Last checked at 28 Jul 2009 12:01
Unisys Corporation (NYSE:UIS) today reported second-quarter 2009 net income of $38.1 million, or 10 cents a share, compared with a net loss of $14.0 million, or 4 cents a share, in the second quarter of 2008. The company's revenue declined 16% to $1.13 billion compared with revenue of $1.34 billion in the year-ago quarter. Foreign exchange rates had an approximately 8 percentage-point negative impact on revenue in the quarter. On a constant currency basis, revenue declined 8 percent in the quarter.
"We made encouraging progress during the quarter on the priorities of our turnaround program," said Unisys Chairman and CEO Ed Coleman. "First and foremost, we were profitable. In the difficult economic environment, we were able to triple our operating profit and deliver net income. This progress was driven by our ongoing actions to concentrate our resources more effectively and reduce our cost base. While we have much more work to do, this is an important first step toward our goal of becoming a consistently and predictably profitable company.
"Also during the quarter we sharpened our value propositions and solution portfolio in our focused market areas," Coleman said. "We announced exciting new solutions for secure cloud computing, outsourcing and ClearPath mainframe technology. These new solutions demonstrate our continued innovation and investment in services and products to help our clients address critical needs within their organizations."
During the quarter the company launched private debt exchange offers designed to strengthen its balance sheet and address $300 million of debt maturing in March 2010. As of yesterday, approximately $230 million of the 2010 notes have been tendered in the exchange, leaving approximately $70 million still outstanding. As previously announced, the exchange offers also involve the company's other outstanding senior notes. The exchange offers expire at midnight tonight.
Overall Second-Quarter Highlights
Revenue in the United States declined 5 percent to $542 million, as growth in the company's U.S. federal government business was offset by declines in its commercial business. Revenue in international markets declined 24 percent to $587 million. On a constant currency basis, international revenue declined 10 percent in the quarter.
Unisys reported an overall gross profit margin of 23.9 percent, up from 22.7 percent in the year-ago quarter. The company's overall operating profit margin increased to 6.7 percent compared with 1.7 percent a year ago, reflecting significant reductions in selling, general and administrative expenses.
Second-Quarter Business Segment Results
Customer revenue in the company's services segment declined 14 percent compared with the year-ago quarter. Foreign exchange rates had an approximately 8 percentage-point negative impact on services revenue in the quarter. Gross profit margin in the services business improved to 21.0 percent compared with 19.2 percent a year ago, while services operating margin improved to 7.9 percent compared with 3.3 percent a year ago, reflecting the benefits of expense reduction actions.
Services orders showed substantial declines from a year ago, but were up sequentially from the first quarter of 2009. Services order backlog at June 30, 2009 was $5.9 billion.
Customer revenue in the company's technology segment declined 31 percent from the second quarter of 2008, reflecting continued weak demand for enterprise server technology in the current economic environment. Foreign exchange rates had an approximately 5 percentage-point negative impact on technology revenue in the quarter. Gross profit margin in the technology business improved to 40.4 percent compared with 39.2 percent in the year-ago quarter, while technology operating margin declined to (5.4) percent compared with (3.7) percent in the second quarter of 2008.
Cash Flow Highlights
Unisys generated $48 million of cash from operations in the quarter compared with $52 million in the year-ago quarter. Capital expenditures in the second quarter of 2009 declined to $53 million compared to $71 million in the year-ago quarter. Unisys closed the quarter with $475 million of cash on hand.
Conference Call
Unisys will hold a conference call today at 8:15 a.m. Eastern Time to discuss its results. The listen-only Webcast, as well as the accompanying presentation materials, can be accessed via a link on the Unisys Investor Web site at www.unisys.com/investor. Following the call, an audio replay of the Webcast, and accompanying presentation materials, can be accessed through the same link.
