Unisys Com Stk Regulatory News (USY)

Unisys Announces Fourth-Quarter and Full-Year 2014 Financial Results BLUE BELL, Pennsylvania, Jan. 29, 2015 -- 4Q 2014 vs. 4Q 2013: * Revenue declines 9% (6% on a constant currency basis(1)) * U.S. and Canada revenue grew 6% * Net income of $61.8 million vs. $117.4 million in 4Q 2013 * Diluted EPS of $1.24 vs. $2.37 in 4Q 2013 * Non-GAAP diluted EPS(2) of $1.60 vs. $2.82 in 4Q 2013 Full-year 2014 vs. full-year 2013: * Revenue declines 3% (2% in constant currency) * U.S. and Canada revenue grew 1% * Net income of $44.0 million vs. $92.3 million for FY 2013 * Diluted EPS of $0.89 vs. $2.08 for FY 2013 * Non-GAAP diluted EPS of $2.36 vs. $3.87 for FY 2013 Unisys Corporation (NYSE: UIS) today reported fourth-quarter 2014 net income of$61.8 million or $1.24 per diluted share, including $18.1 million of pensionexpense. Excluding pension expense, non-GAAP diluted earnings per share was$1.60. In the comparable period in 2013, the company reported diluted earningsper share of $2.37, and non-GAAP diluted earnings per share of $2.82.Fourth-quarter 2014 revenue declined 9% to $906 million from $996 million inthe fourth quarter of 2013. On a constant currency basis, fourth-quarter 2014revenue declined 6%. For the full year of 2014, Unisys reported net income of $44.0 million, or$0.89 per diluted share, which included $73.2 million of pension expense.Excluding pension expense, non-GAAP diluted earnings per share was $2.36. Inthe comparable period in 2013, the company reported earnings of $2.08 perdiluted share, and non-GAAP diluted earnings per share of $3.87. Full-year 2014revenue declined 3% to $3.36 billion from $3.46 billion in 2013. On a constantcurrency basis, full-year 2014 revenue declined 2%. "Our U.S. & Canada team, particularly our US Federal group, posted stronggrowth in the quarter, balancing weakness in some global markets," said PeterAltabef who joined the company as President and CEO on January 1, 2015. Fourth-Quarter Company and Business Segment Highlights Services revenue represented 80% of the company's fourth-quarter 2014 total anddeclined 11%, reflecting declines in outsourcing, systems integration, andinfrastructure services. On a constant currency basis, fourth quarter 2014services revenue declined 8%. As a result of the lower revenue, fourth-quarterservices gross profit margin declined to 17.5% from 21.9% a year ago. Servicesoperating profit margin declined to 3.9% from 9.8%. Services backlog atDecember 31, 2014 was $4.8 billion, unchanged from the prior year. Technology revenue grew 1% from the prior-year fourth quarter or 3% on aconstant currency basis. Fourth-quarter 2014 technology gross profit margin was60.4% versus 61.4% a year ago. Technology operating profit margin was 36.3%compared to 40.6%. This reflected the impact of higher investments in growthprograms. The company reported an overall fourth-quarter 2014 gross profit margin of27.0% versus 31.7% in the year-ago quarter. Operating expenses (SG&A and R&Dexpenses) increased 2% from the year-ago period, reflecting increasedinvestments in growth programs. The company reported a fourth-quarter 2014operating profit of $82.4 million, or 9.1% of revenue, compared tofourth-quarter 2013 operating profit of $155.9 million, or 15.7% of revenue. From a geographic perspective, U.S and Canada revenue grew 6% in the fourthquarter driven by growth in the company's U.S. Federal business. Internationalrevenue declined 18% in the fourth quarter (14% on a constant currency basis)as growth in Latin America was offset by revenue declines in EMEA andAsia-Pacific. Cash Flow and Balance Sheet Highlights In the fourth quarter of 2014, Unisys generated $106 million of cash fromoperations, including $22 million of pension contributions. In the fourthquarter of 2013, the company generated $141 million of cash from operations,including $45 million of pension contributions. Capital expenditures in thefourth quarter of 2014 were $69 million compared with $48 million in theyear-ago quarter. The company generated $37 million of free cash flow(3) in thefourth quarter of 2014 compared with free cash flow of $93 million in thefourth quarter of 2013. Free cash flow before pension contributions was $59million in the fourth quarter of 2014 and $138 million in the year-ago quarter. Unisys made a total of $183 million in pension contributions in 2014 comparedto $147 million of pension contributions in 2013. For the full year of 2014,the company generated free cash flow before pension contributions of $92million compared to $183 million in 2013. At December 31, 2014, the company reported a cash balance of $494 million andtotal debt of $224 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, andconstant 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) 