Final Results
Unisys Announces Fourth-Quarter and Full-Year 2014 Financial Results
BLUE BELL, Pennsylvania, Jan. 29, 2015 --
4Q 2014 vs. 4Q 2013:
* Revenue declines 9% (6% on a constant currency basis(1))
* U.S. and Canada revenue grew 6%
* Net income of $61.8 million vs. $117.4 million in 4Q 2013
* Diluted EPS of $1.24 vs. $2.37 in 4Q 2013
* Non-GAAP diluted EPS(2) of $1.60 vs. $2.82 in 4Q 2013
Full-year 2014 vs. full-year 2013:
* Revenue declines 3% (2% in constant currency)
* U.S. and Canada revenue grew 1%
* Net income of $44.0 million vs. $92.3 million for FY 2013
* Diluted EPS of $0.89 vs. $2.08 for FY 2013
* Non-GAAP diluted EPS of $2.36 vs. $3.87 for FY 2013
Unisys Corporation (NYSE: UIS) today reported fourth-quarter 2014 net income of
$61.8 million or $1.24 per diluted share, including $18.1 million of pension
expense. Excluding pension expense, non-GAAP diluted earnings per share was
$1.60. In the comparable period in 2013, the company reported diluted earnings
per share of $2.37, and non-GAAP diluted earnings per share of $2.82.
Fourth-quarter 2014 revenue declined 9% to $906 million from $996 million in
the fourth quarter of 2013. On a constant currency basis, fourth-quarter 2014
revenue declined 6%.
For the full year of 2014, Unisys reported net income of $44.0 million, or
$0.89 per diluted share, which included $73.2 million of pension expense.
Excluding pension expense, non-GAAP diluted earnings per share was $2.36. In
the comparable period in 2013, the company reported earnings of $2.08 per
diluted share, and non-GAAP diluted earnings per share of $3.87. Full-year 2014
revenue declined 3% to $3.36 billion from $3.46 billion in 2013. On a constant
currency basis, full-year 2014 revenue declined 2%.
"Our U.S. & Canada team, particularly our US Federal group, posted strong
growth in the quarter, balancing weakness in some global markets," said Peter
Altabef who joined the company as President and CEO on January 1, 2015.
Fourth-Quarter Company and Business Segment Highlights
Services revenue represented 80% of the company's fourth-quarter 2014 total and
declined 11%, reflecting declines in outsourcing, systems integration, and
infrastructure services. On a constant currency basis, fourth quarter 2014
services revenue declined 8%. As a result of the lower revenue, fourth-quarter
services gross profit margin declined to 17.5% from 21.9% a year ago. Services
operating profit margin declined to 3.9% from 9.8%. Services backlog at
December 31, 2014 was $4.8 billion, unchanged from the prior year.
Technology revenue grew 1% from the prior-year fourth quarter or 3% on a
constant currency basis. Fourth-quarter 2014 technology gross profit margin was
60.4% versus 61.4% a year ago. Technology operating profit margin was 36.3%
compared to 40.6%. This reflected the impact of higher investments in growth
programs.
The company reported an overall fourth-quarter 2014 gross profit margin of
27.0% versus 31.7% in the year-ago quarter. Operating expenses (SG&A and R&D
expenses) increased 2% from the year-ago period, reflecting increased
investments in growth programs. The company reported a fourth-quarter 2014
operating profit of $82.4 million, or 9.1% of revenue, compared to
fourth-quarter 2013 operating profit of $155.9 million, or 15.7% of revenue.
From a geographic perspective, U.S and Canada revenue grew 6% in the fourth
quarter driven by growth in the company's U.S. Federal business. International
revenue declined 18% in the fourth quarter (14% on a constant currency basis)
as growth in Latin America was offset by revenue declines in EMEA and
Asia-Pacific.
Cash Flow and Balance Sheet Highlights
In the fourth quarter of 2014, Unisys generated $106 million of cash from
operations, including $22 million of pension contributions. In the fourth
quarter of 2013, the company generated $141 million of cash from operations,
including $45 million of pension contributions. Capital expenditures in the
fourth quarter of 2014 were $69 million compared with $48 million in the
year-ago quarter. The company generated $37 million of free cash flow(3) in the
fourth quarter of 2014 compared with free cash flow of $93 million in the
fourth quarter of 2013. Free cash flow before pension contributions was $59
million in the fourth quarter of 2014 and $138 million in the year-ago quarter.
Unisys made a total of $183 million in pension contributions in 2014 compared
to $147 million of pension contributions in 2013. For the full year of 2014,
the company generated free cash flow before pension contributions of $92
million compared to $183 million in 2013.
