Attached files
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 2013 FINANCIAL RESULTS
* REVENUE DECLINES 13 PERCENT ON LOWER SYSTEMS INTEGRATION, TECHNOLOGY
REVENUE; IT OUTSOURCING REVENUE GROWS
* DILUTED LOSS PER SHARE OF 77 CENTS VS. DILUTED EPS OF 30 CENTS IN 1Q
2012
* CASH FROM OPERATIONS OF $14 MILLION VS. $33 MILLION in 1Q 2012
BLUE BELL, Pa., April 23, 2013 - Unisys Corporation (NYSE: UIS) today
reported a first-quarter 2013 net loss of $33.9 million, or a loss of 77
cents per diluted share, which included $22.3 million of pension expense
and a $6.5 million loss associated with the recent Venezuelan currency
devaluation. In the first quarter of 2012, the company reported net
income of $13.4 million, or 30 cents per diluted share, which included
$24.6 million of pension expense and a $7.2 million debt reduction
charge. Excluding pension expense and debt reduction charges, the non-
GAAP diluted loss per share(1) in the first quarter of 2013 was 26 cents
compared with non-GAAP diluted EPS of 97 cents in the first quarter of
2012.
First-quarter 2013 revenue declined 13 percent to $810 million from $928
million in the year-ago quarter. Foreign currency fluctuations had a one
percentage point negative impact on revenue in the first quarter.
"This was a difficult quarter for us as lower revenue impacted our
bottom-line results," said Unisys Chairman and CEO Ed Coleman. "We saw
lower revenue in our technology business following a strong fourth
quarter in 2012 where we benefited from some earlier-than-expected
ClearPath revenue. In services, while we were pleased to see growth in
our strategic IT outsourcing business in the quarter, we were
disappointed in the decline in our project-based systems integration
business, where the market for discretionary projects remains soft and
where we need to improve our execution.
"We expect continuing challenges as we work through softness in our
services business and recognize the need to maintain a competitive cost
structure in line with our revenue performance," Coleman said. "We are
focused on reversing the decline in systems integration. In technology,
given the variability of our sales from quarter to quarter, we measure
this business on an annual basis and continue to focus on maintaining
flat revenue for the full year."
FIRST-QUARTER COMPANY AND BUSINESS SEGMENT HIGHLIGHTS
U.S. revenue declined 15 percent in the quarter while international
revenue declined 11 percent. On a constant currency basis(2),
international revenue declined 9 percent with declines in all regions
except for Latin America.
The company reported an overall first-quarter 2013 gross profit margin of
19.9 percent, down from 24.3 percent in the year-ago quarter. Operating
expenses (SG&A and R&D expenses) decreased 1 percent from the year-ago
period. The company reported a first-quarter 2013 operating profit of
$1.6 million compared with an operating profit of $64.4 million in the
first quarter of 2012.
First-quarter 2013 services revenue declined 12 percent from the prior-
year quarter as declines in systems integration, infrastructure services,
and core maintenance offset revenue growth in IT outsourcing. Reflecting
the lower services revenue, first-quarter 2013 services gross profit
margin declined to 17.4 percent from 18.9 percent a year ago while
services operating profit margin declined to 3.1 percent from 5.0 percent
a year ago.
First-quarter 2013 services order signings showed a slight decrease from
year-ago levels as strong growth in IT outsourcing orders were offset by
order declines in other areas. Services backlog at March 31, 2013 was
$5.1 billion, flat from December 31, 2012 levels.
First-quarter 2013 technology revenue declined 18 percent from the prior-
year quarter driven by lower sales of ClearPath enterprise software and
servers. Reflecting the lower ClearPath sales, first-quarter 2013
technology gross profit margin declined to 45.8 percent from 62.2 percent
in the year-ago quarter and technology operating profit margin declined
to 0.2 percent from 25.6 percent in the year-ago quarter.
CASH FLOW AND BALANCE SHEET HIGHLIGHTS
Unisys generated $14 million of cash from operations in the first quarter
of 2013, including $27 million of pension contributions. In the first
quarter of 2012, the company generated $33 million of cash from
operations, which included $68 million of pension contributions. Capital
expenditures in the first quarter of 2013 were $26 million compared with
$30 million in the year-ago quarter. After capital expenditures, the
company used $12 million of free cash(3) in the first quarter of 2013
compared with free cash flow of $3 million in the first quarter of 2012.
Free cash flow before pension contributions was $15 million in the first
quarter of 2013 compared with $71 million in the year-ago quarter.
