News Release
Investor Contact:
Niels Christensen, 215-986-6651
Niels.Christensen@unisys.com
Media Contact:
Jim Kerr, 215-986-5795
Jim.Kerr@unisys.com
UNISYS ANNOUNCES THIRD-QUARTER 2009 FINANCIAL RESULTS
COMPANY REPORTS $61 MILLION IN NET INCOME AND GENERATES FREE CASH FLOW AS
RESULTS CONTINUED TO BENEFIT FROM TURNAROUND PROGRAM
BLUE BELL, Pa., October 28, 2009 - Unisys Corporation (NYSE: UIS) today
reported third-quarter 2009 net income of $61.1 million, or $1.48 per diluted
share, compared with a net loss of $34.7 million, or a loss of $.96 per diluted
share, in the third quarter of 2008. The earnings per share amounts reflect the
company's previously announced reverse stock split discussed below. The
company's revenue declined 12% to $1.16 billion compared with revenue of $1.31
billion in the year-ago quarter. Foreign exchange rates had an approximately 5
percentage-point negative impact on revenue in the quarter. On a constant
currency basis, revenue declined 7 percent.
"We continue to make progress in our turnaround program," said Unisys Chairman
and CEO Ed Coleman. "For the second consecutive quarter, the company was
solidly profitable at the bottom line. Driven by a more cost-efficient services
business and a strong profit performance in our technology business, we tripled
our operating income over the year-ago quarter and achieved an operating profit
margin of 10.2 percent in the quarter. We also met a key goal of generating
free cash flow in the quarter, and we are now free cash flow positive for the
first nine months of 2009.
"I'm pleased by the improvement we're seeing, particularly given the difficult
economic environment in which we've been operating this year," Coleman said.
"While we have a great deal of work to do, these are positive signs that our
turnaround is working."
Coleman also cited progress in strengthening the company's balance sheet.
During the quarter Unisys successfully completed private offers to exchange
unsecured senior notes for secured senior notes, cash and Unisys common stock.
As a result of the exchange, the company reduced its long-term debt and cut its
2010 debt maturities to $66 million.
OVERALL THIRD-QUARTER HIGHLIGHTS
Revenue in the United States declined 3 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 18 percent to
$618 million. On a constant currency basis, international revenue declined 11
percent in the quarter.
Unisys third-quarter gross profit margin improved to 26.4 percent from 22.2
percent a year ago as the company benefited from improved cost efficiencies in
services delivery and a stronger mix of high-end enterprise servers. Reflecting
these factors as well as significant reductions in selling, general, and
administrative expenses, the company's operating profit margin increased to
10.2 percent compared with 2.9 percent a year ago.
THIRD-QUARTER BUSINESS SEGMENT RESULTS
Customer revenue in the company's services segment declined 13 percent (8
percent on a constant currency basis) compared with the year-ago quarter. Gross
profit margin in the services business improved to 19.7 percent compared with
17.6 percent a year ago, while services operating margin improved to 7.7
percent compared with 3.1 percent a year ago.
Services orders showed substantial gains from a year ago, driven primarily by
outsourcing contract renewals. Services order backlog at September 30, 2009 was
$6.4 billion.
Customer revenue in the company's technology segment declined 4 percent (3
percent in constant currency) from the third quarter of 2008. Gross profit
margin in the technology business increased to 55.2 percent compared with 47.5
percent in the year-ago quarter, while technology operating margin increased to
21.2 percent compared with 11.0 percent in the third quarter of 2008.
CASH FLOW AND BALANCE SHEET HIGHLIGHTS
Unisys generated $94 million of cash from operations in the quarter compared
with $114 million in the year-ago quarter, which benefited from a significant
sequential improvement in days of sales outstanding (DSO). The company has
continued to maintain the improved levels of DSO. Capital expenditures in the
third quarter of 2009 declined to $48 million compared to $78 million in the
year-ago quarter as the company continued to tightly focus its investments.
After capital expenditures, the company generated $46 million of free cash flow
in the quarter. At September 30, 2009, Unisys reported $474 million of cash on
hand.
