Unisys Com Stk Regulatory News (USY)

Unisys Announces Third-Quarter 2013 Financial Results BLUE BELL, Pa., Oct. 23, 2013 -- Unisys Corporation (NYSE: UIS) todayreported a third-quarter 2013 net loss of $11.6 million, or a loss of 26cents per diluted share, which included $22.6 million of pension expense. Inthe third quarter of 2012, the company reported a net loss of $12.4 million,or a loss of 28 cents per diluted share, which included $28.9 million ofpension expense and $23.1 million of debt reduction charges. Excludingpension expense in both periods and the debt reduction charge in the year-ago period, non-GAAP diluted earnings per share(1) in the third quarter of2013 was 25 cents compared with 85 cents in the third quarter of 2012. Pre-tax income in the third quarter of 2013 was $23.5 million compared to $27.6million in the third quarter of 2012. The company reported a third-quarter 2013 income tax provision of $27.0million compared with $32.7 million in the third quarter of 2012. The third-quarter 2013 and third-quarter 2012 tax provisions included charges of $11.4million and $9.2 million, respectively, related to a change in applicablecorporate tax rates in the U.K. Third-quarter 2013 revenue declined 10 percent to $792 million from $877million in the year-ago quarter primarily driven by a $57 million decline intechnology revenue. Foreign currency translations had a one percentage-pointnegative impact on revenue comparisons in the quarter. "While we were encouraged by improved operating profit margins in ourservices business, both sequentially and compared to the year-ago quarter,our third-quarter results were impacted by lower technology revenue, whichcan vary significantly from quarter to quarter," said Unisys Chairman andCEO Ed Coleman. "We are focused on our goal of maintaining flat technologyrevenue for the full year and look to close out the year with a strongfourth quarter. Longer term, we are excited about the growth prospects ofour newer technology offerings, such as our Unisys Stealth suite ofcybersecurity products and our recently announced Forward! by Unisyscomputing platform." Third-Quarter Company and Business Segment Highlights U.S. revenue declined 2 percent in the quarter while international revenuedeclined 15 percent. On a constant currency basis (2), international revenuedeclined 13 percent, primarily due to lower technology revenue. Reflecting the lower technology revenue, the company reported an overallthird-quarter 2013 gross profit margin of 21.7 percent, down from 24.9percent a year ago. Operating expenses (SG&A and R&D expenses) declined 6percent from the year-ago period. The company reported a third-quarter 2013operating profit of $24.0 million, or 3.0 percent of revenue, compared withan operating profit of $61.2 million, or 7.0 percent of revenue, in thethird quarter of 2012. Third-quarter 2013 services revenue declined 4 percent (2 percent on aconstant currency basis) from the prior-year quarter, primarily driven bylower IT outsourcing revenue. Third-quarter 2013 services gross profitmargin improved to 21.1 percent from 19.9 percent a year ago and servicesoperating profit margin improved to 7.7 percent from 6.0 percent a year ago. Third-quarter 2013 services orders grew slightly from year-ago levels asorder growth for IT outsourcing and systems integration offset orderdeclines in other areas. Services backlog at September 30, 2013 was $4.8billion, consistent with June 30, 2013 levels and down 5 percent fromDecember 31, 2012. Third-quarter 2013 technology revenue, which represented 9 percent ofoverall company revenue in the quarter, declined 44 percent from the prior-year quarter due to lower sales of ClearPath enterprise software and servers.Reflecting the lower ClearPath sales, third-quarter 2013 technology grossprofit margin declined to 35.3 percent compared to 59.9 percent in the year-ago quarter and technology operating profit (loss) margin was (11.0) percentcompared to 29.1 percent in the year-ago quarter. Cash Flow and Balance Sheet Highlights Unisys