Unisys Com Stk Regulatory News (USY)

Unisys Announces Third-Quarter 2014 Financial Results - Revenue grows 11 percent; up 10 percent on a constant currency(1) basis - Net income of $47.8 million vs. net loss of $11.6 million in 3Q 2013 - Diluted earnings per share of 95 cents vs. diluted loss per share of 26 cents in 3Q 2013 - Non-GAAP diluted earnings per share(2) of $1.30 vs. 25 cents in 3Q 2013 BLUE BELL, Pa., Oct. 21, 2014 -- Unisys Corporation (NYSE: UIS)today reported third-quarter 2014 net income of $47.8 million, or 95 cents perdiluted share, which included $17.9 million of pension expense. In the thirdquarter of 2013, the company reported a net loss of $11.6 million, or a loss of26 cents per diluted share, which included $22.6 million of pension expense.Excluding pension expense in both periods, non-GAAP diluted earnings per sharein the third quarter of 2014 was $1.30 compared with 25 cents in the thirdquarter of 2013. Third-quarter 2014 revenue grew 11 percent to $883 million from $792 million inthe year-ago quarter. Foreign currency translations had a 1 percentage-pointpositive impact on revenue comparisons in the quarter. "This was a strong quarter for Unisys," said Unisys Chairman and CEO EdColeman. "We grew our revenue double digits, with growth in both our servicesand technology businesses, and more than tripled pretax profit. In our servicesbusiness, we grew both our systems integration and IT outsourcing revenue. Ourtechnology results benefited from significantly higher sales of our flagshipClearPath enterprise servers. Year to date through the first nine months of2014, our technology revenue is up 2 percent year over year." Third-Quarter Company and Business Segment Highlights U.S. revenue grew 12 percent in the quarter while international revenue grew 11percent as all regions contributed to growth. On a constant currency basis,international revenue grew 8 percent. Reflecting the higher technology revenue, the company reported an overallthird-quarter 2014 gross profit margin of 26.6 percent, up from 21.7 percent ayear ago. Operating expenses (SG&A and R&D expenses) increased 7 percent fromthe year-ago period, reflecting increased investments in the company's growthinitiatives. The company reported a third-quarter 2014 operating profit of$76.6 million, or 8.7 percent of revenue, compared with an operating profit of$24.0 million, or 3.0 percent of revenue, in the third quarter of 2013. Third-quarter 2014 services revenue grew 6 percent from the prior-year quarteras growth in systems integration and IT outsourcing more than offset declinesin infrastructure services. Third-quarter 2014 services gross profit margin was19.5 percent compared with 21.1 percent in the year-ago quarter. Third quarter2014 services operating profit margin was 6.9 percent compared with 7.7 percenta year ago. Third-quarter 2014 services orders declined as order gains for systemsintegration and IT outsourcing were more than offset by declines ininfrastructure services. Services backlog at September 30, 2014 was $4.4billion, down 7 percent from June 30, 2014 levels and down 9 percent fromDecember 31, 2013. Third-quarter 2014 technology revenue grew 66 percent from the prior-yearquarter driven by significantly higher sales of ClearPath enterprise softwareand servers. Reflecting the higher ClearPath sales, third-quarter 2014technology gross profit margin increased to 61.5 percent compared with 35.3percent in the year-ago quarter and technology operating profit (loss) marginimproved to 25.5 percent compared with (11.0) percent in the year-ago quarter. Cash Flow and Balance Sheet Highlights Unisys used $8 million of cash from operations in the third quarter of 2014,including $58 million of pension contributions. In the third quarter of 2013,the company generated $16 million of cash from operations, which included $40million of pension contributions. Reflecting increased investments in thecompany's IT outsourcing business, capital expenditures in the third quarter of2014 increased to $54 million compared with $39 million in the year-agoquarter. After capital expenditures, the company used $62 million of free cash(3) in the third quarter of 2014 compared with free cash usage of $23 millionin the third quarter of 2013. Free cash usage before pension contributions was$4 