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 FIRST-QUARTER 2011 FINANCIAL RESULTS
* CONTINUED STRENGTHENING OF BALANCE SHEET; $211 MILLION DEBT REDUCTION IN 1Q;
ADDITIONAL $179 MILLION DEBT REDUCTION IN APRIL
* PRE-TAX LOSS OF $7.8 MILLION INCLUDES PREVIOUSLY ANNOUNCED $31.8 MILLION
CHARGE RELATED TO 1Q DEBT REDUCTION
* 1Q RESULTS IMPACTED BY $50 MILLION REVENUE DECLINE IN U.S. FEDERAL BUSINESS
BLUE BELL, Pa., April 25, 2011 - Unisys Corporation (NYSE: UIS) today reported
a first-quarter 2011 net loss of $39.4 million, or a loss of 95 cents per
diluted share, which included a previously announced charge of $31.8 million
related to debt reduction. In the first quarter of 2010, the company reported a
net loss of $11.6 million, or a loss of 27 cents per diluted share.
Revenue in the first quarter declined 7 percent to $911 million compared with
$977 million in the year-ago quarter. The decline was primarily attributable to
a $50 million reduction in revenue from the U.S. Federal government resulting
from the ending of the Transportation Security Administration contract as well
as constrained agency spending related to the U.S. government budget
uncertainty. Foreign currency fluctuations had a two percentage-point positive
impact on revenue in the quarter.
"Our first-quarter results were negatively impacted by greater than anticipated
softness in our U.S. Federal business associated with the budget impasse in
Washington," said Unisys Chairman and CEO Ed Coleman. "Outside of our Federal
business, IT outsourcing revenue grew 9 percent, marking the fifth consecutive
quarter of year-over-year growth. Sales of our ClearPath systems again grew
following full-year growth in 2010. In addition, we significantly strengthened
our balance sheet over the last 60 days by reducing our debt by $390 million and
cutting our annual interest expense in half.
"Going forward, we are confident in our strategy and are focused on achieving
our three-year financial goals," Coleman said. "We believe that as a result of
the work we've done in recent years to refocus our business model and reduce
our costs, Unisys today has the skills, portfolio, and cost structure needed to
compete successfully and help clients address, and take advantage of, the
disruptive technology trends that are reshaping the IT market."
COMPANY HIGHLIGHTS
The company's profit margins in the first quarter of 2011 were impacted by the
lower revenue in the U.S. Federal business and a $9 million year-over-year
increase in pension expense. First-quarter 2011 gross profit margin was 22.8
percent, down from 24.1 percent a year ago. Operating expenses (selling,
general and administrative expenses plus research and development) declined 6
percent from the year-ago quarter. First-quarter 2011 operating profit was
$41.9 million, or 4.6 percent of revenue, compared to $58.5 million, or 6.0
percent of revenue, in the first-quarter 2010.
The company reported a first-quarter 2011 pre-tax loss from continuing
operations of $7.8 million compared with a pre-tax loss of $4.9 million in the
year-ago quarter. The current quarter included a $31.8 million charge related
to debt reduction, and the prior-year quarter included $35.4 million of foreign
exchange losses. Due to the company's tax valuation allowances, neither of
these charges had a significant tax benefit associated with them.
The company reported a first-quarter 2011 net loss from continuing operations
of $36.0 million compared with a net loss of $16.1 million in the prior-year
quarter. The provision for taxes in the first quarter of 2011 increased by $17
million compared with the year-ago quarter, reflecting a different geographic
mix of business.
BUSINESS SEGMENT HIGHLIGHTS
First-quarter 2011 services revenue declined 6 percent from the prior-year
quarter. Services revenue outside of the U.S. Federal business was essentially
flat with the first quarter of 2010. Reflecting the impact of lower revenue in
the U.S. Federal business, the company reported a first-quarter 2011 services
gross profit margin of 18.0 percent compared with 18.4 percent a year ago while
services operating profit margin declined to 4.0 percent compared with 4.7
percent a year ago.
Services backlog at March 31, 2011 of $5.8 billion increased 2 percent from the
first quarter of 2010 and was flat with services backlog at December 31, 2010.
First-quarter services orders showed double-digit declines in the quarter
primarily reflecting significant order declines in the U.S. Federal business.
First-quarter 2011 technology revenue declined 13 percent from the prior-year
quarter, as growth in ClearPath revenue was more than offset by declines in
other technology revenue. The company reported a technology gross profit margin
of 51.1 percent compared with 52.0 percent in the year-ago quarter. Technology
operating profit margin declined to 10.9 percent compared with 13.3 percent in
the year-ago quarter.
