Unisys Com Stk Regulatory News (USY)

Unisys Announces First-Quarter 2013 Financial Results

BLUE BELL, Pa., April 23, 2013 --

-- Revenue declines 13 percent on lower systems integration, technology

revenue; IT outsourcing revenue grows

-- Diluted loss per share of 77 cents vs. diluted EPS of 30 cents in 1Q 2012

-- Cash from operations of $14 million vs. $33 million in 1Q 2012

Unisys Corporation (NYSE: UIS) today reported a first-quarter 2013 net loss of$33.9 million, or a loss of 77 cents per diluted share, which included $22.3million of pension expense and a $6.5 million loss associated with the recentVenezuelan currency devaluation. In the first quarter of 2012, the companyreported net income of $13.4 million, or 30 cents per diluted share, whichincluded $24.6 million of pension expense and a $7.2 million debt reductioncharge. Excluding pension expense and debt reduction charges, the non-GAAPdiluted loss per share(1) in the first quarter of 2013 was 26 cents comparedwith non-GAAP diluted EPS of 97 cents in the first quarter of 2012.

First-quarter 2013 revenue declined 13 percent to $810 million from $928million in the year-ago quarter. Foreign currency fluctuations had a onepercentage point negative impact on revenue in the first quarter.

"This was a difficult quarter for us as lower revenue impacted our bottom-lineresults," said Unisys Chairman and CEO Ed Coleman. "We saw lower revenue in ourtechnology business following a strong fourth quarter in 2012 where webenefited from some earlier-than-expected ClearPath revenue. In services,while we were pleased to see growth in our strategic IT outsourcing business inthe quarter, we were disappointed in the decline in our project-based systemsintegration business, where the market for discretionary projects remains softand where we need to improve our execution. "We expect continuing challenges as we work through softness in our servicesbusiness and recognize the need to maintain a competitive cost structure inline with our revenue performance," Coleman said. "We are focused on reversingthe decline in systems integration. In technology, given the variability ofour sales from quarter to quarter, we measure this business on an annual basisand continue to focus on maintaining flat revenue for the full year."

First-Quarter Company and Business Segment Highlights

U.S. revenue declined 15 percent in the quarter while international revenuedeclined 11 percent. On a constant currency basis(2), international revenuedeclined 9 percent with declines in all regions except for Latin America.

The company reported an overall first-quarter 2013 gross profit margin of 19.9percent, down from 24.3 percent in the year-ago quarter. Operating expenses (SG&A and R&D expenses) decreased 1 percent from the year-ago period. The companyreported a first-quarter 2013 operating profit of $1.6 million compared with anoperating profit of $64.4 million in the first quarter of 2012. First-quarter 2013 services revenue declined 12 percent from the prior-yearquarter as declines in systems integration, infrastructure services, and coremaintenance offset revenue growth in IT outsourcing. Reflecting the lowerservices revenue, first-quarter 2013 services gross profit margin declined to17.4 percent from 18.9 percent a year ago while services operating profitmargin declined to 3.1 percent from 5.0 percent a year ago. First-quarter 2013 services order signings showed a slight decrease fromyear-ago levels as strong growth in IT outsourcing orders were offset by orderdeclines in other areas. Services backlog at March 31, 2013 was $5.1 billion,flat from December 31, 2012 levels.

First-quarter 2013 technology revenue declined 18 percent from the prior-yearquarter driven by lower sales of ClearPath enterprise software and servers.

Reflecting the lower ClearPath sales, first-quarter 2013 technology grossprofit margin declined to 45.8 percent from 62.2 percent in the year-agoquarter and technology operating profit margin declined to 0.2 percent from25.6 percent in the year-ago quarter.

Cash Flow and Balance Sheet Highlights

Unisys generated $14 million of cash from operations in the first quarter of2013, including $27 million of pension contributions. In the first quarter of2012, the company generated $33 million of cash from operations, which included$68 million of pension contributions. Capital expenditures in the first quarterof 2013 were $26 million compared with $30 million in the year-ago quarter.After capital expenditures, the company used $12 million of free cash(3) in thefirst quarter of 2013 compared with free cash flow of $3 million in the firstquarter of 2012. Free cash flow before pension contributions was $15 million inthe first quarter of 2013 compared with $71 million in the year-ago quarter.