generated $16 million of cash from operations in the third quarter of2013, including $40 million of pension contributions. In the third quarterof 2012, the company generated $17 million of cash from operations, whichincluded $56 million of pension contributions. Capital expenditures in thethird quarter of 2013 were $39 million compared with $32 million in theyear-ago quarter. After capital expenditures, the company used $23 millionof free cash(3) in the third quarter of 2013 compared with free cash usageof $15 million in the third quarter of 2012. Free cash flow before pensioncontributions was $17 million in the third quarter of 2013 compared with $42million in the year-ago quarter. At September 30, 2013, the company reported a cash balance of $556 millionand total debt of $210 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 pressrelease and/or earnings presentation materials, non-GAAP information whichmanagement believes provides useful information to investors. Our managementuses supplemental non-GAAP financial measures internally to understand,manage and evaluate our business and assess operational alternatives. Thesenon-GAAP measures may include non-GAAP diluted earnings per share, free cashflow, and free cash flow before pension contributions. Our non-GAAP measures are not intended to be considered in isolation or assubstitutes for results determined in accordance with GAAP and should beread only in conjunction with our consolidated financial statements preparedin accordance with GAAP. (See GAAP to non-GAAP reconciliations attached.) (1) Non-GAAP diluted earnings per share - The company recorded pensionexpense of $22.6 million and $28.9 million during the third quarters of 2013and 2012, respectively. In addition, as a result of debt reductions, Unisysrecorded a charge of $23.1 million during the third quarter of 2012. In aneffort to provide investors with a perspective on the company's earningswithout these charges, they are excluded from the non-GAAP diluted earningsper share calculations. (2) Constant currency - The company refers to growth rates at constantcurrency or adjusting for currency so that the business results can beviewed without the impact of fluctuations in foreign currency exchange ratesto facilitate comparisons of the company's business performance from oneperiod to another. Constant currency for revenue is calculated byretranslating current and prior period results at a consistent rate. Thisapproach is based on the pricing currency for each country which istypically the functional currency. Generally, when the dollar eitherstrengthens or weakens against other currencies, the growth at constantcurrency rates will be higher or lower, respectively, than growth reportedat 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 ascash flow from operations less capital expenditures. Management believesthis measure gives investors an additional perspective on cash flow fromoperating activities in excess of amounts required for reinvestment. Becauseof the significance of the company's pension funding obligations, free cashflow before pension funding is also provided. Conference CallUnisys will hold a conference call today at 5:30 p.m. Eastern Time todiscuss its results. The listen-only Webcast, as well as the accompanyingpresentation materials, can be accessed on the Unisys Investor Web site atwww.unisys.com/investor. Following the call, an audio replay of the Webcast,and accompanying presentation materials, can be accessed through the samelink. About UnisysUnisys is a worldwide information technology company. We provide a portfolioof IT services, software, and technology that solves critical problems forclients. We specialize in helping clients secure their operations, increasethe efficiency and utilization of their data centers, enhance support totheir end users and constituents, and modernize their enterpriseapplications. To provide these services and solutions, we bring togetherofferings and capabilities in outsourcing services, systems integration andconsulting services, infrastructure services, maintenance services, andhigh-end server technology. With approximately 22,500 employees, Unisysserves commercial organizations and government agencies throughout the world.For more information, visit www.