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 2012 FINANCIAL RESULTS
* REVENUE GROWS 2 PERCENT; SERVICES REVENUE GROWS 3 PERCENT
* NET INCOME OF $13.4 MILLION VS. NET LOSS OF $40.8 MILLION IN 1Q 2011
* DILUTED EPS OF 30 CENTS VS. LOSS OF 95 CENTS IN 1Q 2011
* NON-GAAP(1) DILUTED EPS OF 97 CENTS COMPARES TO NON-GAAP(1) LOSS OF 4 CENTS
IN 1Q 2011
* FREE CASH FLOW(2) INCREASES TO $3 MILLION VS. FREE CASH USAGE OF $15 MILLION
1Q 2011
* FREE CASH FLOW(2) OF $71 MILLION BEFORE PENSION FUNDING VS. $7 MILLION IN 1Q
2011
* COMPLETED PREVIOUSLY ANNOUNCED REDEMPTION OF $66 MILLION OF OUTSTANDING
SENIOR NOTES
BLUE BELL, Pa., April 24, 2012 - Unisys Corporation (NYSE: UIS) today reported
first-quarter 2012 net income of $13.4 million, or 30 cents per diluted share,
which includes a charge of $7.2 million related to debt reduction and $24.6
million of pension expense. The results compare with a first-quarter 2011 net
loss of $40.8 million, or a loss of 95 cents per diluted share, which included
a $31.8 million debt reduction charge and $7.2 million of pension expense.
Excluding debt reduction charges and pension expense, non-GAAP diluted earnings
per share in the first quarter of 2012 was 97 cents compared with a loss of 4
cents in the first quarter of 2011. Revenue in the first quarter of 2012
increased 2 percent to $928 million compared with $911 million in the year-ago
quarter.
"We are pleased to report both increased profits and higher revenue in the
first quarter," said Unisys Chairman and CEO Ed Coleman. "We have grown revenue
year over year for two of the last three quarters despite softness in our U.S.
Federal government business. We also retired an additional $66 million of debt
during the quarter. Since September 2010, we have reduced our debt by more than
$540 million, or nearly two thirds, and cut annualized interest expense by $69
million. We are focused on continuing our progress in 2012 as we work toward
achieving our strategic and financial objectives."
FIRST-QUARTER COMPANY AND BUSINESS SEGMENT HIGHLIGHTS
First-quarter 2012 overall revenue grew 2 percent year-over-year despite a
decline in the company's U.S. Federal business. The company reported strong
revenue growth in the United States outside the U.S. Federal market. Foreign
currency fluctuations had a negligible impact on revenue in the quarter.
First-quarter 2012 gross profit margin improved to 24.3 percent from 22.8
percent in the year-ago quarter. First-quarter 2012 operating profit increased
to $64.4 million, or 6.9 percent of revenue, from $41.9 million, or 4.6 percent
of revenue in the first quarter of 2011.
First-quarter 2012 services revenue increased 3 percent from the prior-year
quarter, primarily reflecting growth in systems integration revenue. Excluding
the U.S. Federal business, services revenue grew 7 percent compared with the
first quarter of 2011. The company reported a first-quarter 2012 services gross
profit margin of 18.9 percent compared with 18.0 percent a year ago while
services operating profit margin improved to 5.0 percent from 4.0 percent a
year ago.
First-quarter services orders showed double-digit increases in the quarter,
primarily reflecting order gains for outsourcing and infrastructure services.
Services backlog at March 31, 2012 was $5.4 billion, a 6 percent decrease from
the first quarter of 2011 and a 1 percent decrease from services backlog at
December 31, 2011.
First-quarter 2012 technology revenue declined 5 percent from the prior-year
quarter. While revenue declined, technology gross profit margin improved to
62.2 percent from 51.1 percent in the year-ago quarter and technology operating
profit margin increased to 25.6 percent from 10.9 percent in the year-ago
quarter, reflecting a richer mix of enterprise software in the current quarter.
CASH FLOW AND BALANCE SHEET HIGHLIGHTS
Unisys generated $33 million of cash from operations in the first quarter of
2012 compared with $28 million in the first quarter of 2011. Pension cash
funding increased to $68 million from $22 million in the first quarter of 2011.
Capital expenditures in the first quarter of 2012 were $30 million compared
with $43 million in the year-ago quarter. The company generated $3 million of
free cash flow(2) in the first quarter of 2012 compared with free cash usage of
$15 million in the first quarter of 2011. In the first quarter of 2012 free
cash flow(2) was $71 million before pension funding compared with $7 million in
the year-ago quarter.
During the quarter Unisys completed its previously announced redemption of $66
million of outstanding senior notes. At March 31, 2012, the company reported
total debt of $296 million and a cash balance of $655 million.
