Unisys Com Stk Regulatory News (USY)

Unisys Announces Second-Quarter 2013 Financial Results - Revenue declines 7 percent on lower services revenue while technology revenue grows on strong ClearPath sales - Diluted earnings per share of 46 cents vs. diluted EPS of 99 cents in 2Q 2012 - Non-GAAP EPS(1) of 91 cents vs. $1.41 in 2Q 2012 BLUE BELL, Pennsylvania, July 24, 2013 -- Unisys Corporation (NYSE: UIS) todayreported second-quarter 2013 net income of $20.4 million, or 46 cents per dilutedshare, which included $21.9 million of pension expense. In the second quarter of2012, the company reported net income of $46.6 million, or 99 cents per dilutedshare, which included $21.5 million of pension expense and a $0.3 million debtreduction charge. Excluding pension expense in both periods and the debt reductioncharge in the year-ago period, non-GAAP diluted earnings per share in the secondquarter of 2013 was 91 cents compared with $1.41 in the second quarter of 2012. Second-quarter 2013 revenue declined 7 percent to $859 million from $921 million inthe year-ago quarter. On a constant currency basis(2), revenue declined 6 percent inthe quarter. Services revenue declined 9 percent from the year-ago quarter whiletechnology revenue grew 13 percent. Sequentially, revenue grew 6 percent from thefirst quarter of 2013. "We were pleased to see the sequential improvement in our results," said UnisysChairman and CEO Ed Coleman. "Our technology business delivered a strong revenueperformance, led by higher sales of our ClearPath family of enterprise software andservers. In our services business, revenue and margins declined year over year asdemand remained soft in a challenging IT spending environment. However, we madeprogress in further strengthening our industry solutions and in building ourapplication managed services capabilities. We are also making additionalinvestments for growth in mission-critical computing, cybersecurity, cloudcomputing, IT outsourcing, and building our reseller channel." Second-Quarter Company and Business Segment Highlights U.S. revenue declined 6 percent in the quarter while international revenue declined7 percent. On a constant currency basis, international revenue declined 6 percentas revenue declines in Europe and Asia Pacific more than offset growth in LatinAmerica. The company reported an overall second-quarter 2013 gross profit margin of 23.4percent, down from year-ago gross profit margin of 26.4 percent. Operating expenses(SG&A and R&D expenses) decreased 1 percent from the year-ago period. The companyreported a second-quarter 2013 operating profit of $38.0 million, or 4.4 percent ofrevenue, compared with an operating profit of $79.0 million, or 8.6 percent ofrevenue, in the second quarter of 2012. Second-quarter 2013 services revenue declined 9 percent from the prior-year quarteron lower demand for outsourcing and systems integration services. Reflecting thelower services revenue, second-quarter 2013 services gross profit margin declinedto 18.2 percent from 21.0 percent a year ago and services operating profit margindeclined to 4.0 percent from 8.0 percent a year ago. Second-quarter 2013 services orders grew slightly from year-ago levels as growth insystems integration orders more than offset order declines in other services areas.Services backlog at June 30, 2013 was $4.8 billion, down 6 percent from December31, 2012 levels. Second-quarter 2013 technology revenue grew 13 percent from the prior-year quarterdriven by higher sales of ClearPath enterprise software and servers. Second-quarter 2013 technology gross profit margin was 59.4 percent compared to 63.4percent in the year-ago quarter and technology operating profit margin was 23.9percent compared to 28.6 percent in the year-ago quarter. Cash Flow and Balance Sheet Highlights Unisys generated $16 million of cash from operations in the second quarter of 2013,including $35 million of pension contributions. In the second quarter of 2012, thecompany generated $57 million of cash from operations, which included $51 millionof pension contributions. Capital expenditures in the second