At March 31, 2013, the company reported a cash balance of $629 million
and total debt of $211 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
diluted earnings per share, free cash flow, free cash flow before pension
contributions, and constant currency.
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/loss per share - As a result of debt
reduction actions, Unisys recorded a charge of $7.2 million during the
first quarter of 2012. The company also recorded pension expense of $22.3
million and $24.6 million during the first quarters of 2013 and 2012,
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 diluted earnings/loss per share calculations.
(2) Constant currency - The company refers to growth rates at constant
currency or adjusting for currency 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 for revenue is calculated
by retranslating current and prior period results at a consistent rate.
This approach is based on the pricing currency for each country which is
typically the functional currency. Generally, when the dollar either
strengthens or weakens against other currencies, the growth at constant
currency rates will be higher or lower, respectively, than growth
reported at actual exchange rates.
(3) 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,
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 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 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; 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.: 0423/9163
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
-------------------
2013 2012
-------- --------
Revenue
Services $723.0 $823.0
Technology 86.9 105.4
-------- --------
809.9 928.4
Costs and expenses
Cost of revenue:
Services 602.8 668.6
Technology 46.3 34.0
-------- --------
649.1 702.6
Selling, general and
administrative 142.2 141.4
Research and development 17.0 20.0
-------- --------
808.3 864.0
-------- --------
Operating profit 1.6 64.4
Interest expense 2.7 9.3
Other income (expense), net (4.9) (13.2)
-------- --------
Income (loss) before
income taxes (6.0) 41.9
Provision for income taxes 21.4 22.0
-------- --------
Consolidated net income (loss) (27.4) 19.9
Net income attributable to
noncontrolling interests 2.5 2.5
-------- --------
Net income (loss) attributable
to Unisys Corporation (29.9) 17.4
Preferred stock dividend 4.0 4.0
-------- --------
Net income (loss) attributable
to Unisys Corporation
common shareholders ($33.9) $13.4
======== ========
Earnings (loss) per common share attributable
to Unisys Corporation
Basic ($ .77) $ .31
======== ========
Diluted ($ .77) $ .30
======== ========
Shares used in the per share
computations (thousands):
Basic 44,054 43,611
Diluted 44,054 44,063
UNISYS CORPORATION
SEGMENT RESULTS
(Unaudited)
(Millions)
Elimi-
Total nations Services Technology
-------- -------- -------- ----------
Three Months Ended
March 31, 2013
------------------
Customer revenue $809.9 $723.0 $86.9
Intersegment ($17.3) 0.5 16.8
-------- -------- -------- --------
Total revenue $809.9 ($17.3) $723.5 $103.7
======== ======== ======== ========
Gross profit percent 19.9% 17.4% 45.8%
======== ======== ========
Operating profit
percent 0.2% 3.1% 0.2%
======== ======== ========
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%
======== ======== ========
UNISYS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Millions)
March 31, December 31,
2013 2012
---------- ----------
Assets
Current assets
Cash and cash equivalents $628.6 $655.6
Accounts and notes receivable, net 581.5 670.2
Inventories
Parts and finished equipment 28.9 29.3
Work in process and materials 21.5 20.7
Deferred income taxes 17.8 21.6
Prepaid expense and other
current assets 123.6 115.0
---------- ----------
Total 1,401.9 1,512.4
---------- ----------
Properties 1,246.6 1,262.2
Less accumulated depreciation
and amortization 1,081.2 1,085.8
---------- ----------
Properties, net 165.4 176.4
---------- ----------
Outsourcing assets, net 120.1 126.3
Marketable software, net 123.5 124.2
Prepaid postretirement assets 11.3 3.3
Deferred income taxes 155.9 162.7
Goodwill 192.1 192.3
Other long-term assets 153.0 122.8
---------- ----------
Total $2,323.2 $2,420.4
========== ==========
Liabilities and deficit
Current liabilities
Notes payable $0.4 $0.0
Current maturities of long-term debt 0.3 0.3
Accounts payable 218.5 228.6
Deferred revenue 379.9 389.5
Other accrued liabilities 349.7 411.9
---------- ----------
Total 948.8 1,030.3
---------- ----------
Long-term debt 210.0 210.0
Long-term postretirement liabilities 2,481.6 2,553.5
