Final Results
Unisys Announces Fourth-Quarter and Full-Year 2012 Financial Results
BLUE BELL, Pa., Jan. 30, 2013 --
Fourth-Quarter 2012
-- Revenue down 1 percent vs. 4Q 2011; flat on a constant currency(1) basis
-- Diluted EPS of $1.67 vs. $1.94 in 4Q 2011
-- Non-GAAP diluted EPS(2) of $2.27 vs. $2.22 in 4Q 2011
-- Free cash flow(3) of $118 million; free cash flow of $144 million before
pension contributions
Full-Year 2012
-- Revenue down 4 percent vs. FY 2011; down 1 percent on a constant currency basis
-- Diluted EPS of $2.84 vs. $2.71 for FY 2011
-- Non-GAAP diluted EPS of $5.50 vs. $5.18 for FY 2011
-- Free cash flow of $129 million; free cash flow of $330 million before pension
contributions
Unisys Corporation (http://www.unisys.com/ ) (NYSE: UIS) today reported fourth-
quarter 2012 net income of $81.8 million, or $1.67 per diluted share, which included
$30.4 million of pension expense. In the fourth quarter of 2011, the company
reported net income of $94.3 million, or $1.94 per diluted share, which included
$6.7 million of pension expense and a $7.6 million debt reduction charge. Excluding
pension expense and debt reduction charges, non-GAAP diluted earnings per share in
the fourth quarter of 2012 was $2.27 compared with $2.22 in the fourth quarter of
2011. Fourth-quarter 2012 revenue declined 1 percent to $979 million from $985
million in the fourth quarter of 2011. Fourth-quarter 2012 revenue was flat year-
over-year on a constant currency basis.
For the full year of 2012, Unisys reported net income of $129.4 million, or $2.84
per diluted share, which included $105.4 million of pension expense and $30.6
million of debt reduction charges. For the full year of 2011, the company reported
net income of $120.5 million, or $2.71 per diluted share, which included $28.0
million of pension expense, $85.2 million of debt reduction charges and an $8.9
million charge related to the settlement of a Brazilian non-income tax matter.
Excluding these items, non-GAAP earnings per share for the full year of 2012 was
$5.50 compared with $5.18 for the full year of 2011. Full-year 2012 revenue declined
4 percent to $3.71 billion from full-year 2011 revenue of $3.85 billion. On a
constant currency basis, full-year 2012 revenue declined 1 percent compared with the
full year of 2011.
"We had a good finish to the year driven by a strong performance in our technology
business," said Unisys Chairman and CEO Ed Coleman. "Sales of our ClearPath software
and servers grew in the quarter and for the year, exceeding our goal, as customers
responded positively to continued innovations in our flagship technology platform.
In our services business, we were pleased to see our revenue and margins improve in
the quarter from a challenging third quarter, although we still have more work to do
to meet our services growth and margin targets.
"These results capped off another year of progress for Unisys," Coleman said. "In an
uncertain business environment, we increased our profitability and generated
significant free cash flow. From a balance sheet perspective, we achieved a major
milestone for the company by eliminating the rest of our high-interest debt and
completing our multi-year program to reduce debt by $1 billion. We also continued to
enhance our solution portfolio to strengthen our competitive profile. We remain
focused on driving profitable growth in the year ahead."
Fourth-Quarter Company and Business Segment Highlights
International revenue grew 6 percent in the fourth quarter, largely offsetting a 10
percent decline in U.S. revenue. On a constant currency basis, international revenue
grew 7 percent as increases in Europe and Latin America offset declines in Asia
Pacific.
The company reported an overall fourth-quarter 2012 gross profit margin of 29.2
percent, up from 28.4 percent in the year-ago quarter. Operating expenses (SG&A and
R&D expenses) increased 8 percent from the year-ago period, reflecting higher
pension expense and investments in growth programs. Fourth-quarter 2012 operating
profit declined to 11.7 percent of revenue from 12.3 percent of revenue in the
fourth quarter of 2011. The company reported fourth-quarter 2012 operating profit of
$114.6 million, which included $31.5 million of pension expense, compared with a
fourth-quarter 2011 operating profit of $121.6 million, which included $8.1 million
of pension expense.
Fourth-quarter 2012 services revenue declined 4 percent (3 percent on a constant
currency basis) from the prior-year quarter. Fourth-quarter 2012 services gross
profit margin improved slightly to 20.2 percent from 20.0 percent a year ago while
services operating profit margin declined to 6.6 percent from 7.6 percent a year
ago.