quarter of 2013 were$38 million compared with $35 million in the year-ago quarter. After capitalexpenditures, the company used $22 million of free cash(3) in the second quarter of2013 compared with free cash flow of $22 million in the second quarter of 2012.Free cash flow before pension contributions was $13 million in the second quarterof 2013 compared with $73 million in the year-ago quarter. At June 30, 2013, the company reported a cash balance of $576 million and totaldebt 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 provide investorswith additional perspective regarding the company's results as determined by GAAP,the company also discusses, in its earnings press release and/or earningspresentation materials, non-GAAP information which management believes providesuseful information to investors. Our management uses supplemental non-GAAPfinancial measures internally to understand, manage and evaluate our business andassess operational alternatives. These non-GAAP measures may include non-GAAPdiluted earnings per share, free cash flow, free cash flow before pensioncontributions, 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 read onlyin conjunction with our consolidated financial statements prepared in accordancewith GAAP. (See GAAP to non-GAAP reconciliations attached.) (1) Non-GAAP diluted earnings per share - The company recorded pension expense of$21.9 million and $21.5 million during the second quarters of 2013 and 2012,respectively. In addition, as a result of debt reductions, Unisys recorded a chargeof $0.3 million during the second quarter of 2012. In an effort to provideinvestors with a perspective on the company's earnings without these charges, theyare excluded from the non-GAAP diluted earnings per share calculations. (2) Constant currency - The company refers to growth rates at constant currency oradjusting for currency so that the business results can be viewed without theimpact of fluctuations in foreign currency exchange rates to facilitate comparisonsof the company's business performance from one period to another. Constant currencyfor revenue is calculated by retranslating current and prior period results at aconsistent rate. This approach is based on the pricing currency for each countrywhich is typically the functional currency. Generally, when the dollar eitherstrengthens or weakens against other currencies, the growth at constant currencyrates will be higher or lower, respectively, than growth reported at actualexchange rates. (3) Free cash flow - To better understand the trends in our business, we believe thatit is helpful to present free cash flow, which we define as cash flow fromoperations less capital expenditures. Management believes this measure givesinvestors an additional perspective on cash flow from operating activities inexcess of amounts required for reinvestment. Because of the significance of thecompany's pension funding obligations, free cash flow before pension funding isalso provided. Conference Call Unisys will hold a conference call today at 5:30 p.m. Eastern Time to discuss itsresults. The listen-only Webcast, as well as the accompanying presentationmaterials, can be accessed on the Unisys Investor Web site atwww.unisys.com/investor. Following the call, an audio replay of the Webcast, andaccompanying presentation materials, can be accessed through the same link. About Unisys Unisys is a worldwide information technology company. We provide a portfolio of ITservices, software, and technology that solves critical problems for clients. Wespecialize in helping clients secure their operations, increase the efficiency andutilization of their data centers, enhance support to their end users andconstituents, and modernize their enterprise applications. To provide theseservices and solutions, we bring together offerings and capabilities in outsourcingservices, systems integration and consulting services, infrastructure services,maintenance services, and high-end server technology. With approximately 22,500employees, Unisys serves commercial organizations and government agenciesthroughout the world. For more information, visit www.unisys.com. 