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 2015 FINANCIAL RESULTS
BLUE BELL, Pa., October 21, 2015 -- Unisys Corporation (NYSE: UIS) today
reported third quarter 2015 results:
* Revenue of $739 million
* Operating profit margin of 1.2 percent; 7.2 percent before restructuring
charges of $17 million and pension expense of $27 million
* Diluted loss per share of $0.19
* Non-GAAP diluted earnings per share(1) of $0.67
"Our transformative cost actions are strengthening the company's underlying
operating profitability," said Unisys President and CEO Peter Altabef. "These
actions, combined with improved offerings and go-to-market capabilities, are
enhancing our competitiveness in the market."
SUMMARY OF BUSINESS RESULTS
* Third quarter 2015 revenue of $739 million declined 16 percent year-over-
year. Foreign currency fluctuations caused approximately half of this decline.
In constant currency(2), Services revenue grew for the third consecutive
quarter. Lower Technology revenue, which can vary significantly from quarter-
to-quarter based on the timing of license renewals, caused the overall revenue
decline in constant currency.
* The third quarter 2015 operating profit margin of 1.2 percent declined year-
over-year due principally to lower operating profit in the Technology segment
where profitability is highly sensitive to revenue volume, as well as cost
reduction charges and higher pension expense. The operating profit margin of
7.2 percent before restructuring charges and pension expense almost doubled
sequentially reflecting benefits of the cost saving actions taken by the
company.
SERVICES
* The Services segment showed progress in the quarter towards its goals with
an increase in order bookings and improvement in profitability. Services
bookings were $778 million on strong services contract renewals. This is an
increase of 34 percent in bookings as compared to second quarter 2015 and an
increase of 42 percent as compared to the third quarter of 2014.
* Services revenue of $656 million declined by 8 percent but increased by 1
percent year-over-year in constant currency and was flat sequentially.
* Services gross profit margin was 17.3 percent, an increase of 1.6 percentage
points as compared to the second quarter 2015. This sequential improvement
reflects the benefit of our cost reduction actions to increase profitability.
TECHNOLOGY
The Technology segment showed increased sequential profitability despite
sequentially lower revenue.
* Third-quarter 2015 Technology revenue of $83 million was down sequentially
and year over year reflecting lower ClearPath Forward(TM) revenue.
* Technology gross profit margin increased to 55.0 percent from 43.9 percent
in the second quarter 2015. Technology operating profit margin increased to
20.7 percent from 15.6 percent in the second quarter of 2015.
* Technology gross profit margin decreased year over year on lower revenue.
Currency fluctuations negatively affected Technology gross profit margin by
approximately 450 basis points and operating profit margin by 700 basis
points.
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 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.
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 constant currency and non-GAAP diluted earnings per
share.
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 diluted earnings per share - Unisys recorded pension expense, net
of tax, of $26.6 million and $17.9 million during the third quarters of 2015
and 2014, respectively. Unisys recorded a charge, net of tax, of $16.4 million
in connection with cost reduction actions during the third quarter of 2015. In
an effort to provide investors with a perspective on the company's earnings
without these charges, they are excluded from the non-GAAP diluted
earnings/loss per share calculations.
(2) Constant currency - The company refers to growth rates in constant
currency or on a constant currency basis so that the business results can be
viewed without the impact of fluctuations in foreign currency exchange rates
to facilitate comparisons of the company's business performance from one
period to another. Constant currency is calculated by retranslating current
and prior period results at a consistent rate.
ABOUT UNISYS
Unisys is a global information technology company that works with many of the
world's largest companies and government organizations to solve their most
pressing IT and business challenges. Unisys specializes in providing
integrated, leading-edge solutions to clients in the government, financial
services and commercial markets. With more than 20,000 employees serving
clients around the world, Unisys offerings include cloud and infrastructure
services, application services, security solutions, and high-end server
technology. 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 effectively anticipate and respond to volatility and
rapid technological innovation in its industry; the company's ability to
maintain and grow its technology business; the company's ability to improve
margins in its services business; the company's ability to drive efficiencies
across all of its operations; the company's significant pension obligations
and requirements to make significant cash contributions to its defined benefit
plans; financial market conditions that may inhibit the company's ability to
access capital and credit markets to address its liquidity needs; the
company's ability to attract, motivate and retain experienced and
knowledgeable personnel in key positions; 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 contracts
may not be as profitable as expected or provide the expected level of
revenues; cybersecurity breaches could result in significant costs and could
harm the company's business and reputation; a significant disruption in the
company's IT systems could adversely affect the company's business and
reputation; 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 adverse effects of global economic conditions,
acts of war, terrorism or natural disasters; contracts with U.S. governmental
agencies may subject the company to audits, criminal penalties, sanctions and
other expenses and fines; the risks of doing business internationally when a
significant portion of the company's revenue is derived from international
operations; 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; 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.: 1021/9368
Unisys and other Unisys products and services mentioned herein, as well as
their respective logos, are trademarks or registered trademarks of Unisys
Corporation. Any other brand or product referenced herein is acknowledged to
be a trademark or registered trademark of its respective holder.