On July 31, 2009, the company completed its private debt exchange offers for
the exchange of an aggregate $760.4 million of unsecured senior notes for an
aggregate $631.6 million of secured senior notes along with $30 million of cash
and 5.2 million shares of Unisys common stock (adjusted for the reverse stock
split). The exchange offers reduced the company's overall long-term debt at
September 30, 2009 to $911 million and increased shares outstanding to 42.3
million shares (adjusted for the reverse stock split).
Subsequent to September 30, the Unisys Board of Directors approved a reverse
stock split of the company's common stock at a ratio of one for ten. The
reverse stock split, which was authorized by the company's shareholders at the
company's annual meeting in May, became effective after the close of the market
on October 23, 2009. The financial statements reflect the impact of the reverse
stock split applied on a retroactive basis.
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.: 1028/9028
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 Nine Months
Ended September 30 Ended September 30
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Revenue
Services $1,006.0 $1,152.1 $3,019.8 $3,486.2
Technology 153.6 160.3 368.4 467.5
-------- -------- -------- --------
1,159.6 1,312.4 3,388.2 3,953.7
Costs and expenses
Cost of revenue:
Services 793.1 937.6 2,402.7 2,814.2
Technology 60.7 82.8 187.0 250.5
-------- -------- -------- --------
853.8 1,020.4 2,589.7 3,064.7
Selling, general and
administrative 163.5 218.4 506.3 701.9
Research and development 24.3 35.7 76.8 98.6
-------- -------- -------- --------
1,041.6 1,274.5 3,172.8 3,865.2
-------- -------- -------- --------
Operating profit 118.0 37.9 215.4 88.5
Interest expense 25.4 21.5 68.4 64.3
Other income (expense), net (3.3) (0.9) (7.0) (8.4)
-------- -------- -------- --------
Income before income taxes 89.3 15.5 140.0 15.8
Provision for income taxes 26.2 45.1 58.4 72.5
-------- -------- -------- --------
Consolidated net
income (loss) 63.1 (29.6) 81.6 (56.7)
Net income attributable to
noncontrolling interests (2.0) (5.1) (6.8) (15.4)
-------- -------- -------- --------
Net income (loss) attributable to
Unisys Corporation $61.1 ($34.7) $74.8 ($72.1)
======== ======== ======== ========
Earnings (loss) per share attributable
to Unisys Corporation
Basic $ 1.51 ($ .96) $ 1.96 ($ 2.01)
======== ======== ======== ========
Diluted $ 1.48 ($ .96) $ 1.93 ($ 2.01)
======== ======== ======== ========
Shares used in the per share
computations (thousands):
Basic 40,569 36,094 38,215 35,797
======== ======== ======== ========
Diluted 41,403 36,094 38,666 35,797
======== ======== ======== ========
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".
The financial statements reflect the impact of the one-for-ten reverse stock
split which became effective on October 23, 2009 on a retroactive basis.
UNISYS CORPORATION
SEGMENT RESULTS
(Unaudited)
(Millions)
Elimi-
Total nations Services Technology
-------- -------- -------- ----------
Three Months Ended
September 30, 2009
- ------------------
Customer revenue $1,159.6 $1,006.0 $153.6
Intersegment ($33.2) 1.7 31.5
-------- -------- -------- --------
Total revenue $1,159.6 ($33.2) $1,007.7 $185.1
======== ======== ======== ========
Gross profit percent 26.4% 19.7% 55.2%
======== ======== ========
Operating profit
percent 10.2% 7.7% 21.2%
======== ======== ========
Three Months Ended
September 30, 2008
- ------------------
Customer revenue $1,312.4 $1,152.1 $160.3
Intersegment ($67.5) 4.0 63.5
-------- -------- -------- --------
Total revenue $1,312.4 ($67.5) $1,156.1 $223.8
======== ======== ======== ========
Gross profit percent 22.2% 17.6% 47.5%
======== ======== ========
Operating profit
percent 2.9% 3.1% 11.0%
======== ======== ========
Nine Months Ended
September 30, 2009
- ------------------
Customer revenue $3,388.2 $3,019.8 $368.4
Intersegment ($118.4) 5.0 113.4
-------- -------- -------- --------