Fourth-quarter 2012 services order signings declined from year-ago levels. Services
backlog at December 31, 2012 was $5.1 billion, an 8 percent decrease from services
backlog at December 31, 2011.
Fourth-quarter 2012 technology revenue grew 16 percent from the prior-year quarter
driven by strong sales of ClearPath software and servers. Reflecting the higher
ClearPath sales, fourth-quarter 2012 technology gross profit margin improved to 68.1
percent from 65.9 percent in the year-ago quarter and technology operating profit
margin improved to 43.9 percent from 37.7 percent in the year-ago quarter.
Cash Flow and Balance Sheet Highlights
Unisys generated $154 million of cash from operations in the fourth quarter of 2012,
including $26 million of pension contributions. In the fourth quarter of 2011, the
company generated $159 million of cash from operations, which included $19 million
of pension contributions. Capital expenditures in the fourth quarter of 2012 were
$36 million compared with $33 million in the year-ago quarter. The company generated
$118 million of free cash flow in the fourth quarter of 2012 compared with free cash
flow of $126 million in the fourth quarter of 2011. Free cash flow before pension
contributions was $144 million in the fourth quarter of 2012 compared with $145
million in the year-ago quarter.
Unisys made $202 million in pension contributions in 2012 compared with $83 million
of pension contributions in 2011. For the full year of 2012, the company generated
free cash flow of $330 million before pension contributions compared with $266
million of free cash flow before pension contributions in 2011.
During 2012 Unisys eliminated all remaining high-interest debt and met, more than a
year early, its goal of reducing debt by 75 percent from September 2010 levels.
Since 2008 the company has reduced its debt by $1 billion.
At December 31, 2012, the company reported a cash balance of $656 million and total
debt of $210 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, 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) 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.
(2) Non-GAAP diluted earnings per share - As a result of debt reduction actions,
Unisys recorded a charge of $7.6 million during the fourth quarter of 2011. The
company also recorded pension expense of $30.4 million and $6.7 million during the
fourth quarters of 2012 and 2011, respectively. For the full years of 2012 and 2011,
Unisys recorded debt reduction charges of $30.6 million and $85.2 million,
respectively, and pension expense of $105.4 million and $28.0 million, respectively.
In addition, for full year 2011 the company incurred a charge of $8.9 million
related to a Brazil non-income tax case. 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 per share calculations.
(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 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 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 year and before
the filing of the Form 10-K 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.: 0129/9151
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 Year
Ended December 31 Ended December 31
----------------- -----------------
2012 2011 2012 2011
---- ---- ---- ----
Revenue
Services $805.7 835.3 3,192.4 $3,354.6
Technology 173.6 150.0 514.0 499.2
----- ----- ----- -----
979.3 985.3 3,706.4 3,853.8
Costs and expenses
Cost of revenue:
Services 640.7 662.2 2,567.7 2,672.8
Technology 52.7 42.8 165.2 194.0
---- ---- ----- -----
693.4 705.0 2,732.9 2,866.8
Selling, general and
administrative 150.8 139.8 572.8 586.3
Research and development 20.5 18.9 81.5 76.1
864.7 863.7 3,387.2 3,529.2
----- ----- ------- -------
Operating profit 114.6 121.6 319.2 324.6
Interest expense 2.5 11.4 27.5 63.1
Other income (expense), net (2.7) 1.1 (37.6) (55.5)
---- --- ----- -----
Income before income taxes 109.4 111.3 254.1 206.0
Provision for income taxes 20.5 12.4 97.3 64.8
---- ---- ---- ----
Consolidated net income 88.9 98.9 156.8 141.2