million in the third quarter of 2014 compared with free cash flow beforepension contributions of $17 million in the third quarter of 2013. At September 30, 2014, the company reported a cash balance of $477 million andtotal debt of $215 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, andfree 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 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 per share - The company recorded pension expenseof $17.9 million and $22.6 million during the third quarters of 2014 and 2013,respectively. In an effort to provide investors with a perspective on thecompany's earnings without these expenses, they are excluded from the non-GAAPdiluted earnings 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 accompanyingpresentation materials, can be accessed through the same link. About Unisys Unisys 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 23,000 employees servingclients around 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 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.: 1021/9286 Unisys and ClearPath are registered trademarks or trademarks of UnisysCorporation. Any other brand or product referenced herein is acknowledged to bea trademark or registered trademark of its respective holders. UNISYS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Millions, except per share data) Three Months Nine Months Ended September 30 Ended September 30 2014 2013 2014 2013 Revenue Services $763.0 $720.0 $2,166.8 $2,182.7 Technology 119.5 72.1 283.8 277.9 882.5 792.1 2,450.6 2,460.6 Costs and expenses Cost of revenue: Services 608.6 580.3 1,801.0 1,797.1 Technology 39.0 40.3 116.5 130.5 647.6 620.6 1,917.5 1,927.6 Selling, general and administrative 138.0 131.7 410.1 418.8Research and development 20.3 15.8 50.5 50.6 805.9 768.1 2,378.1 2,397.0Operating profit 76.6 24.0 72.5 63.6 Interest expense 2.3 2.4 6.6 7.7Other income (expense), net 3.3 1.9 (9.0) 11.1Income before income taxes 77.6 23.5 56.9 67.0 Provision for income taxes 26.4 27.0 62.3 71.1Consolidated net income (loss) 51.2 (3.5) (5.4) (4.1) Net income attributable to noncontrolling interests 3.4 4.1 9.7 8.9 Net Income (loss) attributable to Unisys Corporation 47.8 (7.6) (15.1) (13.0) Preferred stock dividend - 4.0 2.7 12.1Net income (loss) attributable to Unisys Corporation common shareholders $47.8 ($11.6) ($17.8) ($25.1) Earnings (loss) per common share attributable to Unisys Corporation Basic $ .95 ($ .26) ($ .36) ($ .57) Diluted $ .95 ($ .26) ($ .36) ($ .57) Shares used in the per share computations(thousands): Basic 50,245 43,811 49,144 43,883 Diluted 50,422 43,811 49,144 43,883 UNISYS CORPORATION SEGMENT RESULTS (Unaudited) (Millions) Total Eliminations Services TechnologyThree Months EndedSeptember 30, 2014Customer revenue $882.5 $763.0 $119.5Intersegment ($35.4) - 35.4Total revenue $882.5 ($35.4) $763.0 $154.9 Gross profit percent 26.6% 19.5% 61.5%Operating profit percent 8.7% 6.9% 25.5% 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%) Nine Months EndedSeptember 30, 2014Customer revenue $2,450.6 $2,166.8 $283.8Intersegment ($58.8) 0.3 58.5Total revenue $2,450.6 ($58.8) $2,167.1 $342.3 Gross profit percent 21.8% 17.4% 53.5%Operating profit percent 3.0% 4.4% 7.2% Nine Months EndedSeptember 30, 2013Customer 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% UNISYS CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) (Millions) September 30, December 31, 2014 2013 AssetsCurrent assetsCash and cash equivalents $476.5 $639.8Accounts and notes receivable, net 570.2 683.1Inventories Parts and finished equipment 35.4 32.8 Work in process and materials 24.7 22.3Deferred income taxes 16.0 24.1Prepaid expense and other current assets 133.9 138.7Total 1,256.7 1,540.8 Properties 1,095.4 1,095.5Less accumulated depreciation and amortization 921.6 920.8Properties, net 173.8 174.7Outsourcing assets, net 114.1 115.5Marketable software, net 142.6 129.1Prepaid postretirement assets 126.0 83.7Deferred income taxes 110.0 112.3Goodwill 186.6 188.7Other long-term assets 169.6 165.2Total $2,279.4 $2,510.0 Liabilities and deficitCurrent liabilitiesCurrent maturities of long-term debt $1.0 $0.0Accounts payable 241.0 246.7Deferred revenue 319.4 402.4Other accrued liabilities 351.4 375.7Total 912.8 1,024.8 Long-term debt 214.1 210.0Long-term