Unisys Com Stk Regulatory News (USY)

Unisys Announces Second-Quarter 2014 Financial Results BLUE BELL, Pa., July 22, 2014 -- Unisys Corporation (NYSE: UIS)today reported a second-quarter 2014 net loss of $12.1 million, or a loss of 24cents per diluted share, which included $17.9 million of pension expense. Inthe second quarter of 2013, the company reported net income of $20.4 million,or 46 cents per diluted share, which included $21.9 million of pension expense.Excluding pension expense in both periods, non-GAAP earnings per diluted share(1) in the second quarter of 2014 was 11 cents compared with 91 cents in thesecond quarter of 2013. Second-quarter 2014 revenue declined 6 percent to $806 million from $859million in the year-ago quarter. Foreign currency translations had a onepercentage-point positive impact on year-over-year revenue comparisons in thequarter. On a sequential basis, second-quarter 2014 revenue was up 6 percentfrom $762 million in the first quarter of 2014. "Our second-quarter 2014 results were impacted by lower sales of our flagshipClearPath family of enterprise software and servers, which can varysignificantly from quarter to quarter based on the timing of clienttransactions," said Unisys Chairman and CEO Ed Coleman. "However, we werepleased to see sequential improvement in results over the first quarter of 2014and we look for a strong second half of 2014 in our technology business drivenby sales of ClearPath as well as increased traction in our Stealthcybersecurity and Forward! server products. "In our services business, we saw strong order growth in the quarter and werepleased by recent wins such as a significant contract with the Commonwealth ofPennsylvania to deliver one of the largest secure, cloud-based, on-demand ITcomputing implementations by a U.S. state government," Coleman said. "Thiscontract is one more example of Unisys providing innovative, modernmission-critical solutions in the marketplace." Second-Quarter Company and Business Segment HighlightsSecond-quarter 2014 North America revenue declined 10 percent whileinternational revenue declined 3 percent from the second quarter of 2013. On aconstant currency(2) basis, international revenue declined 4 percent comparedwith the second quarter of 2013 as declines in Asia-Pacific offset growth inEurope and Latin America. On lower revenue, second-quarter 2014 gross profit margin declined to 20.5percent from 23.4 percent in the second quarter of 2013. Operating expenses (SG&A and R&D expenses) decreased 8 percent from the year-ago period. The companyreported a second-quarter 2014 operating profit of $15.8 million, or 2.0percent of revenue, compared with an operating profit of $38.0 million, or 4.4percent of revenue, in the second quarter of 2013. Second-quarter 2014 services revenue declined 4 percent from the second quarterof 2013 as growth in outsourcing and core maintenance was more than offset bydeclines in systems integration and infrastructure services. Reflecting thelower services revenue, second-quarter 2014 services gross profit margindeclined to 16.8 percent from 18.2 percent a year ago. On reduced operatingexpenses, services operating profit margin was consistent year-over-year at 4.0percent. Second-quarter 2014 services orders showed substantial gains both sequentiallyand from year-ago levels driven by growth in outsourcing orders. Servicesbacklog at June 30, 2014 was $4.7 billion, down 2 percent from December 31,2013 levels. Second-quarter 2014 technology revenue declined 21 percent from the secondquarter of 2013 driven primarily by lower sales of ClearPath enterprise serversand software. Reflecting the lower ClearPath sales, second-quarter 2014technology gross profit margin declined to 50.2 percent compared with 59.4percent in the year-ago quarter and technology operating profit margin declinedto 1.9 percent compared with 23.9 percent in the year-ago quarter. Cash Flow and Balance Sheet HighlightsUnisys generated $3 million of cash from operations in the second quarter of2014, including $48 million of pension contributions. In the second quarter of2013, the company generated $16 million of cash from operations, which included$35 million of pension contributions. Capital expenditures in the secondquarter of 2014 were $45 million compared with $38 million in the year-agoquarter. After capital expenditures, the company used $42 million of free cash(3) compared with $22 million