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 limitedto, any projections of earnings, revenues, or other financial items; anystatements of the company's plans, strategies or objectives for futureoperations; statements regarding future economic conditions or performance;and any statements of belief or expectation. All forward-looking statementsrely on assumptions and are subject to various risks and uncertainties thatcould cause actual results to differ materially from expectations. Risks anduncertainties that could affect the company's future results include thecompany's ability to drive profitable growth in consulting and systemsintegration; the company's ability to take on, successfully implement andgrow outsourcing operations; market demand for the company's high-endenterprise servers and maintenance on those servers; the potential adverseeffects of aggressive competition in the information services and technologymarketplace; the company's ability to retain significant clients; thecompany's ability to effectively anticipate and respond to volatility andrapid technological change in its industry; the adverse effects of globaleconomic conditions; the company's significant pension obligations andpotential requirements to make significant cash contributions to its definedbenefit pension plans; the success of the company's program to reduce costs,focus its global resources and simplify its business structure; the risksthat the company's contracts may not be as profitable as expected or providethe expected level of revenues and that contracts with U.S. governmentalagencies may subject it to audits, criminal penalties, sanctions and otherexpenses and fines; the risk that the company may face damage to itsreputation or legal liability if its clients are not satisfied with itsservices or products; the risk that breaches of data security could exposethe company to legal liability and could harm its business and reputation;the performance and capabilities of third parties with whom the company hascommercial relationships; the risks of doing business internationally whenmore than half of the company's revenue is derived from internationaloperations; the company's ability to access capital and credit markets toaddress 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 implementingfuture dispositions or acquisitions; and the company's consideration of allavailable information following the end of the quarter and before the filingof the Form 10-Q and the possible impact of this subsequent eventinformation on its financial statements for the reporting period. Additionaldiscussion of factors that could affect the company's future results iscontained in its periodic filings with the Securities and ExchangeCommission. The company assumes no obligation to update any forward-lookingstatements. RELEASE NO.: 1022/9201 Unisys, ClearPath, Unisys Stealth and Forward! by Unisys are registeredtrademarks or trademarks of Unisys Corporation. Any other brand or productreferenced herein is acknowledged to be a trademark or registered trademarkof its respective holders. UNISYS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Millions, except per share data) Three Months Nine Months Ended Ended September 30 September 30 ------------- ------------- 2013 2012 2013 2012 ---- ---- ---- ---- Revenue Services $720.0 $748.0 $2,182.7 $2,386.7 Technology 72.1 129.4 277.9 340.4 ---- ----- ----- ----- 792.1 877.4 2,460.6 2,727.1 Costs and expenses Cost of revenue: Services 580.3 612.5 1,797.1 1,927.0 Technology 40.3 46.3 130.5 112.5 ---- ---- ----- ----- 620.6 658.8 1,927.6 2,039.5Selling, general and administrative 131.7 138.6 418.8 422.0Research and development 15.8 18.8 50.6 61.0 ----- ----- ------- ------- 768.1 816.2 2,397.0 2,522.5 ----- ----- ------- -------Operating profit 24.0 61.2 63.6 