postretirement liabilities 1,457.8 1,697.2Long-term deferred revenue 109.5 122.7Other long-term liabilities 106.4 119.2Commitments and contingenciesTotal deficit (521.2) (663.9)Total $2,279.4 $2,510.0 UNISYS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Millions) Nine Months Ended September 30 2014 2013 * Cash flows from operatingactivitiesConsolidated net loss ($5.4) ($4.1)Add (deduct) items toreconcile consolidated net loss to net cash provided by operating activities:Foreign currency transaction loss 7.4 6.5Employee stock compensation 10.6 10.8Depreciation and amortization of properties 38.6 35.1Depreciation and amortization of outsourcing assets 44.5 39.4Amortization of marketable software 42.5 46.4Other non-cash operating activities 5.1 -Disposals of capital assets 1.0 1.4Gain on sale of business (0.7) -Pension contributions (161.3) (101.6)Pension expense 55.5 69.4Decrease in deferred income taxes, net 15.4 29.4Decrease in receivables, net 81.2 66.3Increase in inventories (6.1) (5.6)Decrease in accounts payable and other accrued liabilities (83.8) (123.3)Decrease in other liabilities (39.1) (19.0)Decrease (increase) in other assets 7.8 (4.8)Other 2.7 (0.1)Net cash provided by operating activities 15.9 46.2 Cash flows from investingactivities Proceeds from investments 4,438.8 3,850.2 Purchases of investments (4,422.8) (3,857.8) Investment in marketable software (56.1) (47.3) Capital additions of properties (41.9) (26.1) Capital additions of outsourcing assets (45.9) (29.6) Other (1.2) 1.1Net cash used for investingactivities (129.1) (109.5) Cash flows from financingactivities Purchases of common stock (29.3) (11.5) Dividends paid on preferred shares (4.0) (12.1) Proceeds from exercise of stock options 3.3 4.5 Financing fees (0.6) -Net cash used for financingactivities (30.6) (19.1) Effect of exchange ratechanges on cash and cashequivalents (19.5) (17.3) Decrease in cash and cashequivalents (163.3) (99.7)Cash and cash equivalents,beginning of period 639.8 655.6Cash and cash equivalents,end of period $476.5 $555.9 * Certain components of net cash provided by operating activities were changed to present pension expense separately, consistent with the 2014 presentation. (1) UNISYS CORPORATION RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (Unaudited) (Millions, except per share data) Three Months Nine Months Ended September Ended September 30 30 2014 2013 2014 2013 GAAP net income (loss) attributable to Unisys Corporation common shareholders $47.8 ($11.6) ($17.8) ($25.1) Pension expense, net of tax 17.9 22.6 55.1 66.8 Non-GAAP net income attributable to Unisys Corporation common shareholders 65.7 11.0 37.3 41.7 Add preferred stock dividend 0.0 4.0 2.7 12.1 Non-GAAP net income attributable to Unisys Corporation for diluted earnings per share $65.7 $15.0 $40.0 $53.8 Weighted average shares (thousands) 50,245 43,811 49,144 43,883 Plus incremental shares from assumedconversion: Employee stock plans 177 436 319 444 Preferred stock 0 0 0 0 GAAP adjusted weighted average shares 50,422 44,247 49,463 44,327 Diluted earnings (loss) per share GAAP basisGAAP net income (loss) attributable to Unisys Corporation for diluted earnings per share $47.8 ($11.6) ($17.8) ($25.1) Divided by adjusted weighted average 50,422 43,811 49,144 43,883shares GAAP earnings (loss) per diluted share $ .95 ($ .26) ($ .36) ($ .57) Non-GAAP basisNon-GAAP net income attributable to Unisys Corporation for diluted earnings per share $65.7 $11.0 $37.3 $41.7 Divided by Non-GAAP adjusted weightedaverage shares 50,422 44,247 49,463 44,327 Non-GAAP earnings per diluted share $ 1.30 $ .25 $ .75 $ .94 (2) UNISYS CORPORATION RECONCILIATION OF GAAP TO NON-GAAP (Unaudited) (Millions) FREE CASH FLOW Three Months Nine Months Ended September 30 Ended September 30 2014 2013 2014 2013 Cash provided by (usedfor) operations ($7.5) $16.0 $15.9 $46.2Additions to marketablesoftware (15.8) (17.7) (56.1) (47.3)Additions to properties (12.9) (9.9) (41.9) (26.1)Additions to outsourcingassets (25.8) (11.3) (45.9) (29.6)Free cash flow (62.0) (22.9) (128.0) (56.8)Pension funding 58.2 40.3 161.3 101.6Free cash flow beforepension funding ($3.8) $17.4 $33.3 $44.8 CONTACT: Investor Contact: Niels Christensen, 215-986-6651,Niels.Christensen@unisys.com; or Media Contact: Jim Kerr, 215-986-5795,Jim.Kerr@unisys.com