About Unisys
Unisys is a worldwide information technology company. We provide a portfolio of IT services, software, and technology that solves critical problems for clients. We specialize in helping clients secure their operations, increase the efficiency and utilization of their data centers, enhance support to their end users and constituents, and modernize their enterprise applications. To provide these services and solutions, we bring together offerings and capabilities in outsourcing services, systems integration and consulting services, infrastructure services, maintenance services, and high-end server technology. With more than 26,000 employees, Unisys serves 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 are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, any projections of earnings, revenues, or other financial items; any statements of the company's plans, strategies or objectives for future operations; statements regarding future economic conditions or performance; and any statements of belief or expectation. All forward-looking statements rely on assumptions and are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Risks and uncertainties that could affect the company's future results include the company's ability to refinance its debt; the economic and business environment; the company's ability to access external credit markets; the company's significant pension obligations; the success of the company's turnaround program; aggressive competition in the information services and technology marketplace; volatility and rapid technological change in the company's industry; the company's ability to retain significant clients; the company's ability to grow outsourcing; the company's ability to drive profitable growth in consulting and systems integration; market demand for the company's high-end enterprise servers and maintenance on those servers; the risk that the company's contracts may not be as profitable as expected or provide the expected level of revenues and that contracts with U.S. governmental agencies may be subject to audits, criminal penalties, sanctions and other expenses and fines; the risk that the company may face damage to its reputation or legal liability if its clients are not satisfied with its services or products; the performance and capabilities of third parties with whom the company has commercial relationships; the risks of doing business internationally; the business and financial risk in implementing future dispositions or acquisitions; the potential for infringement claims to be asserted against the company or its clients; the possibility that pending litigation could affect the company's results of operations or cash flow; and the company's consideration of all available information following the end of the quarter and before the filing of the Form 10-Q and the possible impact of this subsequent event information on its financial statements for the reporting period. Additional discussion of factors that could affect the company's future results is contained in its periodic filings with the Securities and Exchange Commission. Unisys assumes no obligation to update any forward-looking statements.
RELEASE NO.: 0728/9007
Unisys is a registered trademark of Unisys Corporation. All other brands and products referenced herein are acknowledged to be trademarks or registered trademarks of their respective holders.
| UNISYS CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Millions, except per share data) | ||||||||||||||||
| Three Months | Six Months | |||||||||||||||
| Ended June 30 | Ended June 30 | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| Revenue | ||||||||||||||||
| Services | $ | 1,030.0 | $ | 1,197.0 | $ | 2,013.8 | $ | 2,334.1 | ||||||||
| Technology | 98.7 | 143.0 | 214.8 | 307.2 | ||||||||||||
| 1,128.7 | 1,340.0 | 2,228.6 | 2,641.3 | |||||||||||||
| Costs and expenses | ||||||||||||||||
| Cost of revenue: | ||||||||||||||||
| Services | 804.5 | 954.4 | 1,609.6 | 1,876.6 | ||||||||||||
| Technology | 54.5 | 81.8 | 126.3 | 167.7 | ||||||||||||
| 859.0 | 1,036.2 | 1,735.9 | 2,044.3 | |||||||||||||