204.6 Interest expense 2.4 7.8 7.7 25.0Other income (expense), net 1.9 (25.8) 11.1 (34.9) --- ----- ---- -----Income before income taxes 23.5 27.6 67.0 144.7 Provision for income taxes 27.0 32.7 71.1 76.8 ---- ---- ---- ----Consolidated net income (loss) (3.5) (5.1) (4.1) 67.9Net income attributable to noncontrolling interests 4.1 3.3 8.9 8.2 --- --- --- ---Net income (loss) attributable to Unisys Corporation (7.6) (8.4) (13.0) 59.7 Preferred stock dividend 4.0 4.0 12.1 12.1 --- --- ---- ----Net income (loss) attributable to Unisys Corporation common shareholders ($11.6) ($12.4) ($25.1) $47.6 ====== ====== ====== ===== Earnings (loss) per common share attributable to Unisys Corporation Basic ($.26) ($.28) ($.57) $1.09 ===== ===== ===== ===== Diluted ($.26) ($.28) ($.57) $1.08 ===== ===== ===== ===== Shares used in the per share computations (thousands): Basic 43,811 43,966 43,883 43,827 Diluted 43,811 43,966 43,883 44,273 UNISYS CORPORATION SEGMENT RESULTS (Unaudited) (Millions) Total Eliminations Services Technology ----- ------------ -------- ---------- Three Months EndedSeptember 30, 2013------------------Customer revenue $792.1 $720.0 $72.1Intersegment ($22.3) 0.4 21.9Total revenue $792.1 ($22.3) $720.4 $94.0 ====== ====== ====== ===== Gross profit percent 21.7% 21.1% 35.3% ==== ==== ====Operating profit (loss) percent 3.0% 7.7% (11.0%) === === ====== Three Months EndedSeptember 30, 2012------------------Customer revenue $877.4 $748.0 $129.4Intersegment ($16.2) 0.6 15.6Total revenue $877.4 ($16.2) $748.6 $145.0 ====== ====== ====== ====== Gross profit percent 24.9% 19.9% 59.9% ==== ==== ====Operating profit percent 7.0% 6.0% 29.1% === === ==== Nine Months EndedSeptember 30, 2013------------------Customer revenue $2,460.6 $2,182.7 $277.9Intersegment ($56.5) 1.3 55.2Total revenue $2,460.6 ($56.5) $2,184.0 $333.1 ======== ====== ======== ====== Gross profit percent 21.7% 18.9% 48.4% ==== ==== ====Operating profit percent 2.6% 4.9% 6.7% === === === Nine Months EndedSeptember 30, 2012------------------Customer revenue $2,727.1 $2,386.7 $340.4Intersegment ($85.8) 2.0 83.8Total revenue $2,727.1 ($85.8) $2,388.7 $424.2 ======== ====== ======== ====== Gross profit percent 25.2% 19.9% 61.8% ==== ==== ====Operating profit percent 7.5% 6.3% 27.8% === === ==== UNISYS CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) (Millions) September 30, December 31, 2013 2012 ---- ---- AssetsCurrent assetsCash and cash equivalents $555.9 $655.6Accounts and notes receivable, net 572.7 670.2Inventories Parts and finished equipment 35.6 29.3 Work in process and materials 19.5 20.7Deferred income taxes 17.0 21.6Prepaid expense and other current assets 126.6 115.0Total 1,327.3 1,512.4 ------- -------Properties 1,184.0 1,262.2Less accumulated depreciation and amortization 1,018.6 1,085.8Properties, net 165.4 176.4 ----- -----Outsourcing assets, net 119.2 126.3Marketable software, net 125.1 124.2Prepaid postretirement assets 27.7 3.3Deferred income taxes 139.8 162.7Goodwill 189.7 192.3Other long-term assets 143.5 122.8Total $2,237.7 $2,420.4 ======== ======== Liabilities and deficitCurrent liabilitiesCurrent maturities of long- term debt $0.1 $0.3Accounts payable 218.6 228.6Deferred revenue 343.1 389.5Other accrued liabilities 353.9 411.9Total 915.7 1,030.3 ----- ------- Long-term debt 210.0 210.0Long-term postretirement liabilities 2,404.8 2,553.5Long-term deferred revenue 109.5 123.1Other long-term liabilities 107.6 92.2Commitments and contingenciesTotal deficit (1,509.9) (1,588.7)Total $2,237.7 $2,420.4 ======== ======== UNISYS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Millions) Nine Months Ended September 30 ------------ 2013 2012* ---- ----- Cash flows from operating activitiesConsolidated net income (loss) ($4.1) $67.9Add (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 - 30.6Employee stock compensation 10.8 11.8Company stock issued for U.S. 401(k) plan - 6.2Depreciation and amortization of properties 35.1 41.8Depreciation and amortization of outsourcing assets 39.4 44.1Amortization of