of free cash usage in the second quarter of 2013.Free cash flow before pension contributions was $6 million in the secondquarter of 2014 compared with $13 million in the year-ago quarter. During the second quarter of 2014 the company returned $13.1 million toshareholders through the repurchase of common shares. Overall, through June 30,2014 the company has repurchased a total of $25.7 million of common sharesunder a $50 million share repurchase authorization that expires on December 31,2014. At June 30, 2014, the company reported a cash balance of $574 million and totaldebt 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 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 earnings per diluted share, free cash flow, freecash flow before pension contributions, 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 readonly in conjunction with our consolidated financial statements prepared inaccordance with GAAP. (See GAAP to non-GAAP reconciliations attached.) (1) Non-GAAP earnings per diluted share - The company recorded pension expenseof $17.9 million and $21.9 million during the second 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-GAAPearnings per diluted share calculations. (2) 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. (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 CallUnisys 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 UnisysUnisys 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 StatementsAny 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.: 0722/9267 Unisys is a registered trademark of Unisys Corporation. Any other brand orproduct referenced herein is acknowledged to be a trademark or registeredtrademark of its respective holders. UNISYS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Millions, except per share data) Three Months Six Months Ended June 30 Ended June 30 2014 2013 2014 2013Revenue Services $712.9 $739.7 $1,403.8 $1,462.7 Technology 93.5 118.9 164.3 205.8 806.4 858.6 1,568.1 1,668.5 Costs and expenses Cost of revenue: Services 600.2 614.0 1,192.4 1,216.8 Technology 41.0 43.9 77.5 90.2 641.2 657.9 1,269.9 1,307.0Selling, general and administrative 133.6 144.9 272.1 287.1Research and development 15.8 17.8 30.2 34.8 790.6 820.6 1,572.2 1,628.9Operating profit (loss) 15.8 38.0 (4.1) 39.6 Interest expense 2.3 2.6 4.3 5.3Other income (expense), net (2.5) 14.1 (12.3) 9.2Income (loss) before income taxes 11.0 49.5 (20.7) 43.5 Provision for income taxes 19.9 22.7 35.9 44.1Consolidated net income (loss) (8.9) 26.8 (56.6) (0.6)Net income attributable to noncontrolling interests 3.2 2.3 6.3 4.8Net Income (loss) attributable toUnisys Corporation (12.1) 24.5 (62.9) (5.4) Preferred stock dividend - 4.1 2.7 8.1Net income (loss) attributable toUnisys Corporation common shareholders ($12.1) $20.4 ($65.6) ($13.5) Earnings (loss) per common share attributable to Unisys Corporation Basic ($ .24) $ .47 ($ 1.35) ($ .31) Diluted ($ .24) $ .46 ($ 1.35) ($ .31) Shares used in the per share computations(thousands): Basic 50,843 43,780 48,593 43,918 Diluted 50,843 44,195 48,593 43,918 UNISYS CORPORATION SEGMENT RESULTS (Unaudited) (Millions) Total Eliminations Services TechnologyThree Months EndedJune 30, 2014Customer revenue $806.4 $712.9 $93.5Intersegment ($13.8) 0.1 13.7Total revenue $806.4 ($13.8) $713.0 $107.2 Gross profit percent 20.5% 16.8% 50.2%Operating profit percent 2.0% 4.0% 1.9% Three Months EndedJune 30, 2013Customer revenue $858.6 $739.7 $118.9Intersegment ($16.9) 0.4 16.5Total 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% Six Months EndedJune 30, 2014 Customer revenue $1,568.1 $1,403.8 $164.3Intersegment ($23.4) 0.3 23.1Total revenue $1,568.1 ($23.4) $1,404.1 $187.4 Gross profit percent 19.0% 16.3% 46.9%Operating profit (loss) percent (0.3%) 3.0% (8.0%) Six Months EndedJune 30, 2013Customer revenue $1,668.5 $1,462.7 $205.8Intersegment ($34.2) 0.9 33.3Total 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% UNISYS CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) (Millions) June 30, December 31, 2014 2013AssetsCurrent assetsCash and cash equivalents $574.2 $639.8Accounts and notes receivable, net 515.7 683.1Inventories Parts and finished equipment 27.2 32.8 Work in process and materials 22.5 22.3Deferred income taxes 17.8 24.1Prepaid expense and other current assets 144.3 138.7Total 1,301.7 1,540.8 Properties 1,136.5 1,095.5Less accumulated depreciation and amortization 956.9 