| Selling, general and administrative | 169.2 | 251.0 | 342.8 | 483.5 | ||||||||||||
| Research and development | 25.1 | 30.2 | 52.5 | 62.9 | ||||||||||||
| 1,053.3 | 1,317.4 | 2,131.2 | 2,590.7 | |||||||||||||
| Operating profit | 75.4 | 22.6 | 97.4 | 50.6 | ||||||||||||
| Interest expense | 21.2 | 21.2 | 43.0 | 42.8 | ||||||||||||
| Other income (expense), net | 3.0 | (6.4 | ) | (3.7 | ) | (7.5 | ) | |||||||||
| Income (loss) before Income taxes | 57.2 | (5.0 | ) | 50.7 | 0.3 | |||||||||||
| Provision for income taxes | 16.6 | 3.5 | 32.2 | 27.4 | ||||||||||||
| Consolidated net income (loss) | 40.6 | (8.5 | ) | 18.5 | (27.1 | ) | ||||||||||
| Net income attributable to noncontrolling interests | (2.5 | ) | (5.5 | ) | (4.8 | ) | (10.3 | ) | ||||||||
| Net income (loss) attributable to Unisys Corporation | $ | 38.1 | ($14.0 | ) | $ | 13.7 | ($37.4 | ) | ||||||||
| Earnings (loss) per share attributable to Unisys Corporation | ||||||||||||||||
| Basic | $ | .10 | ($ .04 | ) | $ | .04 | ($ .10 | ) | ||||||||
| Diluted | $ | .10 | ($ .04 | ) | $ | .04 | ($ .10 | ) | ||||||||
| Shares used in the per share computations (thousands): | ||||||||||||||||
| Basic | 370,320 | 358,167 | 370,183 | 356,482 | ||||||||||||
| Diluted | 374,495 | 358,167 | 372,777 | 356,482 | ||||||||||||
| On January 1, 2009, Unisys adopted SFAS 160, which required certain reclassifications of noncontrolling interests to the 2008 income statement. All references to "net income" or "net loss" contained in this press release are intended to refer to the income statement line item titled "Net income (loss) attributable to Unisys Corporation". |
| UNISYS CORPORATION SEGMENT RESULTS (Unaudited) (Millions) | |||||||||||||||||||
|
|
| Elimi- | |||||||||||||||||
| Total | nations | Services | Technology | ||||||||||||||||
| Three Months Ended | |||||||||||||||||||
| June 30, 2009 | |||||||||||||||||||
| Customer revenue | $ | 1,128.7 | $ | 1,030.0 | $ | 98.7 | |||||||||||||
| Intersegment | ($47.3 | ) | 1.6 | 45.7 | |||||||||||||||
| Total revenue | $ | 1,128.7 | ($47.3 | ) | $ | 1,031.6 | $ | 144.4 | |||||||||||
| Gross profit percent | 23.9 | % | 21.0 | % | 40.4 | % | |||||||||||||
| Operating profit (loss) percent | 6.7 | % | 7.9 | % | (5.4 | %) | |||||||||||||
| Three Months Ended | |||||||||||||||||||
| June 30, 2008 | |||||||||||||||||||
| Customer revenue | $ | 1,340.0 | $ | 1,197.0 | $ | 143.0 | |||||||||||||
| Intersegment | ($51.0 | ) | 2.7 | 48.3 | |||||||||||||||
| Total revenue | $ | 1,340.0 | ($51.0 | ) | $ | 1,199.7 | $ | 191.3 | |||||||||||
| Gross profit percent | 22.7 | % | 19.2 | % | 39.2 | % | |||||||||||||
| Operating profit (loss) percent | 1.7 | % | 3.3 | % | (3.7 | %) | |||||||||||||
| Six Months Ended | |||||||||||||||||||
| June 30, 2009 | |||||||||||||||||||
| Customer revenue | $ | 2,228.6 | $ | 2,013.8 | $ | 214.8 | |||||||||||||
| Intersegment | ($85.2 | ) | 3.3 | 81.9 | |||||||||||||||
| Total revenue | $ | 2,228.6 | ($85.2 | ) | $ | 2,017.1 | $ | 296.7 | |||||||||||
| Gross profit percent | 22.1 | % | 18.7 | % | 36.7 | % | |||||||||||||
| Operating profit (loss) percent | 4.4 | % | 5.4 | % | (8.6 | %) | |||||||||||||
| Six Months Ended | |||||||||||||||||||
| June 30, 2008 | |||||||||||||||||||
| Customer revenue | $ | 2,641.3 | $ | 2,334.1 | $ | 307.2 | |||||||||||||
| Intersegment | ($94.7 | ) | 5.4 | 89.3 | |||||||||||||||
| Total revenue | $ | 2,641.3 | ($94.7 | ) | $ | 2,339.5 | $ | 396.5 | |||||||||||
| Gross profit percent | 22.6 | % | 18.8 | % | 41.1 | % | |||||||||||||
| Operating profit (loss) percent | 1.9 | % | 2.8 | % | (1.4 | %) | |||||||||||||
| UNISYS CORPORATION | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (Unaudited) | ||||||||
| (Millions) | ||||||||
| June 30, | December 31, | |||||||
| 2009 | 2008 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 475.0 | $ | 544.0 | ||||
| Accounts and notes receivable, net | 739.9 | 818.5 | ||||||
| Inventories | ||||||||
| Parts and finished equipment | 67.4 | 64.7 | ||||||
| Work in process and materials | 54.6 | 70.7 | ||||||
| Deferred income taxes | 16.8 | 23.8 | ||||||
| Prepaid expense and other current assets | 132.0 | 116.7 | ||||||
| Total | 1,485.7 | 1,638.4 | ||||||