Net income attributable to
noncontrolling interests 3.0 0.6 11.2 7.2
Net income attributable to
Unisys Corporation 85.9 98.3 145.6 134.0
Preferred stock dividend 4.1 4.0 16.2 13.5
--- --- ---- ----
Net income attributable to
Unisys Corporation common
shareholders $81.8 $94.3 $129.4 $120.5
Earnings per common share
attributable to Unisys
Corporation
Basic $1.86 $2.17 $2.95 $2.79
Diluted $1.67 $1.94 $2.84 $2.71
Shares used in the per share
computations (thousands):
Basic 43,976 43,392 43,864 43,145
Diluted 51,307 50,799 51,216 49,478
UNISYS CORPORATION
SEGMENT RESULTS
(Unaudited)
(Millions)
Total Eliminations Services Technology
----- ------------ -------- ----------
Three Months Ended
December 31, 2012
------------
Customer revenue $979.3 $805.7 $173.6
Intersegment ($37.3) 1.8 35.5
Total revenue $979.3 ($37.3) $807.5 $209.1
====== ====== ====== ======
Gross profit
percent 29.2% 20.2% 68.1%
==== ==== ====
Operating profit
percent 11.7% 6.6% 43.9%
==== === ====
Three Months Ended
December 31, 2011
------------
Customer revenue $985.3 $835.3 $150.0
Intersegment ($32.4) 3.6 28.8
Total revenue $985.3 ($32.4) $838.9 $178.8
====== ====== ====== ======
Gross profit
percent 28.4% 20.0% 65.9%
==== ==== ====
Operating profit
percent 12.3% 7.6% 37.7%
==== === ====
Year Ended
December 31, 2012
------------
Customer revenue $3,706.4 $3,192.4 $514.0
Intersegment ($123.1) 3.8 119.3
Total revenue $3,706.4 ($123.1) $3,196.2 $633.3
======== ======= ======== ======
Gross profit
percent 26.3% 20.0% 63.9%
==== ==== ====
Operating profit
percent 8.6% 6.4% 33.1%
=== === ====
Year Ended
December 31,
2011
------------
Customer revenue $3,853.8 $3,354.6 $499.2
Intersegment ($102.6) 6.3 96.3
Total revenue $3,853.8 ($102.6) $3,360.9 $595.5
======== ======= ======== ======
Gross profit
percent 25.6% 20.0% 56.9%
==== ==== ====
Operating profit
percent 8.4% 6.9% 21.5%
=== === ====
UNISYS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Millions)
December 31, December 31,
2012 2011
---- ----
Assets
Current assets
Cash and cash equivalents $655.6 $714.9
Accounts and notes receivable, net 670.2 673.0
Inventories
Parts and finished equipment 29.3 38.1
Work in process and materials 20.7 26.7
Deferred income taxes 21.6 27.1
Prepaid expense and other current
assets 115.0 123.6
Total 1,512.4 1,603.4
------- -------
Properties 1,262.2 1,257.2
Less accumulated depreciation
and amortization 1,085.8 1,065.9
Properties, net 176.4 191.3
----- -----
Outsourcing assets, net 126.3 137.9
Marketable software, net 124.2 129.8
Prepaid postretirement assets 3.3 43.9
Deferred income taxes 162.7 181.5
Goodwill 192.3 192.5
Other long-term assets 122.8 131.9
Total $2,420.4 $2,612.2
======== ========
Liabilities and deficit
Current liabilities
Current maturities of long-term debt $0.3 $0.9
Accounts payable 228.6 241.6
Deferred revenue 389.5 448.1
Other accrued liabilities 411.9 425.5
Total 1,030.3 1,116.1
------- -------
Long-term debt 210.0 358.8
Long-term postretirement liabilities 2,553.5 2,224.0
Long-term deferred revenue 123.1 120.3
Other long-term liabilities 92.2 104.0
Commitments and contingencies
Total deficit (1,588.7) (1,311.0)
Total $2,420.4 $2,612.2
======== ========
UNISYS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Millions)
Year Ended
December 31
-----------
2012 2011
---- ----
Cash flows from operating activities
Consolidated net income $156.8 $141.2
Add (deduct) items to reconcile consolidated net
income to net cash provided by operating activities:
Loss on debt extinguishment 30.6 85.2
Employee stock compensation 14.3 13.9
Company stock issued for U.S. 401(k) plan 6.2 11.8
Depreciation and amortization of properties 54.7 66.4
Depreciation and amortization of outsourcing assets 57.9 62.7
Amortization of marketable software 62.0 65.7
Disposals of capital assets 6.3 1.4
Gain on sale of businesses and assets (11.7) (2.2)
Decrease in deferred income taxes, net 36.5 28.6
(Increase) decrease in receivables, net (11.2) 92.1
Decrease in inventories 14.2 22.1