920.8Properties, net 179.6 174.7Outsourcing assets, net 107.2 115.5Marketable software, net 142.3 129.1Prepaid postretirement assets 120.5 83.7Deferred income taxes 121.6 112.3Goodwill 190.1 188.7Other long-term assets 173.1 165.2Total $2,336.1 $2,510.0 Liabilities and deficitCurrent liabilitiesNotes payable $0.1 $0.0Accounts payable 223.1 246.7Deferred revenue 351.9 402.4Other accrued liabilities 356.9 375.7Total 932.0 1,024.8 Long-term debt 210.0 210.0Long-term postretirement liabilities 1,599.6 1,697.2Long-term deferred revenue 114.1 122.7Other long-term liabilities 108.9 119.2Commitments and contingencies Total deficit (628.5) (663.9)Total $2,336.1 $2,510.0 UNISYS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Millions) Six Months Ended June 30 2014 2013 * Cash flows from operating activitiesConsolidated net loss ($56.6) ($0.6)Add (deduct) items to reconcile consolidated net loss to net cash provided by operating activities:Foreign currency transaction loss 6.3 6.5Employee stock compensation 9.3 8.9Depreciation and amortization of properties 25.0 23.7Depreciation and amortization of outsourcing assets 29.1 25.5Amortization of marketable software 27.0 31.0Disposals of capital assets 0.4 0.2Gain on sale of business (0.7) -Pension contributions (103.1) (61.3)Pension expense 37.4 46.0Decrease in deferred income taxes, net 10.5 18.7Decrease in receivables, net 170.6 33.3Decrease in inventories 5.8 1.0Decrease in accounts payable and other accrued (111.9) (83.5)liabilitiesDecrease in other liabilities (28.6) (11.0)Decrease (increase) in other assets 2.1 (8.7)Other 0.8 0.5Net cash provided by operating activities 23.4 30.2 Cash flows from investing activities Proceeds from investments 2,909.1 2,450.2 Purchases of investments (2,899.0) (2,452.9) Investment in marketable software (40.3) (29.6) Capital additions of properties (29.0) (16.2) Capital additions of outsourcing assets (20.1) (18.3) Other 1.6 (0.6)Net cash used for investing activities (77.7) (67.4) Cash flows from financing activities Purchases of common stock (14.0) (11.5) Dividends paid on preferred shares (4.0) (8.1) Proceeds from exercise of stock options 2.8 1.2 Net proceeds from short-term borrowings 0.1 0.2Net cash used for financing activities (15.1) (18.2) Effect of exchange rate changes on cash and cash 3.8 24.6)equivalents Decrease in cash and cash equivalents (65.6) (80.0)Cash and cash equivalents, beginning of period 639.8 655.6Cash and cash equivalents, end of period $574.2 $575.6 * 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 Six Months Ended June 30 Ended June 30 2014 2013 2014 2013GAAP net income (loss) attributable to Unisys Corporation common shareholders ($12.1) $20.4 ($65.6) ($13.5) Pension expense, net of tax 17.9 21.9 37.2 44.2 Non-GAAP net income (loss) attributable to Unisys Corporation common shareholders 5.8 42.3 (28.4) 30.7 Add preferred stock dividend 0.0 4.1 0.0 8.1 Non-GAAP net income (loss) attributable to Unisys Corporation for diluted earnings per share $5.8 $46.4 ($28.4) $38.8 Weighted average shares (thousands) 50,843 43,780 48,593 43,918 Plus incremental shares from assumedconversion: Employee stock plans 260 415 0 449 Preferred stock 0 6,913 0 0 GAAP adjusted weighted average shares 51,103 51,108 48,593 44,367 Diluted earnings (loss) per share GAAP basisGAAP net income (loss) attributable to Unisys Corporation for diluted earnings per share ($12.1) $20.4 ($65.6) ($13.5) Divided by adjusted weighted average 50,843 44,195 48,593 43,918shares GAAP earnings (loss) per diluted share ($ .24) $ .46 ($ 1.35) ($ .31) Non-GAAP basisNon-GAAP net income (loss) attributable to Unisys Corporation for diluted earnings per share $5.8 $46.4 ($28.4) $30.7 Divided by Non-GAAP adjusted weighted 51,103 51,108 48,593 44,367average shares Non-GAAP earnings (loss) per diluted $ .11 $ .91 ($ .58) $ .69share ( 2 ) UNISYS CORPORATION RECONCILIATION OF GAAP TO NON-GAAP (Unaudited) (Millions) FREE CASH FLOW Three Months Six Months Ended June 30 Ended June 30 2014 2013 2014 2013 Cash provided by operations $3.3 $16.1 $23.4 $30.2Additions to marketable software (19.6) (14.8) (40.3) (29.6)Additions to properties (13.8) (12.6) (29.0) (16.2)Additions to outsourcing assets (11.4) (10.8) (20.1) (18.3)Free cash flow (41.5) (22.1) (66.0) (33.9)Pension funding 47.6 34.7 103.1 61.3Free cash flow before pension funding $6.1 $12.6 $37.1 $27.4 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