Total revenue $3,388.2 ($118.4) $3,024.8 $481.8
======== ======== ======== ========
Gross profit percent 23.6% 19.0% 43.8%
======== ======== ========
Operating profit
percent 6.4% 6.1% 2.8%
======== ======== ========
Nine Months Ended
September 30, 2008
- ------------------
Customer revenue $3,953.7 $3,486.2 $467.5
Intersegment ($162.2) 9.4 152.8
-------- -------- -------- --------
Total revenue $3,953.7 ($162.2) $3,495.6 $620.3
======== ======== ======== ========
Gross profit percent 22.5% 18.4% 43.4%
======== ======== ========
Operating profit
percent 2.2% 2.9% 3.1%
======== ======== ========
UNISYS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Millions)
September 30, December 31,
2009 2008
---------- ----------
Assets
Current assets
Cash and cash equivalents $473.6 $544.0
Accounts and notes receivable, net 764.0 818.5
Inventories
Parts and finished equipment 65.1 64.7
Work in process and materials 59.7 70.7
Deferred income taxes 17.7 23.8
Prepaid expense and other
current assets 112.4 116.7
---------- ----------
Total 1,492.5 1,638.4
---------- ----------
Properties 1,438.5 1,416.0
Less accumulated depreciation
and amortization 1,192.4 1,139.5
---------- ----------
Properties, net 246.1 276.5
---------- ----------
Outsourcing assets, net 292.0 314.9
Marketable software, net 175.3 202.0
Prepaid postretirement assets 55.6 20.7
Deferred income taxes 89.5 87.6
Goodwill 198.2 189.4
Other long-term assets 191.9 94.6
---------- ----------
Total $2,741.1 $2,824.1
========== ==========
Liabilities and stockholders' deficit
Current liabilities
Current maturities of long-term debt $66.0 $1.5
Accounts payable 287.3 379.2
Other accrued liabilities 952.4 1,045.7
---------- ----------
Total 1,305.7 1,426.4
---------- ----------
Long-term debt 845.0 1,059.1
Long-term postretirement liabilities 1,410.5 1,497.0
Other long-term liabilities 325.4 265.4
Commitments and contingencies
Total stockholders' deficit (1,145.5) (1,423.8)
---------- ----------
Total $2,741.1 $2,824.1
========== ==========
UNISYS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Millions)
Nine Months Ended
September 30
--------------------
2009 2008
-------- --------
Cash flows from operating activities
Consolidated net income (loss) $81.6 ($56.7)
Add (deduct) items to reconcile
consolidated net income (loss) to net
cash provided by operating activities:
Employee stock compensation expense (.3) (.2)
Company stock issued for U.S. 401(k) plan - 34.2
Depreciation and amortization
of properties 71.7 80.4
Depreciation and amortization of
outsourcing assets 113.9 126.0
Amortization of marketable software 70.3 90.0
Disposals of capital assets 5.7 8.6
Loss on sale of assets 4.7
Decrease in deferred income
taxes, net 16.7 -
Decrease in receivables, net 96.4 175.9
Decease in inventories 15.4 16.7
Decrease in accounts payable
and other accrued liabilities (248.8) (215.9)
Increase (decrease) in other liabilities 6.0 (43.3)
Increase in other assets (52.0) (108.7)
Other .5 9.4
------- -------
Net cash provided by
operating activities 181.8 116.4
------- -------
Cash flows from investing activities
Proceeds from investments 296.8 4,838.1
Purchases of investments (294.9) (4,847.9)
Collateralized letters of credit (82.5) -
Investment in marketable software (43.7) (65.9)
Capital additions of properties (32.1) (51.8)
Capital additions of outsourcing assets (73.4) (96.6)
Purchases of businesses (1.9) (2.3)
------- -------
Net cash used for investing activities (231.7) (226.4)
------- -------
Cash flows from financing activities
Net reduction in short-term borrowings - (.1)
Payments of long-term debt (30.0) (200.0)
Financing fees (15.4) (.8)
------- -------
Net cash used for financing
activities (45.4) (200.9)
------- -------
Effect of exchange rate changes on cash
and cash equivalents 24.9 (25.5)
------- -------
Decrease in cash and cash equivalents (70.4) (336.4)
Cash and cash equivalents, beginning of
period 544.0 830.2
------- -------
Cash and cash equivalents, end of period $473.6 $493.8
======= =======