At March 31, 2013, the company reported a cash balance of $629 million andtotal debt of $211 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) Non-GAAP diluted earnings/loss per share - As a result of debt reductionactions, Unisys recorded a charge of $7.2 million during the first quarter of2012. The company also recorded pension expense of $22.3 million and $24.6million during the first quarters of 2013 and 2012, respectively. In an effortto provide investors with a perspective on the company's earnings without thesecharges, they are excluded from the non-GAAP diluted earnings/loss per sharecalculations. (2) 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. (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 accompanyingpresentation materials, 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 todrive profitable growth in consulting and systems integration; the company'sability to take on, successfully implement and grow outsourcing operations;market demand for the company's high-end enterprise servers and maintenance onthose servers; the potential adverse effects of aggressive competition in theinformation services and technology marketplace; the company's ability toretain significant clients; the company's ability to effectively anticipate andrespond to volatility and rapid technological change in its industry; theadverse effects of global economic conditions; the company's significantpension obligations and potential requirements to make significant cashcontributions to its defined benefit pension plans; the success of thecompany's program to reduce costs, focus its global resources and simplify itsbusiness structure; the risks that the company's contracts may not be asprofitable 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 risk that breaches of datasecurity could expose the company to legal liability and could harm itsbusiness and reputation; the performance and capabilities of third parties withwhom the company has commercial relationships; the risks of doing businessinternationally when more than half of the company's revenue is derived frominternational operations; the company's ability to access capital and creditmarkets to address its liquidity needs; the potential for intellectual propertyinfringement claims to be asserted against the company or its clients; thepossibility that pending litigation could affect the company's results ofoperations or cash flow; the business and financial risk in implementing futuredispositions or acquisitions; and the company's consideration of all availableinformation following the end of the quarter and before the filing of the Form10-Q and the possible impact of this subsequent event information on itsfinancial statements for the reporting period. Additional discussion of factorsthat could affect the company's future results is contained in its periodicfilings with the Securities and Exchange Commission. The company assumes noobligation to update any forward-looking statements.

RELEASE NO.: 0423/9163

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 2013 2012 Revenue Services $723.0 $823.0 Technology 86.9 105.4 809.9 928.4Costs and expenses Cost of revenue: Services 602.8 668.6 Technology 46.3 34.0 649.1 702.6Selling, general and administrative 142.2 141.4Research and development 17.0 20.0 808.3 864.0Operating profit 1.6 64.4 Interest expense 2.7 9.3Other income (expense), net (4.9) (13.2)Income (loss) before income taxes (6.0) 41.9 Provision for income taxes 21.4 22.0Consolidated net income (loss) (27.4) 19.9Net income attributable to noncontrolling interests 2.5 2.5Net income (loss) attributable to Unisys Corporation (29.9) 17.4 Preferred stock dividend 4.0 4.0Net income (loss) attributable to Unisys Corporation common shareholders ($33.9) $13.4 Earnings (loss) per common share attributable to Unisys Corporation Basic ($ .77) $ .31 Diluted ($ .77) $ .30

Shares used in the per share computations (thousands):