NON-GAAP INFORMATION
Unisys reports its results in accordance with Generally Accepted Accounting
Principles (GAAP) in the United States. However, in an effort to provide
investors with additional perspective regarding the company's results as
determined by GAAP, the company also discusses, in its earnings press release
and/or earnings presentation materials, non-GAAP information which management
believes provides useful information to investors. Our management uses
supplemental non-GAAP financial measures internally to understand, manage and
evaluate our business and assess operational alternatives. These non-GAAP
measures may include non-GAAP earnings per diluted share and free cash flow.
Our non-GAAP measures are not intended to be considered in isolation or as
substitutes for results determined in accordance with GAAP and should be read
only in conjunction with our consolidated financial statements prepared in
accordance with GAAP. (See GAAP to non-GAAP reconciliations attached.)
(1) Non-GAAP earnings per diluted share - As a result of the debt reductions,
Unisys recorded charges of $7.2 million and $31.8 million during the first
quarters of 2012 and 2011, respectively. The company also recorded pension
expense of $24.6 million and $7.2 million during the first quarters of 2012 and
2011, respectively. In an effort to provide investors with a perspective on the
company's earnings without these charges, they are excluded from the non-GAAP
earnings per diluted share calculations.
(2) Free cash flow - To better understand the trends in our business, we
believe that it is helpful to present free cash flow, which we define as cash
flow from operations less capital expenditures. Management believes this
measure gives investors an additional perspective on cash flow from operating
activities in excess of amounts required for reinvestment. Because of the
significance of the company's pension funding obligations in 2012, free cash
flow before pension funding is also provided.
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 22,500 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 risks 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 risk that breaches of data
security could expose the company to legal liability and could harm its
business and reputation; 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 intellectual property
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.: 0424/9097
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
-------------------
2012 2011
-------- --------
Revenue
Services $823.0 $800.3
Technology 105.4 110.9
-------- --------
928.4 911.2
Costs and expenses
Cost of revenue:
Services 668.6 654.5
Technology 34.0 48.5
-------- --------
702.6 703.0
Selling, general and
administrative 141.4 146.0
Research and development 20.0 20.3
-------- --------
864.0 869.3
-------- --------
Operating profit 64.4 41.9
Interest expense 9.3 25.9
Other income (expense), net (13.2) (23.8)
-------- --------
Income (loss) before
income taxes 41.9 (7.8)
Provision for income taxes 22.0 28.2
-------- --------
Consolidated net income (loss) 19.9 (36.0)
Net income (loss) attributable
to noncontrolling interests 2.5 3.4
-------- --------
Net income (loss) attributable
to Unisys Corporation 17.4 (39.4)
Preferred stock dividend 4.0 1.4
-------- --------
Net income (loss) attributable to Unisys
Corporation common shareholders $13.4 ($40.8)
======== ========
Earnings (loss) per common share attributable
to Unisys Corporation
Basic $ .31 ($ .95)
======== ========
Diluted $ .30 ($ .95)
======== ========
Shares used in the per share
computations (thousands):
Basic 43,611 42,836
Diluted 44,063 42,836
UNISYS CORPORATION
SEGMENT RESULTS
(Unaudited)
(Millions)
Elimi-
Total nations Services Technology
-------- -------- -------- ----------
Three Months Ended
March 31, 2012
------------------
Customer revenue $928.4 $823.0 $105.4
Intersegment ($32.0) 0.8 31.2
-------- -------- -------- --------
Total revenue $928.4 ($32.0) $823.8 $136.6
======== ======== ======== ========
Gross profit percent 24.3% 18.9% 62.2%
======== ======== ========
Operating profit
percent 6.9% 5.0% 25.6%
======== ======== ========
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%
======== ======== ========
UNISYS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Millions)
March 31, December 31,
2012 2011
---------- ----------
Assets
Current assets
Cash and cash equivalents $654.7 $714.9
Accounts and notes receivable, net 597.2 673.0
Inventories
Parts and finished equipment 36.2 38.1
Work in process and materials 25.6 26.7
Deferred income taxes 21.8 27.1
Prepaid expense and other
current assets 116.6 123.6
---------- ----------
Total 1,452.1 1,603.4
---------- ----------
Properties 1,279.4 1,257.2
Less accumulated depreciation
and amortization 1,092.5 1,065.9
---------- ----------
Properties, net 186.9 191.3
---------- ----------
Outsourcing assets, net 135.8 137.9