UNISYS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Millions, except per share data)
Three Months Nine Months
Ended September 30 Ended September 30
------------------ ------------------
2015 2014 2015 2014
-------- -------- -------- --------
Revenue
Services $656.0 $711.9 * $1,956.5 $2,097.0 *
Technology 83.2 170.6 * 268.7 353.6 *
-------- -------- -------- --------
739.2 882.5 2,225.2 2,450.6
Costs and expenses
Cost of revenue:
Services 564.7 586.7 * 1,714.7 1,763.9 *
Technology 33.9 60.9 * 128.6 153.6 *
-------- -------- -------- --------
598.6 647.6 1,843.3 1,917.5
Selling, general and
administrative 115.4 138.0 389.6 410.1
Research and development 16.6 20.3 63.2 50.5
-------- -------- -------- --------
730.6 805.9 2,296.1 2,378.1
-------- -------- -------- --------
Operating profit (loss) 8.6 76.6 (70.9) 72.5
Interest expense 3.0 2.3 8.3 6.6
Other income (expense),
net 1.7 3.3 8.0 (9.0)
-------- -------- -------- --------
Income (loss) before
income taxes 7.3 77.6 (71.2) 56.9
Provision for income
taxes 14.9 26.4 33.3 62.3
-------- -------- -------- --------
Consolidated net (loss)
income (7.6) 51.2 (104.5) (5.4)
Net income attributable
to noncontrolling
interests 2.0 3.4 6.5 9.7
-------- -------- -------- --------
Net (loss) income attributable
to Unisys Corporation (9.6) 47.8 (111.0) (15.1)
Preferred stock dividend - - - 2.7
-------- -------- -------- --------
Net (loss) income attributable
to Unisys Corporation
common shareholders ($9.6) $47.8 ($111.0) ($17.8)
======== ======== ======== ========
(Loss) earnings per common share attributable
to Unisys Corporation
Basic ($ .19) $ .95 ($ 2.22) ($ .36)
======== ======== ======== ========
Diluted ($ .19) $ .95 ($ 2.22) ($ .36)
======== ======== ======== ========
Shares used in the per share
computations (thousands):
Basic 49,934 50,245 49,894 49,144
Diluted 49,934 50,422 49,894 49,144
* Changed to conform with the 2015 presentation.
UNISYS CORPORATION
SEGMENT RESULTS
(Unaudited)
(Millions)
Elimi-
Total nations Services Technology
-------- -------- -------- ----------
Three Months Ended
September 30, 2015
------------------
Customer revenue $739.2 $656.0 $83.2
Intersegment ($11.9) - 11.9
-------- -------- -------- --------
Total revenue $739.2 ($11.9) $656.0 $95.1
======== ======== ======== ========
Gross profit percent 19.0% 17.3% 55.0%
======== ======== ========
Operating profit
percent 1.2% 4.8% 20.7%
======== ======== ========
Three Months Ended
September 30, 2014 *
------------------
Customer revenue $882.5 $711.9 $170.6
Intersegment ($9.0) - 9.0
-------- -------- -------- --------
Total revenue $882.5 ($9.0) $711.9 $179.6
======== ======== ======== ========
Gross profit percent 26.6% 18.8% 61.3%
======== ======== ========
Operating profit
percent 8.7% 5.1% 31.1%
======== ======== ========
Nine Months Ended
September 30, 2015
------------------
Customer revenue $2,225.2 $1,956.5 $268.7
Intersegment ($40.6) 0.1 40.5
-------- -------- -------- --------
Total revenue $2,225.2 ($40.6) $1,956.6 $309.2
======== ======== ======== ========
Gross profit percent 17.2% 15.7% 49.0%
======== ======== ========
Operating profit
(loss) percent (3.2%) 1.9% 14.2%
======== ======== ========
Nine Months Ended
September 30, 2014 *
------------------
Customer revenue $2,450.6 $2,097.0 $353.6
Intersegment ($22.9) 0.3 22.6
-------- -------- -------- --------
Total revenue $2,450.6 ($22.9) $2,097.3 $376.2
======== ======== ======== ========
Gross profit percent 21.8% 17.2% 53.3%
======== ======== ========
Operating profit
percent 3.0% 3.5% 12.4%
======== ======== ========
* Changed to conform with the 2015 presentation.