Basic 44,054 43,611 Diluted 44,054 44,063 UNISYS CORPORATION SEGMENT RESULTS (Unaudited) (Millions) Total Eliminations Services TechnologyThree Months EndedMarch 31, 2013Customer revenue $809.9 $723.0 $86.9Intersegment ($17.3) 0.5 16.8Total 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% Three Months EndedMarch 31, 2012Customer revenue $928.4 $823.0 $105.4Intersegment ($32.0) 0.8 31.2 Total revenue $928.4 ($32.0) $823.8 $136.6 Gross profit percent 24.3% 18.9% 62.2%Operating profit percent 6.9% 5.0% 25.6% UNISYS CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) (Millions) March 31, December 31, 2013 2012AssetsCurrent assetsCash and cash equivalents $628.6 $655.6Accounts and notes receivable, net 581.5 670.2Inventories Parts and finished equipment 28.9 29.3 Work in process and materials 21.5 20.7 Deferred income taxes 17.8 21.6Prepaid expense and other current assets 123.6 115.0 Total 1,401.9 1,512.4 Properties 1,246.6 1,262.2 Less accumulated depreciation and amortization 1,081.2 1,085.8 Properties, net 165.4 176.4Outsourcing assets, net 120.1 126.3Marketable software, net 123.5 124.2 Prepaid postretirement assets 11.3 3.3 Deferred income taxes 155.9 162.7Goodwill 192.1 192.3Other long-term assets 153.0 122.8Total $2,323.2 $2,420.4 Liabilities and deficitCurrent liabilitiesNotes payable $0.4 $0.0 Current maturities of long-term debt .3 .3 Accounts payable 218.5 228.6Deferred revenue 379.9 389.5Other accrued liabilities 349.7 411.9Total 948.8 1,030.3 Long-term debt 210.0 210.0 Long-term postretirement liabilities 2,481.6 2,553.5Long-term deferred revenue 118.8 123.1Other long-term liabilities 109.4 92.2Commitments and contingenciesTotal deficit (1,545.4) (1,588.7)Total $2,323.2 $2,420.4 UNISYS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Millions) Three Months Ended March 31 2013 2012 *Cash flows from operatingactivities Consolidated net income (loss) ($27.4) $19.9 Add (deduct) items to reconcileconsolidated net income (loss) to net cashprovided by operating activities:Foreign currency transaction loss 6.5 -Loss on debt extinguishment - 7.2Employee stock compensation 5.9 6.1Company stock issued for U.S. 401 - 4.3(k) planDepreciation and amortization of 11.9 14.4propertiesDepreciation and amortization of 12.8 13.4outsourcing assetsAmortization of marketable software 15.5 14.0 Disposals of capital assets 0.1 0.3Gain on sale of business - (11.3)Pension plans contributions (26.6) (68.2) Decrease in deferred income taxes, 11.7 3.8 netDecrease in receivables, net 69.5 69.5 (Increase) decrease in inventories (0.8) 3.5Decrease in accounts payable and (76.9) (73.6)other accrued liabilitiesIncrease in other liabilities 18.6 24.9(Increase) decrease in other assets (6.6) 4.5Other (0.1) 0.7Net cash provided by operating 14.1 33.4activities Cash flows from investingactivities Proceeds from investments 1,224.8 711.0 Purchases of investments (1,223.7) (711.0) Restricted deposits 0.2 1.3 Investment in marketable software (14.8) (13.9) Capital additions of properties (3.6) (7.9) Capital additions of outsourcing assets (7.5) (8.6) Net proceeds from sale of business - 2.8Net cash used for investing (24.6) (26.3)activities Cash flows from financingactivities Payments of long-term debt - (71.7) Dividends paid to noncontrolling interests - (4.5) Dividends paid on preferred shares (4.0) (4.0) Proceeds from exercise of stock options 0.5 0.1 Net proceeds from short-term borrowings 0.4 - Net cash used for financingactivities (3.1) (80.1) Effect of exchange rate changes oncash and cash equivalents (13.4) 12.8 Decrease in cash and cashequivalents (27.0) (60.2)Cash and cash equivalents,beginning of period 655.6 714.9Cash and cash equivalents, end ofperiod $628.6 $654.7 * Certain components of net cash provided by operating activities were changedto present pension contributions separately, consistent with the 2013presentation. ( 1 ) UNISYS CORPORATION RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (Unaudited) (Millions, except per share data) Three Months Ended March 31 2013 2012GAAP net income (loss) attributable to Unisys Corporation common shareholders ($33.9) $13.4 Debt reduction charges, net of tax 0.0 7.2FAS87 pension charges, net of tax 22.3 24.6 Non-GAAP net income (loss) attributable to Unisys Corporation common shareholders (11.6) 45.2 Add preferred stock dividend 0.0 4.0 Non-GAAP net income (loss) attributable to Unisys Corporation for diluted earnings per share ($11.6) $49.2 Weighted average shares (thousands) 44,054 43,611 Plus incremental shares from assumed conversion: Employee stock plans 0 452 Preferred stock 0 6,913 GAAP Adjusted weighted average shares 44,054 50,976 Diluted earnings (loss) per share GAAP basisGAAP net income (loss) attributable to Unisys Corporation for diluted earnings per share ($33.9) $13.4 Divided by adjusted weighted average shares 44,054 44,063 GAAP net income (loss) per diluted share ($ .77) $ .30 Non-GAAP basisNon-GAAP net income (loss) attributable to Unisys Corporation for diluted earnings per share ($11.6) $49.2 Divided by Non-GAAP adjusted weighted average shares 44,054 50,976 Non-GAAP net income (loss) per diluted share ($ .26) $ .97 ( 2 ) UNISYS CORPORATION RECONCILIATION OF GAAP TO NON-GAAP (Unaudited) (Millions) FREE CASH FLOW Three Months Ended March 31 2013 2012Cash provided by operations $14.1 $33.4Additions to marketable software (14.8) (13.9)Additions to properties (3.6) (7.9)Additions to outsourcing assets (7.5) (8.6)Free cash flow (11.8) 3.0Pension funding 26.6 68.2Free cash flow before pension funding $14.8 $71.2

CONTACT: Investor Contact, Niels Christensen, 215-986-6651,Niels.Christensen@unisys.com or Media Contact, Jim Kerr, 215-986-5795,Jim.Kerr@unisys.com