Unisys Com Stk Regulatory News (USY)

Unisys Announces Fourth-Quarter 2013 Financial Results - Revenue grows 2 percent; technology revenue up 5 percent; services revenue up1 percent - Net income of $117.4 million vs. $81.8 million in 4Q 2012 - Diluted EPS of $2.37 vs. $1.67 in 4Q 2012 - Non-GAAP diluted EPS(1) of $2.82 vs. $2.27 in 4Q 2012 - Free cash flow(2) of $93 million; free cash flow of $138 million beforepension contributions BLUE BELL, Pa., Jan. 30, 2014 -- Unisys Corporation (NYSE: UIS) today reportedfourth-quarter 2013 net income of $117.4 million, or $2.37 per diluted share,which included $23.2 million of pension expense. In the fourth quarter of 2012,the company reported net income of $81.8 million, or $1.67 per diluted share,which included $30.4 million of pension expense. Excluding pension expense,non-GAAP diluted earnings per share in the fourth quarter of 2013 was $2.82compared with $2.27 in the fourth quarter of 2012. Fourth-quarter 2013 revenuegrew 2 percent to $996 million from $979 million in the fourth quarter of 2012.Foreign currency translations had a negligible impact on revenue comparisonsin the fourth quarter. For the full year of 2013, Unisys reported net income of $92.3 million, or$2.08 per diluted share, which included $90.0 million of pension expense. Forthe full year of 2012, the company reported net income of $129.4 million, or$2.84 per diluted share, which included $105.4 million of pension expense and$30.6 million of debt reduction charges. Excluding pension expense in bothyears and the debt reduction charges in 2012, non-GAAP earnings per share forthe full year of 2013 was $3.87 compared with $5.50 for the full year of 2012.Full-year 2013 revenue declined 7 percent to $3.46 billion from full-year 2012revenue of $3.71 billion. Foreign currency translations had a onepercentage-point negative impact on full-year 2013 revenue comparisons. "We closed 2013 with a good fourth quarter, reporting significantly increasedprofitability on higher revenue," said Unisys Chairman and CEO Ed Coleman. "Wegrew both our services and technology businesses while continuing to show goodcost discipline across the business. We were particularly pleased by the higheroperating profit margins in our services business, where we also grew ordersfor the third consecutive quarter. "As we move into 2014, we are excited by the opportunities in front of us,"Coleman said. "We are seeing growing market interest in our Stealthcybersecurity software products, our new Forward! by Unisys fabric-basedservers, our cloud-based offerings, and other innovative solution offerings. Weare focused on continuing our fourth-quarter momentum and driving profitablerevenue growth in the year ahead." Fourth-Quarter Company and Business Segment Highlights International revenue grew 2 percent (3 percent on a constant currency(3)basis) in the fourth quarter as growth in Europe and Asia Pacific more thanoffset declines in Latin America. U.S. revenue was flat compared to the fourthquarter of 2012. The company reported an overall fourth-quarter 2013 gross profit margin of 31.7percent, up from 29.2 percent in the year-ago quarter. Operating expenses (SG&Aand R&D expenses) decreased 7 percent from the year-ago period, reflectingeffective cost management. The company reported fourth-quarter 2013 operatingprofit of $155.9 million, or 15.7 percent of revenue, compared withfourth-quarter 2012 operating profit of $114.6 million, or 11.7 percent ofrevenue. Fourth-quarter 2013 services revenue increased 1 percent (2 percent on aconstant currency basis) as growth in outsourcing and systems integrationoffset declines in core maintenance. Reflecting a richer mix of higher-marginservices and solutions as well as a continued focus on cost control,fourth-quarter 2013 services gross profit margin improved to 21.9 percent from20.2 percent a year ago and services operating profit margin improved to 9.8percent from 6.6 percent a year ago. Fourth-quarter 2013 services orders grew from the fourth quarter of 2012,driven by higher orders for outsourcing and systems integration services.Services backlog at December 31, 2013 was $4.8 billion, down 5 percent fromservices backlog at December 31, 2012. Fourth-quarter 2013 technology revenue grew 5 percent from the prior-yearquarter. Fourth-quarter 2013 technology gross profit margin declined to 61.4percent from 68.1 percent in the year-ago quarter, resulting from a higher mixof third-party product sales, and technology operating profit margin declinedto 40.6 percent from 43.9 percent in the year-ago quarter. Cash Flow and Balance Sheet Highlights In the