Long-term deferred revenue 118.8 123.1
Other long-term liabilities 109.4 92.2
Commitments and contingencies
Total deficit (1,545.4) (1,588.7)
---------- ----------
Total $2,323.2 $2,420.4
========== ==========
UNISYS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Millions)
Three Months Ended
March 31
-------------------
2013 2012 *
------- -------
Cash flows from operating activities
Consolidated net income (loss) ($27.4) $19.9
Add (deduct) items to reconcile consolidated net
income (loss) to net cash provided by operating activities:
Foreign currency transaction loss 6.5 -
Loss on debt extinguishment - 7.2
Employee stock compensation 5.9 6.1
Company stock issued for U.S. 401(k) plan - 4.3
Depreciation and amortization of properties 11.9 14.4
Depreciation and amortization of
outsourcing assets 12.8 13.4
Amortization of marketable software 15.5 14.0
Disposals of capital assets .1 .3
Gain on sale of business - (11.3)
Pension plans contributions (26.6) (68.2)
Decrease in deferred income taxes, net 11.7 3.8
Decrease in receivables, net 69.5 69.5
(Increase) decrease in inventories (.8) 3.5
Decrease in accounts payable
and other accrued liabilities (76.9) (73.6)
Increase in other liabilities 18.6 24.9
(Increase) decrease in other assets (6.6) 4.5
Other (.1) .7
------- -------
Net cash provided by operating activities 14.1 33.4
------- -------
Cash flows from investing activities
Proceeds from investments 1,224.8 711.0
Purchases of investments (1,223.7) (711.0)
Restricted deposits .2 1.3
Investment in marketable software (14.8) (13.9)
Capital additions of properties (3.6) (7.9)
Capital additions of outsourcing assets (7.5) (8.6)
Net proceeds from sale of business - 2.8
------- -------
Net cash used for investing activities (24.6) (26.3)
------- -------
Cash flows from financing activities
Payments of long-term debt - (71.7)
Dividends paid to noncontrolling interests - (4.5)
Dividends paid on preferred shares (4.0) (4.0)
Proceeds from exercise of stock options .5 .1
Net proceeds from short-term borrowings .4 -
------- -------
Net cash used for financing activities (3.1) (80.1)
------- -------
Effect of exchange rate changes on cash
and cash equivalents (13.4) 12.8
------- -------
Decrease in cash and cash equivalents (27.0) (60.2)
Cash and cash equivalents, beginning of
period 655.6 714.9
------- -------
Cash and cash equivalents, end of period $628.6 $654.7
======= =======
*Certain components of net cash provided by operating
activities were changed to present pension contributions
separately, consistent with the 2013 presentation.
(1)
UNISYS CORPORATION
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(Unaudited)
(Millions, except per share data)
Three Months
Ended March 31
------------------
2013 2012
-------- --------
GAAP net income (loss)
attributable to Unisys Corporation
common shareholders ($33.9) $13.4
Debt reduction charges, net of tax 0.0 7.2
FAS87 pension charges, net of tax 22.3 24.6
-------- --------
Non-GAAP net income (loss)
attributable to Unisys Corporation
common shareholders (11.6) 45.2
Add preferred stock dividend 0.0 4.0
-------- --------
Non-GAAP net income (loss)
attributable to Unisys
Corporation for diluted
earnings per share ($11.6) $49.2
======== ========
Weighted average
shares (thousands) 44,054 43,611
Plus incremental shares from assumed conversion:
Employee stock plans 0 452
Preferred stock 0 6,913
-------- --------
GAAP adjusted weighted
average shares 44,054 50,976
======== ========
Diluted earnings (loss) per share
GAAP basis
GAAP net income (loss)
attributable to Unisys
Corporation for diluted
earnings per share ($33.9) $13.4
Divided by adjusted weighted
average shares 44,054 44,063
GAAP net income (loss)
per diluted share ($ .77) $ .30
======== ========
Non-GAAP basis
Non-GAAP net income (loss)
attributable to Unisys
Corporation for diluted
earnings per share ($11.6) $49.2
Divided by Non-GAAP adjusted
weighted average shares 44,054 50,976
Non-GAAP net income (loss)
per diluted share ($ .26) $ .97
======== ========
(2)
UNISYS CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP
(Unaudited)
(Millions)
FREE CASH FLOW
--------------
Three Months
Ended March 31
------------------
2013 2012
-------- --------
Cash provided by operations $14.1 $33.4
Additions to marketable
software (14.8) (13.9)
Additions to properties (3.6) (7.9)
Additions to outsourcing
assets (7.5) (8.6)
-------- --------
Free Cash Flow (11.8) 3.0
Pension funding 26.6 68.2
-------- --------
Free cash flow before
pension funding $14.8 $71.2
======== ========
