation CONTACT: Investor, Niels Christensen, 215-986-6651,Niels.Christensen@unisys.com, Media, Jim Kerr, 215-986-5795,Jim.Kerr@unisys.com