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 $18.1 million and $23.2 million during the fourth quarters of 2014 and 2013,respectively. For the full years of 2014 and 2013, Unisys recorded pensionexpense of $73.2 million and $90.0 million, respectively. In an effort toprovide investors with a perspective on the company's earnings without thesecharges, they are excluded from the non-GAAP diluted earnings per sharecalculations. (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 20,000 employees servingclients around the world. For more information, visit http://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 toeffectively anticipate and respond to volatility and rapid technological changein its industry; the company's ability to drive profitable growth in consultingand systems integration; the company's ability to profitably grow itsoutsourcing business; the company's ability to maintain and grow its technologybusiness; the potential adverse effects of aggressive competition in theinformation services and technology marketplace; the company's ability toretain significant clients; the risks that the company's contracts may not beas profitable 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 performance and capabilities ofthird parties with whom the company has commercial relationships; the company'sability to attract, motivate and retain experienced and knowledgeable personnelin key positions; the company's significant pension obligations and potentialrequirements to make significant cash contributions to its defined benefitpension plans; the company's ability to continue to simplify its operations andprovide services more cost efficiently; the adverse effects of global economicconditions; the risk that breaches of data security could expose the company tolegal liability and could harm its business and reputation; 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 year andbefore the filing of the Form 10-K 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.: 0129/9307 Unisys is a registered trademark of Unisys Corporation. Any other brand andproducts referenced herein is acknowledged to be a trademark or registeredtrademark of its respective holder. UNISYS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Millions, except per share data) Three Months Year Ended December 31 Ended December 31 2014 2013 2014 2013Revenue Services $720.9 $813.4 $2,887.7 $2,996.1 Technology 184.9 182.5 468.7 460.4 905.8 995.9 3,356.4 3,456.5 Costs and expenses Cost of revenue: Services 593.2 608.4 2,394.2 2,405.5 Technology 67.9 72.1 184.4 202.6 661.1 680.5 2,578.6 2,608.1Selling, general and administrative 144.0 140.6 554.1 559.4Research and development 18.3 18.9 68.8 69.5 823.4 840.0 3,201.5 3,237.0Operating profit 82.4 155.9 154.9 219.5 Interest expense 2.6 2.2 9.2 9.9Other income (expense), net 8.8 (1.3) (0.2) 9.8Income before income taxes 88.6 152.4 145.5 219.4 Provision for income taxes 23.9 28.2 86.2 99.3Consolidated net income 64.7 124.2 59.3 120.1Net income attributable to noncontrolling interests 2.9 2.7 12.6 11.6Net Income attributable to Unisys Corporation 61.8 121.5 46.7 108.5 Preferred stock dividend - 4.1 2.7 16.2Net income attributable to Unisys Corporation common shareholders $61.8 $117.4 $44.0 $92.3 Earnings per common share attributable to Unisys Corporation Basic $ 1.24 $ 2.67 $ .89 $ 2.10 Diluted $ 1.24 $ 2.37 $ .89 $ 2.08 Shares used in the per share computations (thousands): Basic 49,689 43,947 49,280 43,899 Diluted 49,948 51,319 49,584 44,347 UNISYS CORPORATION SEGMENT RESULTS (Unaudited) (Millions) Total Eliminations Services Technology Three Months EndedDecember 31, 2014Customer revenue $905.8 $720.9 $184.9Intersegment ($53.5) 0.1 53.4Total revenue $905.8 ($53.5) $721.0 $238.3 Gross profit percent 27.0% 17.5% 60.4%Operating profit percent 9.1% 3.9% 36.3% Three Months EndedDecember 31, 2013Customer revenue $995.9 $813.4 $182.5Intersegment ($66.0) 0.4 65.6Total revenue $995.9 ($66.0) $813.8 $248.1 Gross profit percent 31.7% 21.9% 61.4%Operating profit percent 15.7% 9.8% 40.6% Year EndedDecember 31, 2014Customer revenue $3,356.4 $2,887.7 $468.7Intersegment ($112.3) 0.4 111.9Total revenue $3,356.4 ($112.3) $2,888.1 $580.6 Gross profit percent 23.2% 17.5% 56.3%Operating profit percent 4.6% 4.2% 19.1% Year EndedDecember 31, 2013Customer revenue $3,456.5 $2,996.1 $460.4Intersegment ($122.5) 1.7 120.8Total revenue $3,456.5 ($122.5) $2,997.8 $581.2 Gross profit percent 24.5% 19.7% 53.9%Operating profit percent 6.4% 6.2% 21.1% UNISYS CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) (Millions) December 31, December 31, 2014 2013AssetsCurrent assetsCash and cash equivalents $494.3 $639.8Accounts and notes receivable, net 619.3 683.1Inventories Parts and finished equipment 22.2 32.8 Work in process and materials 