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 of1995. Forward-looking statements include, but are not limited to, any projectionsof earnings, revenues, or other financial items; any statements of the company'splans, strategies or objectives for future operations; statements regarding futureeconomic conditions or performance; and any statements of belief or expectation.All forward-looking statements rely on assumptions and are subject to various risksand uncertainties that could cause actual results to differ materially fromexpectations. Risks and uncertainties that could affect the company's futureresults include the company's ability to drive profitable growth in consulting andsystems integration; the company's ability to take on, successfully implement andgrow outsourcing operations; market demand for the company's high-end enterpriseservers and maintenance on those servers; the potential adverse effects ofaggressive competition in the information services and technology marketplace; thecompany's ability to retain significant clients; the company's ability toeffectively anticipate and respond to volatility and rapid technological change inits industry; the adverse effects of global economic conditions; the company'ssignificant pension obligations and potential requirements to make significant cashcontributions to its defined benefit pension plans; the success of the company'sprogram to reduce costs, focus its global resources and simplify its businessstructure; the risks that the company's contracts may not be as profitable asexpected or provide the expected level of revenues and that contracts with U.S.governmental agencies may subject it to audits, criminal penalties, sanctions andother expenses and fines; the risk that the company may face damage to itsreputation or legal liability if its clients are not satisfied with its services orproducts; the risk that breaches of data security could expose the company to legalliability and could harm its business and reputation; the performance andcapabilities of third parties with whom the company has commercial relationships;the risks of doing business internationally when more than half of the company'srevenue is derived from international operations; the company's ability to accesscapital and credit markets to address its liquidity needs; the potential forintellectual property infringement claims to be asserted against the company or itsclients; the possibility that pending litigation could affect the company's resultsof operations 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 Form 10-Qand the possible impact of this subsequent event information on its financialstatements for the reporting period. Additional discussion of factors that couldaffect the company's future results is contained in its periodic filings with theSecurities and Exchange Commission. The company assumes no obligation to update anyforward-looking statements. RELEASE NO.: 0723/9184 Unisys is a registered trademark of Unisys Corporation. Any other brand or productreferenced herein is acknowledged to be a trademark or registered trademark of itsrespective holders. UNISYS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Millions, except per share data) Three Months Six Months Ended June 30 Ended June 30 ----------- ------------- 2013 2012 2013 2012 ---- ---- ---- ----RevenueServices $739.7 $815.7 $1,462.7 $1,638.7Technology 118.9 105.6 205.8 211.0 ----- ----- ----- ----- 858.6 921.3 1,668.5 1,849.7 Costs and expensesCost of revenue:Services 614.0 645.9 1,216.8 1,314.5Technology 43.9 32.2 90.2 66.2 ---- ---- ---- ---- 657.9 678.1 1,307.0 1,380.7 Selling, general and administrative 144.9 142.0 287.1 283.4Research and development 17.8 22.2 34.8 42.2 820.6 842.3 1,628.9 1,706.3 ----- ----- ------- ------- Operating profit 38.0 79.0 39.6 143.4 Interest expense 2.6 7.9 5.3 17.2Other income (expense), net 14.1 4.1 9.2 (9.1) ---- --- --- ----Income before income taxes 49.5 75.2 43.5 117.1 Provision for income taxes 22.7 22.1 44.1 44.1 ---- ---- ---- ----Consolidated net income (loss) 