At December 31, 2014, the company reported a cash balance of $494 million and
total debt of $224 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 - The company recorded pension expense
of $18.1 million and $23.2 million during the fourth quarters of 2014 and 2013,
respectively. For the full years of 2014 and 2013, Unisys recorded pension
expense of $73.2 million and $90.0 million, 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 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, 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 global information technology company that solves complex IT
challenges at the intersection of modern and mission critical. We work with
many of the world's largest companies and government organizations to secure
and keep their mission-critical operations running at peak performance;
streamline and transform their data centers; enhance support to their end users
and constituents; and modernize their enterprise applications. We do this while
protecting and building on their legacy IT investments. Our offerings include
outsourcing and managed services, systems integration and consulting services,
high-end server technology, cybersecurity and cloud management software, and
maintenance and support services. Unisys has more than 20,000 employees serving
clients around the world. For more information, visit http://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 change
in its industry; the company's ability to drive profitable growth in consulting
and systems integration; the company's ability to profitably grow its
outsourcing business; the company's ability to maintain and grow its technology
business; the potential adverse effects of aggressive competition in the
information services and technology marketplace; the company's ability to
retain significant clients; 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 performance and capabilities of
third parties with whom the company has commercial relationships; the company's
ability to attract, motivate and retain experienced and knowledgeable personnel
in key positions; the company's significant pension obligations and potential
requirements to make significant cash contributions to its defined benefit
pension plans; the company's ability to continue to simplify its operations and
provide services more cost efficiently; the adverse effects of global economic
conditions; the risk that breaches of data security could expose the company to
legal liability and could harm its business and reputation; 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.: 0129/9307
Unisys is a registered trademark of Unisys Corporation. Any other brand and
products 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 Year
Ended December 31 Ended December 31
2014 2013 2014 2013
Revenue
Services $720.9 $813.4 $2,887.7 $2,996.1
Technology 184.9 182.5 468.7 460.4
905.8 995.9 3,356.4 3,456.5
Costs and expenses
Cost of revenue:
Services 593.2 608.4 2,394.2 2,405.5
Technology 67.9 72.1 184.4 202.6
661.1 680.5 2,578.6 2,608.1
Selling, general and administrative 144.0 140.6 554.1 559.4
Research and development 18.3 18.9 68.8 69.5
823.4 840.0 3,201.5 3,237.0
Operating profit 82.4 155.9 154.9 219.5
Interest expense 2.6 2.2 9.2 9.9
Other income (expense), net 8.8 (1.3) (0.2) 9.8
Income before income taxes 88.6 152.4 145.5 219.4
Provision for income taxes 23.9 28.2 86.2 99.3
Consolidated net income 64.7 124.2 59.3 120.1
Net income attributable to
noncontrolling interests 2.9 2.7 12.6 11.6
Net Income attributable to Unisys
Corporation 61.8 121.5 46.7 108.5
Preferred stock dividend - 4.1 2.7 16.2
Net income attributable to Unisys
Corporation common shareholders $61.8 $117.4 $44.0 $92.3
Earnings per common share
attributable to Unisys Corporation
Basic $ 1.24 $ 2.67 $ .89 $ 2.10
Diluted $ 1.24 $ 2.37 $ .89 $ 2.08
Shares used in the per share
computations (thousands):
Basic 49,689 43,947 49,280 43,899
Diluted 49,948 51,319 49,584 44,347
UNISYS CORPORATION
SEGMENT RESULTS
(Unaudited)
(Millions)
Total Eliminations Services Technology
Three Months Ended
December 31, 2014
Customer revenue $905.8 $720.9 $184.9
Intersegment ($53.5) 0.1 53.4
Total revenue $905.8 ($53.5) $721.0 $238.3
Gross profit percent 27.0% 17.5% 60.4%
Operating profit percent 9.1% 3.9% 36.3%
Three Months Ended
December 31, 2013
Customer revenue $995.9 $813.4 $182.5
Intersegment ($66.0) 0.4 65.6
Total revenue $995.9 ($66.0) $813.8 $248.1
Gross profit percent 31.7% 21.9% 61.4%
Operating profit percent 15.7% 9.8% 40.6%
Year Ended
December 31, 2014
Customer revenue $3,356.4 $2,887.7 $468.7
Intersegment ($112.3) 0.4 111.9
Total revenue $3,356.4 ($112.3) $2,888.1 $580.6
Gross profit percent 23.2% 17.5% 56.3%
Operating profit percent 4.6% 4.2% 19.1%
Year Ended
December 31, 2013
Customer revenue $3,456.5 $2,996.1 $460.4
Intersegment ($122.5) 1.7 120.8
Total revenue $3,456.5 ($122.5) $2,997.8 $581.2
Gross profit percent 24.5% 19.7% 53.9%
Operating profit percent 6.4% 6.2% 21.1%
UNISYS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Millions)
December 31, December 31,
2014 2013
Assets
Current assets