CASH FLOW AND BALANCE SHEET HIGHLIGHTS
Unisys generated $28 million of cash from operations in the first quarter of
2011. This compared with operating cash usage of $28 million in the first
quarter of 2010, which included a $100 million reduction in receivables sold
through the company's U.S. accounts receivable securitization facility.
Capital expenditures in the first quarter of 2011 declined to $43 million
compared with $69 million in the year-ago quarter. The company used $15 million
of free cash (cash provided by operations less capital expenditures) in the
first quarter of 2011. This compared with free cash usage of $97 million in the
year-ago quarter, which included the $100 million impact of reduction in
securitized receivables.
At March 31, 2011, Unisys reported total debt of $619 million and a cash
balance of $833 million.
As previously announced, during the first quarter Unisys issued 2,587,500
shares of mandatory convertible preferred stock at an initial liquidation
preference of $100 per share. The company used the net proceeds to redeem
principal amounts of $124.7 million of its 12 3/4% Senior Secured Notes due
2014 and $86.3 million of its 14 1/4% Senior Secured Notes due 2015.
Also as previously announced, on April 11, Unisys successfully completed a cash
tender offer for principal amounts of $134.8 million of its 14 1/4% Senior
Secured Notes due 2015 and $44.1 million of its 12 3/4% Senior Secured Notes due
2014.
CONFERENCE CALL
Unisys will hold a conference call today at 5:30 p.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 approximately 23,000 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
drive profitable growth in consulting and systems integration; the company's
ability to take on, successfully implement and grow outsourcing operations;
market demand for the company's high-end enterprise servers and maintenance on
those servers; the potential adverse effects of aggressive competition in the
information services and technology marketplace; the company's ability to
retain significant clients; the company's ability to effectively anticipate and
respond to volatility and rapid technological change in its industry; the
adverse effects of global economic conditions; the company's significant
pension obligations and potential requirements to make significant cash
contributions to its defined benefit pension plans; the success of the
company's program to reduce costs, focus its global resources and simplify its
business structure; 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 subject it 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 when more than half of the company's revenue is
derived from international operations; the company's ability to access capital
and credit markets to address its liquidity needs; 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; the business and financial risk in implementing future
dispositions or acquisitions; the company's ability to use its U.S. federal net
operating loss carryforwards and other tax attributes; 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. The company assumes no obligation to update any forward-looking
statements.
####
RELEASE NO.: 0425/9034
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
Ended March 31
-------------------
2011 2010*
Revenue -------- --------
Services $800.3 $850.5
Technology 110.9 126.9
-------- --------
911.2 977.4
Costs and expenses
Cost of revenue:
Services 654.5 687.6
Technology 48.5 54.6
-------- --------
703.0 742.2
Selling, general
and administrative 146.0 155.9
Research and development 20.3 20.8
-------- --------
869.3 918.9
-------- --------
Operating profit 41.9 58.5
Interest expense 25.9 26.5
Other income (expense), net (23.8) (36.9)
-------- --------
Loss from continuing operations
before income taxes (7.8) (4.9)
Provision for income taxes 28.2 11.2
-------- --------
Consolidated net loss
from continuing operations (36.0) (16.1)
Net income attributable to
noncontrolling interests (3.4) (1.2)
-------- --------
Net loss from continuing operations
attributable to Unisys Corporation (39.4) (17.3)
Income from discontinued
operations, net of taxes - 5.7
-------- --------
Net loss attributable to
Unisys Corporation (39.4) (11.6)
Dividends on preferred shares 1.4 -
-------- --------
Net loss attributable to Unisys
Corporation common shares ($40.8) ($11.6)
======== ========
Earnings (loss) per common share
attributable to Unisys Corporation
Basic
Continuing operations ($ .95) ($ .40)
Discontinued operations .00 .13
-------- --------
Total ($ .95) ($ .27)
======== ========
Diluted
Continuing operations ($ .95) ($ .40)
Discontinued operations .00 .13
-------- --------
Total ($ .95) ($ .27)
======== ========
Shares used in the per share
computations (thousands):
Basic 42,836 42,398