Decrease in accounts payable and other accrued
liabilities (73.7) (214.4)
Decrease in other liabilities (200.7) (50.6)
Decrease (increase) in other assets 121.8 (5.9)
Other (2.7) (0.8)
Net cash provided by operating activities 261.3 317.2
----- -----
Cash flows from investing activities
Proceeds from investments 4,108.5 691.2
Purchases of investments (4,107.2) (688.2)
Restricted deposits (0.6) 50.7
Investment in marketable software (56.4) (51.7)
Capital additions of properties (40.1) (42.2)
Capital additions of outsourcing assets (36.1) (40.5)
Net proceeds from sale of businesses and assets 5.2 (15.6)
Net cash used for investing activities (126.7) (96.3)
------ -----
Cash flows from financing activities
Proceeds from issuance of preferred stock, net
of issuance costs - 249.7
Payments of long-term debt (388.9) (555.7)
Dividends paid to noncontrolling interests (4.5) (0.4)
Dividends paid on preferred shares (16.2) (12.2)
Proceeds from exercise of stock options 0.4 1.4
Proceeds from issuance of long-term debt 204.8 -
Financing fees - (2.2)
Net cash used for financing activities (204.4) (319.4)
------ ------
Effect of exchange rate changes on cash
and cash equivalents 10.5 (14.9)
---- -----
Decrease in cash and cash equivalents (59.3) (113.4)
Cash and cash equivalents, beginning of period 714.9 828.3
Cash and cash equivalents, end of period $655.6 $714.9
====== ======
( 1 )
UNISYS CORPORATION
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(Unaudited)
(Millions, except per share data)
Three Months Year
Ended December 31 Ended December 31
----------------- -----------------
2012 2011 2012 2011
---- ---- ---- ----
GAAP net income
attributable to Unisys
Corporation common
shareholders $81.8 $94.3 $129.4 $120.5
Debt reduction charges,
net of tax 0.0 7.6 30.6 85.2
Brazil non-income tax
case, net of tax 8.9
FAS87 pension charges,
net of tax 30.4 6.7 105.4 28.0
---- --- ----- ----
Non-GAAP net income
attributable to Unisys
Corporation common
shareholders 112.2 108.6 265.4 242.6
Add preferred stock dividend 4.1 4.0 16.2 13.5
--- --- ---- ----
Non-GAAP net income
attributable to Unisys
Corporation for diluted
earnings per share $116.3 $112.6 $281.6 $256.1
====== ====== ====== ======
Weighted average shares
(thousands) 43,976 43,392 43,864 43,145
Plus incremental shares from
assumed conversion:
419 494 439 553
Employee stock plans
6,913 6,913 6,913 5,780
Preferred stock
GAAP Adjusted weighted average
shares 51,307 50,799 51,216 49,478
====== ====== ====== ======
Diluted earnings per share
GAAP basis
----------
GAAP net income
attributable to Unisys
Corporation for diluted
earnings per share $85.9 $98.3 $145.6 $134.0
Divided by adjusted weighted
average shares 51,307 50,799 51,216 49,478
GAAP net income per diluted
share $1.67 $1.94 $2.84 $2.71
===== ===== ===== =====
Non-GAAP basis
--------------
Non-GAAP net income
attributable to Unisys
Corporation for diluted
earnings per share $116.3 $112.6 $281.6 $256.1
Divided by Non-GAAP
adjusted weighted average
shares 51,307 50,799 51,216 49,478
Non-GAAP net income per
diluted share $2.27 $2.22 $5.50 $5.18
===== ===== ===== =====
( 2 )
UNISYS CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP
(Unaudited)
(Millions)
FREE CASH FLOW
--------------
Three Months Year
Ended December 31 Ended December 31
----------------- -----------------
2012 2011 2012 2011
---- ---- ---- ----
Cash provided by operations $153.9 $159.5 $261.3 $317.2
Additions to marketable software (13.5) (14.8) (56.4) (51.7)
Additions to properties (14.1) (9.3) (40.1) (42.2)
Additions to outsourcing assets (8.3) (9.2) (36.1) (40.5)
---- ---- ----- -----
Free cash flow 118.0 126.2 128.7 182.8
Pension funding 26.4 19.1 201.5 82.7
Free cash flow before
pension funding $144.4 $145.3 $330.2 $265.5
====== ====== ====== ======
CONTACT: Investor Contact: Niels Christensen, +1-215-986-6651,
Niels.Christensen@unisys.com; Media Contact: Jim Kerr, +1-215-986-5795,
Jim.Kerr@unisys.com
Friday, 10th January 2025
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