Cash and cash equivalents $494.3 $639.8
Accounts and notes receivable, net 619.3 683.1
Inventories
Parts and finished equipment 22.2 32.8
Work in process and materials 24.5 22.3
Deferred income taxes 16.4 24.1
Prepaid expense and other current assets 140.6 138.7
Total 1,317.3 1,540.8
Properties 1,059.4 1,095.5
Less accumulated depreciation and amortization 890.7 920.8
Properties, net 168.7 174.7
Outsourcing assets, net 150.9 115.5
Marketable software, net 144.1 129.1
Prepaid postretirement assets 19.9 83.7
Deferred income taxes 154.6 112.3
Goodwill 183.9 188.7
Other long-term assets 209.3 165.2
Total $2,348.7 $2,510.0
Liabilities and deficit
Current liabilities
Current maturities of long-term debt $1.8 $0.0
Accounts payable 262.5 246.7
Deferred revenue 348.3 402.4
Other accrued liabilities 385.1 375.7
Total 997.7 1,024.8
Long-term debt 222.2 210.0
Long-term postretirement liabilities 2,369.9 1,697.2
Long-term deferred revenue 119.5 122.7
Other long-term liabilities 91.8 119.2
Commitments and contingencies
Total deficit (1,452.4) (663.9)
Total $2,348.7 $2,510.0
UNISYS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Millions)
Year Ended
December 31
2014 2013
Cash flows from operating activities
Consolidated net income $59.3 $120.1
Add (deduct) items to reconcile consolidated net
income to net cash provided by operating
activities:
Foreign currency transaction loss 7.4 6.5
Employee stock compensation 10.4 12.5
Depreciation and amortization of properties 52.0 46.7
Depreciation and amortization of outsourcing assets 58.1 53.5
Amortization of marketable software 58.5 59.4
Other non-cash operating activities 7.8 (0.6)
Disposals of capital assets 1.8 2.0
(Gain) loss on sale of business (0.7) 1.5
Pension contributions (183.4) (147.2)
Pension expense 73.8 93.5
Decrease in deferred income taxes, net 24.8 29.4
Increase in receivables, net (14.3) (63.5)
Decrease (increase) in inventories 6.3 (6.5)
Increase in accounts payable and other accrued
liabilities 14.4 1.9
Decrease in other liabilities (31.1) (5.3)
Increase in other assets (23.7) (16.5)
Net cash provided by operating activities 121.4 187.4
Cash flows from investing activities
Proceeds from investments 5,654.0 5,315.9
Purchases of investments (5,640.3) (5,325.8)
Investment in marketable software (73.6) (64.3)
Capital additions of properties (53.3) (47.2)
Capital additions of outsourcing assets (85.9) (39.9)
Other 3.8 (1.4)
Net cash used for investing activities (195.3) (162.7)
Cash flows from financing activities
Purchases of common stock (35.7) (11.7)
Dividends paid on preferred shares (4.0) (16.2)
Proceeds from exercise of stock options 3.4 4.9
Financing fees (0.6) -
Net cash used for financing activities (36.9) (23.0)
Effect of exchange rate changes on cash and
cash equivalents (34.7) (17.5)
Decrease in cash and cash equivalents (145.5) (15.8)
Cash and cash equivalents, beginning of period 639.8 655.6
Cash and cash equivalents, end of period $494.3 $639.8
(1)
UNISYS CORPORATION
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(Unaudited)
(Millions, except per share data)
Three Months Year
Ended December Ended December
31 31
2014 2013 2014 2013
GAAP net income
attributable to Unisys Corporation
common shareholders $61.8 $117.4 $44.0 $92.3
Pension expense, net of tax 18.1 23.2 73.2 90.0
Non-GAAP net income
attributable to Unisys Corporation
common shareholders 79.9 140.6 117.2 182.3
Add preferred stock dividend 0.0 4.1 2.7 16.2
Non-GAAP net income
attributable to Unisys Corporation
for diluted earnings per share $79.9 $144.7 $119.9 $198.5
Weighted average shares (thousands) 49,689 43,947 49,280 43,899
Plus incremental shares from assumed
conversion:
Employee stock plans 259 459 304 448
Preferred stock 0 6,913 1,172 6,913
GAAP adjusted weighted average shares 49,948 51,319 50,756 51,260
Diluted earnings per share
GAAP basis
GAAP net income
attributable to Unisys Corporation
for diluted earnings per share $61.8 $121.5 $44.0 $92.3
Divided by adjusted weighted average shares 49,948 51,319 49,584 44,347
GAAP earnings per diluted share $ 1.24 $ 2.37 $ .89 $ 2.08
Non-GAAP basis
Non-GAAP net income
attributable to Unisys Corporation
for diluted earnings per share $79.9 $144.7 $119.9 $198.5
Divided by Non-GAAP adjusted weighted
average shares 49,948 51,319 50,756 51,260
Non-GAAP earnings per diluted share $ 1.60 $ 2.82 $ 2.36 $ 3.87
(2)
UNISYS CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP
(Unaudited)
(Millions)
FREE CASH FLOW
Three Months Year
Ended December 31 Ended December 31
2014 2013 2014 2013
Cash provided by operations $105.5 $141.2 $121.4 $187.4
Additions to marketable
software (17.5) (17.0) (73.6) (64.3)
Additions to properties (11.4) (21.1) (53.3) (47.2)
Additions to outsourcing assets (40.0) (10.3) (85.9) (39.9)
Free cash flow 36.6 92.8 (91.4) 36.0
Pension funding 22.1 45.6 183.4 147.2
Free cash flow before
pension funding $58.7 $138.4 $92.0 $183.2
CONTACT: Investor Contact: Niels Christensen, 215-986-6651,
Niels.Christensen@unisys.com or Media Contact: Jim Kerr, 215-986-5795,
Jim.Kerr@unisys.com
Friday, 10th January 2025
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