marketable software 46.4 42.5Disposals of capital assets 1.4 6.2Gain on sale of business - (11.7)Pension plans contributions (101.6) (175.1)Decrease in deferred income taxes, net 29.4 22.3Decrease in receivables, net 66.3 58.0(Increase) decrease in inventories (5.6) 5.1Decrease in accounts payable and other accrued liabilities (123.3) (137.7)Increase in other liabilities 59.7 58.9(Increase) decrease in other assets (14.1) 39.2Other (0.1) (2.7)Net cash provided by operating activities 46.2 107.4 ---- ----- Cash flows from investing activities Proceeds from investments 3,850.2 2,786.6 Purchases of investments (3,857.8) (2,784.2) Restricted deposits 1.1 (1.1) Investment in marketable software (47.3) (42.9) Capital additions of properties (26.1) (26.0) Capital additions of outsourcing assets (29.6) (27.8) Net proceeds from sale of business - 5.2Net cash used for investing activities (109.5) (90.2) ------ -----Cash flows from financing activities Purchases of common stock (11.5) - Payments of long-term debt - (388.9) Dividends paid to noncontrolling interests - (4.5) Dividends paid on preferred shares (12.1) (12.1) Proceeds from exercise of stock options 4.5 0.4 Proceeds from issuance of long-term debt - 204.8 Net proceeds from short-term borrowings - 0.2Net cash used for financing activities (19.1) (200.1) ----- ------ Effect of exchange rate changes on cash and cash equivalents (17.3) 9.6 ----- --- Decrease in cash and cash equivalents (99.7) (173.3)Cash and cash equivalents, beginning of period 655.6 714.9Cash and cash equivalents, end of period $555.9 $541.6 ====== ====== * 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 Nine Months Ended Ended September 30 September 30 ------------ ------------ 2013 2012 2013 2012 ---- ---- ---- ---- GAAP net income (loss) attributable to Unisys Corporation common shareholders ($11.6) ($12.4) ($25.1) $47.6 Debt reduction charges, net of tax 0.0 23.1 0.0 30.6FAS87 pension charges, net of tax 22.6 28.9 66.8 75.0 ---- ---- ---- ---- Non-GAAP net income attributable to Unisys Corporation common shareholders 11.0 39.6 41.7 153.2 Add preferred stock dividend 4.0 4.0 12.1 12.1 --- --- ---- ---- Non-GAAP net income attributable to Unisys Corporation for diluted earnings per share $15.0 $43.6 $53.8 $165.3 ===== ===== ===== ====== Weighted average shares (thousands) 43,811 43,966 43,883 43,827 Plus incremental shares from assumed conversion: Employee stock plans 436 458 445 445 Preferred stock 0 6,913 0 6,913 --- ----- --- ----- GAAP Adjusted weighted average shares 44,247 51,337 44,327 51,185 ====== ====== ====== ====== Diluted earnings (loss) per share GAAP basis----------GAAP net income (loss) attributable to Unisys Corporation for diluted earnings per share ($11.6) ($12.4) ($25.1) $47.6 Divided by adjusted weighted average shares 43,811 43,966 43,883 44,273 GAAP net income (loss) per diluted share ($.26) ($.28) ($.57) $1.08 ===== ===== ===== ===== Non-GAAP basis--------------Non-GAAP net income attributable to Unisys Corporation for diluted earnings per share $11.0 $43.6 $41.7 $165.3 Divided by Non-GAAP adjusted weighted average shares 44,247 51,337 44,327 51,185 Non-GAAP net income per diluted share $.25 $.85 $.94 $3.23 ==== ==== ==== ===== (2) UNISYS CORPORATION RECONCILIATION OF GAAP TO NON-GAAP (Unaudited) (Millions)FREE CASH FLOW-------------- Three Months Nine Months Ended Ended September 30 September 30 ------------ ------------ 2013 2012 2013 2012 ---- ---- ---- ----Cash provided by operations $16.0 $16.9 $46.2 $107.4Additions to marketable software (17.7) (14.3) (47.3) (42.9)Additions to properties (9.9) (8.1) (26.1) (26.0)Additions to Outsourcing assets (11.3) (9.1) (29.6) (27.8) ----- ---- ----- -----Free cash flow (22.9) (14.6) (56.8) 10.7Pension funding 40.3 56.3 101.6 175.1 ---- ---- ----- -----Free cash flow before pension funding $17.4 $41.7 $44.8 $185.8 ===== ===== ===== ====== SOURCE Unisys Corporation CONTACT: Investor Contact: Niels Christensen, 215-986-6651,Niels.Christensen@unisys.com; Media Contact: Jim Kerr, 215-986-5795,Jim.Kerr@unisys.com