UNISYS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Millions)
September 30, December 31,
2015 2014
---------- ----------
Assets
Current assets
Cash and cash equivalents $293.1 $494.3
Accounts and notes receivable, net 551.5 619.3
Inventories
Parts and finished equipment 26.3 22.2
Work in process and materials 26.2 24.5
Deferred income taxes 17.2 16.4
Prepaid expense and other
current assets 128.1 140.6
---------- ----------
Total 1,042.4 1,317.3
---------- ----------
Properties 994.5 1,059.4
Less accumulated depreciation
and amortization 829.9 890.7
---------- ----------
Properties, net 164.6 168.7
---------- ----------
Outsourcing assets, net 182.3 150.9
Marketable software, net 140.1 144.1
Prepaid postretirement assets 45.0 19.9
Deferred income taxes 143.7 154.6
Goodwill 177.3 183.9
Other long-term assets 202.5 209.3
---------- ----------
Total $2,097.9 $2,348.7
========== ==========
Liabilities and deficit
Current liabilities
Notes payable $55.0 $0.0
Current maturities of long-term debt 11.2 1.8
Accounts payable 221.5 262.5
Deferred revenue 290.9 348.3
Other accrued liabilities 339.1 385.1
---------- ----------
Total 917.7 997.7
---------- ----------
Long-term debt 244.1 222.2
Long-term postretirement liabilities 2,185.6 2,369.9
Long-term deferred revenue 119.5 119.5
Other long-term liabilities 82.3 91.8
Commitments and contingencies
Total deficit (1,451.3) (1,452.4)
---------- ----------
Total $2,097.9 $2,348.7
========== ==========
UNISYS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Millions)
Nine Months Ended
September 30
------------------
2015 2014
------- -------
Cash flows from operating activities
Consolidated net loss ($104.5) ($5.4)
Add (deduct) items to reconcile consolidated net loss
to net cash (used for) provided by operating activities:
Foreign currency transaction loss 8.0 7.4
Employee stock compensation 7.9 10.6
Depreciation and amortization of properties 34.1 38.6
Depreciation and amortization of
outsourcing assets 41.2 44.5
Amortization of marketable software 50.3 42.5
Other non-cash operating activities 1.8 7.8
Disposals of capital assets 6.1 1.0
Gain on sale of business - (0.7)
Pension contributions (115.6) (161.3)
Pension expense 81.5 55.5
(Increase) decrease in deferred
income taxes, net (2.8) 15.4
Decrease in receivables, net 11.7 81.2
Increase in inventories (7.7) (6.1)
Decrease in accounts payable
and other accrued liabilities (121.4) (83.8)
Decrease in other liabilities (8.3) (39.1)
Decrease in other assets 9.2 7.8
------- -------
Net cash (used for) provided by
operating activities (108.5) 15.9
------- -------
Cash flows from investing activities
Proceeds from investments 2,904.0 4,438.8
Purchases of investments (2,884.2) (4,422.8)
Investment in marketable software (46.8) (56.1)
Capital additions of properties (40.2) (41.9)
Capital additions of outsourcing assets (80.4) (45.9)
Other 6.1 (1.2)
------- -------
Net cash used for investing activities (141.5) (129.1)
------- -------
Cash flows from financing activities
Purchases of common stock - (29.3)
Payments of long-term debt (1.3) -
Dividends paid on preferred shares - (4.0)
Proceeds from exercise of stock options 3.7 3.3
Proceeds from issuance of long-term debt 31.8 -
Net proceeds from short-term borrowings 55.0 -
Financing fees (.2) (.6)
------- -------
Net cash provided by (used for)
financing activities 89.0 (30.6)
------- -------
Effect of exchange rate changes on cash
and cash equivalents (40.2) (19.5)
------- -------
Decrease in cash and cash equivalents (201.2) (163.3)
Cash and cash equivalents, beginning of
period 494.3 639.8
------- -------
Cash and cash equivalents, end of period $293.1 $476.5
======= =======
(1)
UNISYS CORPORATION
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(Unaudited)
(Millions, except per share data)
Three Months Ended
September 30, 2015
------------------
GAAP net loss attributable to Unisys
Corporation common shareholders ($9.6)
Cost reduction expense, net of tax 16.4
Pension expense, net of tax 26.6
--------
Non-GAAP net income attributable to
Unisys Corporation for diluted
earnings per share $33.4
========
Weighted average shares (thousands) 49,934
Plus incremental shares from
assumed conversion:
Employee stock plans 114
--------
GAAP adjusted weighted average shares 50,048
========
Diluted earnings per share
GAAP basis
----------
GAAP net loss attributable to
Unisys Corporation for diluted
earnings per share ($9.6)
Divided by adjusted weighted
average shares 49,934
GAAP loss per diluted share ($ .19)
========
Non-GAAP basis
--------------
Non-GAAP net income attributable to
Unisys Corporation for diluted
earnings per share $33.4
Divided by Non-GAAP adjusted
weighted average shares 50,048
Non-GAAP earnings per diluted share $ .67
========