Marketable software, net 129.7 129.8
Prepaid postretirement assets 46.5 43.9
Deferred income taxes 182.6 181.5
Goodwill 194.2 192.5
Other long-term assets 127.8 131.9
---------- ----------
Total $2,455.6 $2,612.2
========== ==========
Liabilities and deficit
Current liabilities
Current maturities of long-term debt $0.8 $0.9
Accounts payable 230.2 241.6
Deferred revenue 432.8 448.1
Other accrued liabilities 357.8 425.5
---------- ----------
Total 1,021.6 1,116.1
---------- ----------
Long-term debt 294.7 358.8
Long-term postretirement liabilities 2,154.4 2,224.0
Long-term deferred revenue 124.1 120.3
Other long-term liabilities 101.2 104.0
Commitments and contingencies
Total deficit (1,240.4) (1,311.0)
---------- ----------
Total $2,455.6 $2,612.2
========== ==========
UNISYS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Millions)
Three Months Ended
March 31
-------------------
2012 2011
-------- --------
Cash flows from operating activities
Consolidated net income (loss) $19.9 ($36.0)
Add (deduct) items to reconcile consolidated net
income (loss) to net cash provided by operating activities:
Loss on debt extinguishment 7.2 31.8
Employee stock compensation 6.1 6.3
Company stock issued for U.S. 401(k) plan 4.3 3.6
Depreciation and amortization of properties 14.4 17.1
Depreciation and amortization of
outsourcing assets 13.4 18.7
Amortization of marketable software 14.0 17.4
Disposals of capital assets .3 .4
(Gain) loss on sale of businesses and assets (11.3) .3
Decrease in deferred income taxes, net 4.8 12.3
Decrease in receivables, net 69.5 74.1
Decrease in inventories 3.5 8.7
Decrease in accounts payable
and other accrued liabilities (76.4) (110.3)
Decrease in other liabilities (69.6) (6.2)
Decrease (increase) in other assets 32.6 (8.8)
Other .7 (1.0)
------- -------
Net cash provided by operating activities 33.4 28.4
------- -------
Cash flows from investing activities
Proceeds from investments 711.0 84.8
Purchases of investments (711.0) (83.5)
Restricted deposits 1.3 .2
Investment in marketable software (13.9) (11.4)
Capital additions of properties (7.9) (15.0)
Capital additions of outsourcing assets (8.6) (17.0)
Net proceeds from sale of
businesses and assets 2.8 (5.2)
------- -------
Net cash used for investing activities (26.3) (47.1)
------- -------
Cash flows from financing activities
Proceeds from issuance of preferred stock,
net of issuance costs - 250.4
Payments of long-term debt (71.7) (239.3)
Dividends paid to noncontrolling interests (4.5) (.4)
Dividends paid on preferred shares (4.0) -
Proceeds from exercise of stock options .1 1.3
------- -------
Net cash (used for) provided by
financing activities (80.1) 12.0
------- -------
Effect of exchange rate changes on cash
and cash equivalents 12.8 11.5
------- -------
(Decrease) increase in cash
and cash equivalents (60.2) 4.8
Cash and cash equivalents, beginning of
period 714.9 828.3
------- -------
Cash and cash equivalents, end of period $654.7 $833.1
======= =======
(1)
UNISYS CORPORATION
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(Unaudited)
(Millions, except per share data)
Three Months
Ended March 31
------------------
2012 2011
-------- --------
GAAP net income (loss)
attributable to Unisys Corporation
common shareholders $13.4 ($40.8)
Debt reduction charges, net of tax 7.2 31.8
FAS87 pension charges, net of tax 24.6 7.2
-------- --------
Non-GAAP net income (loss)
attributable to Unisys Corporation
common shareholders 45.2 (1.8)
Add preferred stock dividend 4.0 0.0
-------- --------
Non-GAAP net income (loss)
attributable to Unisys Corporation
for diluted earnings per share $49.2 ($1.8)
======== ========
Weighted average
shares (thousands) 43,611 42,836
Plus incremental shares from assumed conversion:
Employee stock plans 452 0
Preferred stock 6,913 0
-------- --------
GAAP adjusted weighted
average shares 50,976 42,836
======== ========
Diluted earnings (loss) per share
GAAP basis
GAAP net income (loss)
attributable to Unisys Corporation
for diluted earnings per share $13.4 ($40.8)
Divided by adjusted weighted
average shares 44,063 42,836
GAAP net income (loss)
per diluted share $ .30 ($ .95)
======== ========
Non-GAAP basis
Non-GAAP net income (loss)
attributable to Unisys Corporation
for diluted earnings per share $49.2 ($1.8)
Divided by Non-GAAP adjusted
weighted average shares 50,976 42,836
Non-GAAP net income (loss)
per diluted share $ .97 ($ .04)
======== ========
(2)
UNISYS CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP
(Unaudited)
(Millions)
FREE CASH FLOW
--------------
Three Months
Ended March 31
------------------
2012 2011
-------- --------
Cash provided by operations $33.4 $28.4
Additions to marketable software (13.9) (11.4)
Additions to properties (7.9) (15.0)
Additions to outsourcing assets (8.6) (17.0)
-------- --------
Free cash flow $3.0 ($15.0)
Pension funding 68.2 22.2
-------- --------
Free cash flow before pension funding $71.2 $7.2
======== ========