fourth quarter of 2013, Unisys generated $141 million of cash fromoperations, which included $46 million of pension contributions. In the fourthquarter of 2012, the company generated $154 million of cash from operations,which included $26 million of pension contributions. Capital expenditures inthe fourth quarter of 2013 were $48 million compared with $36 million in theyear-ago quarter. The company generated $93 million of free cash flow in thefourth quarter of 2013 compared with free cash flow of $118 million in thefourth quarter of 2012. Free cash flow before pension contributions was $138million in the fourth quarter of 2013 compared with $144 million in theyear-ago quarter. Unisys made a total of $147 million in pension contributions in 2013 comparedwith $202 million of pension contributions in 2012. For the full year of 2013,the company generated free cash flow of $183 million before pensioncontributions compared with $330 million of free cash flow before pensioncontributions in 2012. At December 31, 2013, the company reported a cash balance of $640 million andtotal debt 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 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) Non-GAAP diluted earnings per share - For the full years of 2013 and 2012,Unisys recorded pension expense of $90.0 million and $105.4 million,respectively. In addition, for full year 2012 the company incurred debtreduction charges of $30.6 million as a result of debt reduction actions. In aneffort to provide investors with a perspective on the company's earningswithout these charges, they are excluded from the non-GAAP diluted earnings pershare calculations. (2) 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. (3) 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. 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 year and before the filing of the Form10-K 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.: 0130/9222 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 2013 2012 2013 2012 Revenue Services $813.4 $805.7 $2,996.1 $3,192.4 Technology 182.5 173.6 460.4 514.0 995.9 979.3 3,456.5 3,706.4 Costs and expenses Cost of revenue: Services 608.4 640.7 2,405.5 2,567.7 Technology 72.1 52.7 202.6 165.2 680.5 693.4 2,608.1 2,732.9 Selling, general and administrative 140.6 150.8 559.4 572.8Research and development 18.9 20.5 69.5 81.5 840.0 864.7 3,237.0 3,387.2 Operating profit 155.9 114.6 219.5 319.2 Interest expense 2.2 2.5 9.9 27.5Other income (expense), net (1.3) (2.7) 9.8 (37.6)Income before income taxes 152.4 109.4 219.4 254.1 Provision for income taxes 28.2 20.5 99.3 97.3Consolidated net income 124.2 88.9 120.1 156.8Net income attributable to noncontrolling interests 2.7 3.0 11.6 11.2 Net income attributable to Unisys Corporation 121.5 85.9 108.5 145.6 Preferred stock dividend 4.1 4.1 16.2 16.2Net income attributable to Unisys Corporation common shareholders $117.4 $81.8 $92.3 $129.4 Earnings per common share attributable to Unisys Corporation Basic $ 2.67 $ 1.86 $ 2.10 $ 2.95 Diluted $ 2.37 $ 1.67 $ 2.08 $ 2.84 Shares used in the per share computations(thousands): Basic 43,947 43,976 43,899 43,864 Diluted 51,319 51,307 44,347 51,216 UNISYS CORPORATION SEGMENT RESULTS (Unaudited) (Millions) Total Eliminations Services TechnologyThree 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% Three Months EndedDecember 31, 2012Customer revenue $979.3 $805.7 $173.6Intersegment ($37.3) 1.8 35.5Total revenue $979.3 ($37.3) $807.5 $209.1 Gross profit percent 29.2% 20.2% 68.1%Operating profit percent 11.7% 6.6% 43.9% 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% Year EndedDecember 31, 2012Customer revenue $3,706.4 $3,192.4 $514.0Intersegment ($123.1) 3.8 119.3Total revenue $3,706.4 ($123.1) $3,196.2 $633.3 Gross profitpercent 26.3% 20.0% 63.9%Operating profitpercent 8.6% 6.4% 33.1% UNISYS CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) (Millions) December 31, December 31, 2013 2012AssetsCurrent assetsCash and cash equivalents $639.8 $655.6Accounts and notes receivable, net 683.1 670.2Inventories Parts and finished equipment 32.8 29.3 Work in process and materials 22.3 20.7Deferred income taxes 24.1 21.6Prepaid expense and other current assets 138.7 115.0Total 1,540.8 1,512.4 Properties 1,095.5 1,262.2Less accumulated depreciation and amortization 920.8 1,085.8Properties, net 174.7 176.4Outsourcing assets, net 115.5 126.3Marketable software, net 129.1 124.2Prepaid postretirement assets 83.7 3.3Deferred income taxes 112.3 162.7Goodwill 188.7 192.3Other long-term assets 165.2 122.8Total $2,510.0 $2,420.4 Liabilities and deficitCurrent liabilitiesCurrent