26.8 53.1 (0.6) 73.0Net income attributable to noncontrolling interests 2.3 2.4 4.8 4.9 --- --- --- ---Net income (loss) attributable to Unisys Corporation 24.5 50.7 (5.4) 68.1 Preferred stock dividend 4.1 4.1 8.1 8.1 --- --- --- ---Net income (loss) attributable to Unisys Corporation common shareholders $20.4 $46.6 ($13.5) $60.0 ===== ===== ====== ===== Earnings (loss) per common share attributable to Unisys Corporation Basic $.47 $1.06 ($.31) $1.37 ==== ===== ===== ===== Diluted $.46 $.99 ($.31) $1.33 ==== ==== ===== ===== Shares used in the per share computations (thousands):Basic 43,780 43,905 43,918 43,758Diluted 44,195 51,244 43,918 51,110 UNISYS CORPORATION SEGMENT RESULTS (Unaudited) (Millions) Total Eliminations Services Technology ----- ------------ -------- ---------- Three Months EndedJune 30, 2013-------------Customer revenue $858.6 $739.7 $118.9Intersegment ($16.9) 0.4 16.5 ------ ------ ------ ------Total revenue $858.6 ($16.9) $740.1 $135.4 ====== ====== ====== ====== Gross profit percent 23.4% 18.2% 59.4% ==== ==== ====Operating profit percent 4.4% 4.0% 23.9% === === ==== Three Months EndedJune 30, 2012-------------Customer revenue $921.3 $815.7 $105.6Intersegment ($37.6) 0.6 37.0 ------ ------ ------ ------Total revenue $921.3 ($37.6) $816.3 $142.6 ====== ====== ====== ====== Gross profit percent 26.4% 21.0% 63.4% ==== ==== ====Operating profit percent 8.6% 8.0% 28.6% === === ==== Six Months EndedJune 30, 2013-------------Customer revenue $1,668.5 $1,462.7 $205.8Intersegment ($34.2) 0.9 33.3 ------ ------ ------ ------Total revenue $1,668.5 ($34.2) $1,463.6 $239.1 ======== ====== ======== ====== Gross profit percent 21.7% 17.8% 53.5% ==== ==== ====Operating profit percent 2.4% 3.5% 13.6% === === ==== Six Months EndedJune 30, 2012-------------Customer revenue $1,849.7 $1,638.7 $211.0Intersegment ($69.6) 1.4 68.2Total revenue $1,849.7 ($69.6) $1,640.1 $279.2 ======== ====== ======== ====== Gross profit percent 25.4% 19.9% 62.8% ==== ==== ====Operating profit percent 7.8% 6.5% 27.1% === === ==== UNISYS CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) (Millions) June 30, December 31, 2013 2012 ---- ---- AssetsCurrent assetsCash and cash equivalents $575.6 $655.6Accounts and notes receivable, net 600.0 670.2Inventories Parts and finished equipment 29.1 29.3 Work in process and materials 18.8 20.7Deferred income taxes 16.8 21.6Prepaid expense and other current assets 121.4 115.0 ------ ------Total 1,361.7 1,512.4 ------- ------- Properties 1,235.5 1,262.2Less accumulated depreciation and amortization 1,070.4 1,085.8Properties, net 165.1 176.4 ----- -----Outsourcing assets, net 120.3 126.3Marketable software, net 122.9 124.2Prepaid postretirement assets 19.3 3.3Deferred income taxes 150.8 162.7Goodwill 189.0 192.3Other long-term assets 146.7 122.8 ----- -----Total $2,275.8 $2,420.4 ======== ======== Liabilities and deficitCurrent liabilitiesNotes payable $0.2 $0.0Current maturities of long- term debt 0.2 0.3Accounts payable 229.2 228.6Deferred revenue 357.4 389.5Other accrued liabilities 362.5 411.9 ----- -----Total 949.5 1,030.3 ----- ------- Long-term debt 210.0 210.0Long-term postretirement liabilities 2,429.2 2,553.5Long-term deferred revenue 113.9 123.1Other long-term liabilities 109.2 92.2Commitments and contingenciesTotal deficit (1,536.0) (1,588.7) -------- --------Total $2,275.8 $2,420.4 ======== ======== UNISYS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Millions) Six Months Ended June 30 ------- 2013 2012 * ---- ----- Cash flows from operating activitiesConsolidated net income (loss) ($0.6) $73.0Add (deduct) items to reconcile consolidated net income (loss) to net cash provided by operating activities:Foreign currency transaction loss 6.5 -Loss on debt extinguishment - 7.5Employee stock compensation 8.9 8.9Company stock issued for U.S. 401(k) plan - 6.2Depreciation and amortization of properties 23.7 28.7Depreciation and amortization of outsourcing assets 25.5 30.7Amortization of marketable software 31.0 28.9Disposals of capital assets 0.2 3.1Gain on sale of business - (10.6)Pension plans contributions (61.3) (118.8)Decrease in deferred income taxes, net 18.7 7.5Decrease in receivables, net 33.3 43.1Decrease in inventories 1.0 4.8Decrease in accounts payable and other accrued liabilities (83.5) (76.3)Increase in other liabilities 41.1 31.4(Increase) decrease in other assets (14.8) 23.9Other 0.5 (1.5) ---- ----Net cash provided by operating activities 30.2 90.5 ---- ---- Cash flows from investing activities Proceeds from investments 2,450.2 1,631.8 Purchases of investments (2,452.9) (1,630.5) Restricted deposits (0.6) 1.6 Investment in marketable software (29.6) (28.6) Capital additions of properties (16.2) (17.9) Capital additions of outsourcing assets (18.3) (18.7) Net proceeds from sale of business - 2.7 ----- -----Net cash used for investing activities (67.4) (59.6) ----- ----- Cash flows from financing activities Purchases of common stock (11.5) - Payments of long-term debt - (75.0) Dividends paid to noncontrolling interests - (4.5) Dividends paid on preferred shares (8.1) (8.1) Proceeds from exercise of stock options 1.2 0.3 Net proceeds from short- term borrowings 0.2 - ----- -----Net cash used for financing activities (18.2) (87.3) ----- ----- Effect of exchange rate changes on cash and cash equivalents (24.6) 1.2 ----- --- Decrease in cash and cash equivalents (80.0) (55.2)Cash and cash equivalents, beginning of period 655.6 714.9 ----- -----Cash and cash equivalents, end of period $575.6 $659.7 ====== ====== * Certain components of net cash provided by operating activities were changed to present pension contributions separately, consistent with the 2013 presentation. ( 1 ) UNISYS CORPORATION RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (Unaudited) (Millions, except per share data) Three Months Six Months Ended June 30 Ended June 30 ----------- ------------- 2013 2012 2013 2012 ---- ---- ---- ---- GAAP net income (loss) attributable to Unisys Corporation common shareholders $20.4 $46.6 ($13.5) $60.0 Debt reduction charges, net of tax 0.0 0.3 0.0 7.5FAS87 pension charges, net of tax 21.9 21.5 44.2 46.1 ---- ---- ---- ---- Non-GAAP net income attributable to Unisys Corporation common shareholders 42.3 68.4 30.7 113.6 Add preferred stock dividend 4.1 4.1 8.1 8.1 --- --- --- ---Non-GAAP net income attributable to Unisys Corporation for diluted earnings per share $46.4 $72.5 $38.8 $121.7 ===== ===== ===== ====== Weighted average shares (thousands) 43,780 43,905 43,918 43,758 Plus incremental shares from assumed conversion: Employee stock plans 415 426 449 439 Preferred stock 6,913 6,913 0 6,913 ----- ----- --- ----- GAAP Adjusted weighted average shares 51,108 51,244 44,367 51,110 ====== ====== ====== ====== Diluted earnings (loss) per share GAAP basis----------GAAP net income (loss) attributable to Unisys Corporation for diluted earnings per share $20.4 $50.7 ($13.5) $68.1 Divided by adjusted weighted average shares 44,195 51,244 43,918 51,110 GAAP net income (loss) per diluted share $.46 $.99 ($.31) $1.33 ==== ==== ===== ===== Non-GAAP basis--------------Non-GAAP net income attributable to Unisys Corporation for diluted earnings per share $46.4 $72.5 $30.7 $121.7 Divided by Non-GAAP adjusted weighted average shares 51,108 51,244 44,367 51,110 Non-GAAP net income per diluted share $.91 $1.41 $.69 $2.38 ==== ===== ==== ===== ( 2 ) UNISYS CORPORATION RECONCILIATION OF GAAP TO NON-GAAP (Unaudited) (Millions) FREE CASH FLOW-------------- Three Months Six Months Ended June 30 Ended June 30 ---------- ----------- 2013 2012 2013 2012 ---- ---- ---- ----Cash provided by operations $16.1 $57.1 $30.2 $90.5Additions to marketable software (14.8) (14.7) (29.6) (28.6)Additions to properties (12.6) (10.0) (16.2) (17.9)Additions to outsourcing assets (10.8) (10.1) (18.3) (18.7) ----- ----- ----- -----Free cash flow (22.1) 22.3 (33.9) 25.3Pension funding 34.7 50.6 61.3 118.8 ---- ----- ----- -----Free cash flow before pension funding $12.6 $72.9 $27.4 $144.1 ===== ===== ===== ====== SOURCE Unisys Corporation CONTACT: Investor Contact: Niels Christensen, +1-215-986-6651, Niels.Christensen@unisys.com, Media Contact:Jim Kerr, +1-215-986-5795, Jim.Kerr@unisys.com