24.5 22.3Deferred income taxes 16.4 24.1Prepaid expense and other current assets 140.6 138.7Total 1,317.3 1,540.8 Properties 1,059.4 1,095.5Less accumulated depreciation and amortization 890.7 920.8Properties, net 168.7 174.7Outsourcing assets, net 150.9 115.5Marketable software, net 144.1 129.1Prepaid postretirement assets 19.9 83.7Deferred income taxes 154.6 112.3Goodwill 183.9 188.7Other long-term assets 209.3 165.2Total $2,348.7 $2,510.0 Liabilities and deficitCurrent liabilitiesCurrent maturities of long-term debt $1.8 $0.0Accounts payable 262.5 246.7Deferred revenue 348.3 402.4Other accrued liabilities 385.1 375.7Total 997.7 1,024.8 Long-term debt 222.2 210.0Long-term postretirement liabilities 2,369.9 1,697.2Long-term deferred revenue 119.5 122.7Other long-term liabilities 91.8 119.2Commitments and contingenciesTotal deficit (1,452.4) (663.9)Total $2,348.7 $2,510.0 UNISYS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Millions) Year Ended December 31 2014 2013 Cash flows from operating activitiesConsolidated net income $59.3 $120.1Add (deduct) items to reconcile consolidated net income to net cash provided by operating activities:Foreign currency transaction loss 7.4 6.5Employee stock compensation 10.4 12.5Depreciation and amortization of properties 52.0 46.7Depreciation and amortization of outsourcing assets 58.1 53.5Amortization of marketable software 58.5 59.4Other non-cash operating activities 7.8 (0.6)Disposals of capital assets 1.8 2.0(Gain) loss on sale of business (0.7) 1.5Pension contributions (183.4) (147.2)Pension expense 73.8 93.5Decrease in deferred income taxes, net 24.8 29.4Increase in receivables, net (14.3) (63.5)Decrease (increase) in inventories 6.3 (6.5)Increase in accounts payable and other accrued liabilities 14.4 1.9Decrease in other liabilities (31.1) (5.3)Increase in other assets (23.7) (16.5)Net cash provided by operating activities 121.4 187.4 Cash flows from investing activities Proceeds from investments 5,654.0 5,315.9 Purchases of investments (5,640.3) (5,325.8) Investment in marketable software (73.6) (64.3) Capital additions of properties (53.3) (47.2) Capital additions of outsourcing assets (85.9) (39.9) Other 3.8 (1.4)Net cash used for investing activities (195.3) (162.7) Cash flows from financing activities Purchases of common stock (35.7) (11.7) Dividends paid on preferred shares (4.0) (16.2) Proceeds from exercise of stock options 3.4 4.9 Financing fees (0.6) -Net cash used for financing activities (36.9) (23.0) Effect of exchange rate changes on cash and cash equivalents (34.7) (17.5) Decrease in cash and cash equivalents (145.5) (15.8)Cash and cash equivalents, beginning of period 639.8 655.6Cash and cash equivalents, end of period $494.3 $639.8 (1) UNISYS CORPORATION RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (Unaudited) (Millions, except per share data) Three Months Year Ended December Ended December 31 31 2014 2013 2014 2013GAAP net income attributable to Unisys Corporation common shareholders $61.8 $117.4 $44.0 $92.3 Pension expense, net of tax 18.1 23.2 73.2 90.0 Non-GAAP net income attributable to Unisys Corporation common shareholders 79.9 140.6 117.2 182.3 Add preferred stock dividend 0.0 4.1 2.7 16.2 Non-GAAP net income attributable to Unisys Corporation for diluted earnings per share $79.9 $144.7 $119.9 $198.5 Weighted average shares (thousands) 49,689 43,947 49,280 43,899 Plus incremental shares from assumedconversion: Employee stock plans 259 459 304 448 Preferred stock 0 6,913 1,172 6,913 GAAP adjusted weighted average shares 49,948 51,319 50,756 51,260 Diluted earnings per share GAAP basisGAAP net income attributable to Unisys Corporation for diluted earnings per share $61.8 $121.5 $44.0 $92.3 Divided by adjusted weighted average shares 49,948 51,319 49,584 44,347 GAAP earnings per diluted share $ 1.24 $ 2.37 $ .89 $ 2.08 Non-GAAP basisNon-GAAP net income attributable to Unisys Corporation for diluted earnings per share $79.9 $144.7 $119.9 $198.5 Divided by Non-GAAP adjusted weightedaverage shares 49,948 51,319 50,756 51,260 Non-GAAP earnings per diluted share $ 1.60 $ 2.82 $ 2.36 $ 3.87 (2) UNISYS CORPORATION RECONCILIATION OF GAAP TO NON-GAAP (Unaudited) (Millions) FREE CASH FLOW Three Months Year Ended December 31 Ended December 31 2014 2013 2014 2013Cash provided by operations $105.5 $141.2 $121.4 $187.4Additions to marketable software (17.5) (17.0) (73.6) (64.3)Additions to properties (11.4) (21.1) (53.3) (47.2)Additions to outsourcing assets (40.0) (10.3) (85.9) (39.9)Free cash flow 36.6 92.8 (91.4) 36.0Pension funding 22.1 45.6 183.4 147.2Free cash flow before pension funding $58.7 $138.4 $92.0 $183.2 CONTACT: Investor Contact: Niels Christensen, 215-986-6651,Niels.Christensen@unisys.com or Media Contact: Jim Kerr, 215-986-5795,Jim.Kerr@unisys.com