maturities of long-term debt $0.0 $0.3Accounts payable 246.7 228.6Deferred revenue 402.4 389.5Other accrued liabilities 375.7 411.9Total 1,024.8 1,030.3 Long-term debt 210.0 210.0Long-term postretirement liabilities 1,697.2 2,553.5Long-term deferred revenue 122.7 123.1Other long-term liabilities 119.2 92.2Commitments and contingenciesTotal deficit (663.9) (1,588.7)Total $2,510.0 $2,420.4 UNISYS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Millions) Year Ended December 31 2013 2012 *Cash flows from operating activitiesConsolidated net income $120.1 $156.8Add (deduct) items to reconcile consolidated net income to net cash provided by operating activities:Foreign currency transaction loss 6.5 -Loss on debt extinguishment - 30.6Employee stock compensation 12.5 14.3Company stock issued for U.S. 401(k) plan - 6.2Depreciation and amortization of properties 46.7 54.7Depreciation and amortization of outsourcing assets 53.5 57.9Amortization of marketable software 59.4 62.0Disposals of capital assets 2.0 6.3Loss (gain) on sale of business 1.5 (11.7)Pension plans contributions (147.2) (201.5)Decrease in deferred income taxes, net 29.4 26.3Increase in receivables, net (63.5) (11.2)(Increase) decrease in inventories (6.5) 14.2Increase (decrease) in accounts payable and other 1.9 (80.7)accrued liabilitiesChange in other assets, liabilities and other 71.1 137.1Net cash provided by operating activities 187.4 261.3 Cash flows from investing activities Proceeds from investments 5,315.9 4,108.5 Purchases of investments (5,325.8) (4,107.2) Restricted deposits (1.3) (0.6) Investment in marketable software (64.3) (56.4) Capital additions of properties (47.2) (40.1) Capital additions of outsourcing assets (39.9) (36.1) Net proceeds from sale of business (0.1) 5.2 Net cash used for investing activities (162.7) (126.7) Cash flows from financing activities Purchases of common stock (11.7) - Payments of long-term debt - (388.9) Dividends paid to noncontrolling interests - (4.5) Dividends paid on preferred shares (16.2) (16.2) Proceeds from exercise of stock options 4.9 0.4 Proceeds from issuance of long-term debt - 204.8Net cash used for financing activities (23.0) (204.4) Effect of exchange rate changes on cash and cash (17.5) 10.5equivalents Decrease in cash and cash equivalents (15.8) (59.3)Cash and cash equivalents, beginning of period 655.6 714.9Cash and cash equivalents, end of period $639.8 $655.6 * Certain components of net cash provided by operating activities werechanged to present pension contributions separately, consistent withthe 2013 presentation. ( 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 2013 2012 2013 2012 GAAP net income attributable to Unisys Corporation common shareholders $117.4 $81.8 $92.3 $129.4 Debt reduction charges, net of tax 0.0 0.0 0.0 30.6FAS87 pension charges, net of tax 23.2 30.4 90.0 105.4 Non-GAAP net income attributable to Unisys Corporation common shareholders 140.6 112.2 182.3 265.4 Add preferred stock dividend 4.1 4.1 16.2 16.2 Non-GAAP net income attributable to Unisys Corporation for diluted earnings per share $144.7 $116.3 $198.5 $281.6 Weighted average shares (thousands) 43,947 43,976 43,899 43,864 Plus incremental shares from assumedconversion: Employee stock plans 460 419 448 439 Preferred stock 6,913 6,913 6,913 6,913 GAAP Adjusted weighted average shares 51,319 51,307 51,260 51,216 Diluted earnings per share GAAP basisGAAP net income attributable to Unisys Corporation for diluted earnings per share $121.5 $85.9 $92.3 $145.6 Divided by adjusted weighted average 51,319 51,307 44,347 51,216shares GAAP net income (loss) per diluted share $ 2.37 $ 1.67 $ 2.08 $ 2.84 Non-GAAP basisNon-GAAP net income attributable to Unisys Corporation for diluted earnings per share $144.7 $116.3 $198.5 $281.6 Divided by Non-GAAP adjusted weighted 51,319 51,307 51,260 51,216average shares Non-GAAP net income per diluted share $ 2.82 $ 2.27 $ 3.87 $ 5.50 ( 2 ) UNISYS CORPORATION RECONCILIATION OF GAAP TO NON-GAAP (Unaudited) (Millions) FREE CASH FLOW Three Months Year Ended December 31 Ended December 31 2013 2012 2013 2012Cash provided by $141.2 $153.9 $187.4 $261.3operationsAdditions to marketable (17.0) (13.5) (64.3) (56.4) softwareAdditions to properties (21.1) (14.1) (47.2) (40.1)Additions to outsourcing (10.3) (8.3) (39.9) (36.1) assetsFree cash flow 92.8 118.0 36.0 128.7Pension funding 45.6 26.4 147.2 201.5Free cash flow before $138.4 $144.4 $183.2 $330.2 pension funding SOURCE Unisys Corporation CONTACT: Investors: Niels Christensen, 215-986-6651,Niels.Christensen@unisys.com; or Media: Jim Kerr, 215-986-5795,Jim.Kerr@unisys.com