| Properties | 1,402.1 | 1,416.0 | ||||||
| Less accumulated depreciation and amortization | 1,149.6 | 1,139.5 | ||||||
| Properties, net | 252.5 | 276.5 | ||||||
| Outsourcing assets, net | 308.2 | 314.9 | ||||||
| Marketable software, net | 181.8 | 202.0 | ||||||
| Prepaid postretirement assets | 40.5 | 20.7 | ||||||
| Deferred income taxes | 90.8 | 87.6 | ||||||
| Goodwill | 195.5 | 189.4 | ||||||
| Other long-term assets | 171.1 | 94.6 | ||||||
| Total | $ | 2,726.1 | $ | 2,824.1 | ||||
| Liabilities and stockholders' deficit | ||||||||
| Current liabilities | ||||||||
| Current maturities of long-term debt | $ | 301.1 | $ | 1.5 | ||||
| Accounts payable | 310.6 | 379.2 | ||||||
| Other accrued liabilities | 945.4 | 1,045.7 | ||||||
| Total | 1,557.1 | 1,426.4 | ||||||
| Long-term debt | 760.1 | 1,059.1 | ||||||
| Long-term postretirement liabilities | 1,451.1 | 1,497.0 | ||||||
| Other long-term liabilities | 302.2 | 265.4 | ||||||
| Commitments and contingencies | ||||||||
| Total stockholders' deficit | (1,344.4 | ) | (1,423.8 | ) | ||||
| Total | $ | 2,726.1 | $ | 2,824.1 | ||||
| On July 31, 2009, the company expects to complete its previously announced debt exchange. This is expected to result in a reclassification of approximately $200 million from current maturities of long-term debt to long-term debt resulting in current maturities of long-term debt of approximately $100 million, consisting of approximately $70 million of 6 7/8% of notes due March 2010 not tendered plus approximately $30 million of cash consideration to be paid in the quarter ending September 30, 2009 to the holders of the 2010 notes tendered. |
| UNISYS CORPORATION | ||||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||
| (Unaudited) | ||||||
| (Millions) | ||||||
| Six Months Ended | ||||||
| June 30 | ||||||
| 2009 | 2008 | |||||
| Cash flows from operating activities | ||||||
| Consolidated net income (loss) | $18.5 | ($27.1 | ) | |||
| Add (deduct) items to reconcile consolidated net income (loss) to net cash provided by operating activities: | ||||||
| Employee stock compensation expense | 3.8 | 11.9 | ||||
| Company stock issued for U.S. 401(k) plan | - | 23.9 | ||||
| Depreciation and amortization of properties | 48.4 | 53.7 | ||||
| Depreciation and amortization of outsourcing assets | 75.7 | 83.9 | ||||
| Amortization of marketable software | 49.7 | 60.9 | ||||
| Disposals of capital assets | 5.6 | 5.6 | ||||
| Decrease in deferred income taxes, net | 3.9 | - | ||||
| Decrease in receivables, net | 101.7 | 89.4 | ||||
| Decease in inventories | 15.8 | 9.8 | ||||
| Decrease in accounts payable and other accrued liabilities | (206.2 | ) | (207.2 | ) | ||
| Increase (decrease) in other liabilities | 21.8 | (26.9 | ) | |||
| Increase in other assets | (52.0 | ) | (80.8 | ) | ||
| Other | 1.0 | 5.2 | ||||
| Net cash provided by operating activities | 87.7 | 2.3 | ||||
| Cash flows from investing activities | ||||||
| Proceeds from investments | 200.9 | 3,276.9 | ||||
| Purchases of investments | (199.6 | ) | (3,306.5 | ) | ||
| Collateralized letters of credit | (72.3 | ) | - | |||
| Investment in marketable software | (29.5 | ) | (45.4 | ) | ||
| Capital additions of properties | (18.1 | ) | (32.1 | ) | ||
| Capital additions of outsourcing assets | (53.2 | ) | (58.6 | ) | ||
| Purchases of businesses | (1.5 | ) | (1.8 | ) | ||
| Net cash used for investing activities | (173.3 | ) | (167.5 | ) | ||
| Cash flows from financing activities | ||||||
| Payments of long-term debt | - | (200.0 | ) | |||
| Financing fees | (.7 | ) | (.8 | ) | ||
| Net cash used for financing activities | (.7 | ) | (200.8 | ) | ||
| Effect of exchange rate changes on cash and cash equivalents | 17.3 | 7.2 | ||||
| Decrease in cash and cash equivalents | (69.0 | ) | (358.8 | ) | ||
| Cash and cash equivalents, beginning of period | 544.0 | 830.2 | ||||
| Cash and cash equivalents, end of period | $475.0 | $471.4 | ||||
| Unisys Corporation |
| Investor Contact: |
| Jack McHale, 215-986-6050 |
| Jack.McHale@unisys.com |
| or |
| Media Contact: |
| Jim Kerr, 215-986-5795 |
| Jim.Kerr@unisys.com |
Copyright Business Wire 2009