Diluted 42,836 42,398
* Reclassified for discontinued operations
UNISYS CORPORATION
SEGMENT RESULTS
(Unaudited)
(Millions)
Elimi-
Total nations Services Technology
-------- -------- -------- ----------
Three Months Ended
March 31, 2011
------------------
Customer revenue $911.2 $800.3 $110.9
Intersegment ($21.6) 0.9 20.7
-------- -------- -------- --------
Total revenue $911.2 ($21.6) $801.2 $131.6
======== ======== ======== ========
Gross profit percent 22.8% 18.0% 51.1%
======== ======== ========
Operating profit
percent 4.6% 4.0% 10.9%
======== ======== ========
Three Months Ended
March 31, 2010*
------------------
Customer revenue $977.4 $850.5 $126.9
Intersegment ($23.1) 0.9 22.2
-------- -------- -------- --------
Total revenue $977.4 ($23.1) $851.4 $149.1
======== ======== ======== ========
Gross profit percent 24.1% 18.4% 52.0%
======== ======== ========
Operating profit
percent 6.0% 4.7% 13.3%
======== ======== ========
* Reclassified for discontinued operations
UNISYS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Millions)
March 31, December 31,
2011 2010
---------- ----------
Assets
Current assets
Cash and cash equivalents $833.1 $828.3
Accounts and notes receivable, net 732.8 789.7
Inventories
Parts and finished equipment 42.4 44.8
Work in process and materials 39.1 44.1
Deferred income taxes 33.2 40.7
Prepaid expense and other
current assets 125.7 127.8
---------- ----------
Total 1,806.3 1,875.4
---------- ----------
Properties 1,363.9 1,339.0
Less accumulated depreciation
and amortization 1,144.4 1,119.3
---------- ----------
Properties, net 219.5 219.7
---------- ----------
Outsourcing assets, net 163.2 162.3
Marketable software, net 137.8 143.8
Prepaid postretirement assets 35.0 31.2
Deferred income taxes 174.6 179.6
Goodwill 199.3 197.9
Other long-term assets 213.6 211.0
---------- ----------
Total $2,949.3 $3,020.9
========== ==========
Liabilities and stockholders' deficit
Current liabilities
Current maturities of long-term debt $0.8 $0.8
Accounts payable 273.4 260.7
Deferred revenue 537.6 556.3
Other accrued liabilities 446.9 518.9
---------- ----------
Total 1,258.7 1,336.7
---------- ----------
Long-term debt 618.5 823.2
Long-term postretirement liabilities 1,482.2 1,509.2
Long-term deferred revenue 157.5 149.4
Other long-term liabilities 124.5 136.2
Commitments and contingencies
Total stockholders' deficit (692.1) (933.8)
---------- ----------
Total $2,949.3 $3,020.9
========== ==========
UNISYS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Millions)
Three Months Ended
March 31
-------------------
2011 2010
Cash flows from operating activities -------- --------
Consolidated net loss from
continuing operations ($36.0) ($16.1)
Income from discontinued operations,
net of taxes - 5.7
Add (deduct) items to reconcile
consolidated net loss to net cash
provided by (used for) operating activities:
Foreign currency transaction loss - 19.9
Loss on debt extinguishment 31.8 -
Employee stock compensation 6.3 4.9
Company stock issued for U.S. 401(k) plan 3.6 -
Depreciation and amortization of properties 17.1 20.5
Depreciation and amortization of
outsourcing assets 18.7 30.2
Amortization of marketable software 17.4 16.2
Disposals of capital assets .4 2.7
Loss on sale of businesses and assets .3 2.8
Decrease in deferred income taxes, net 12.3 1.2
Decrease in receivables, net 74.1 21.3
Decrease (increase) in inventories 8.7 (3.6)
Decrease in accounts payable
and other accrued liabilities (110.3) (85.8)
Decrease in other liabilities (6.2) (24.7)
Increase in other assets (8.8) (24.5)
Other (1.0) .9
------- -------
Net cash provided by (used for)
operating activities 28.4 (28.4)
------- -------
Cash flows from investing activities
Proceeds from investments 84.8 107.8
Purchases of investments (83.5) (108.3)
Restricted deposits .2 .5
Investment in marketable software (11.4) (14.8)
Capital additions of properties (15.0) (14.8)
Capital additions of outsourcing assets (17.0) (39.0)
Net proceeds from sale of
businesses and assets (5.2) 4.4
------- -------
Net cash used for investing activities (47.1) (64.2)
------- -------
Cash flows from financing activities
Proceeds from issuance of preferred stock,
net of issuance costs 250.4 -
Payments of long-term debt (239.3) (64.9)
Dividends paid to noncontrolling interests (.4) -
Proceeds from exercise of stock options 1.3 1.1
Net proceeds from short-term borrowings - 1.8
Financing fees - (.1)
------- -------
Net cash provided by (used for)
financing activities 12.0 (62.1)
------- -------
Effect of exchange rate changes on cash
and cash equivalents 11.5 (24.4)
------- -------
Increase (decrease) in cash and
cash equivalents 4.8 (179.1)
Cash and cash equivalents, beginning of
period 828.3 647.6
------- -------
Cash and cash equivalents, end of period $833.1 $468.5
======= =======