Unisys Announces Fourth-Quarter 2013 Financial Results - KPLC 7 News, Lake Charles, Louisiana

Unisys Announces Fourth-Quarter 2013 Financial Results

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SOURCE Unisys Corporation

- Revenue grows 2 percent; technology revenue up 5 percent; services revenue up 1 percent

- Net income of $117.4 million vs. $81.8 million in 4Q 2012

- Diluted EPS of $2.37 vs. $1.67 in 4Q 2012

- Non-GAAP diluted EPS(1) of $2.82 vs. $2.27 in 4Q 2012

- Free cash flow(2) of $93 million; free cash flow of $138 million before pension contributions

BLUE BELL, Pa., Jan. 30, 2014 /PRNewswire/ -- Unisys Corporation (NYSE: UIS) today reported fourth-quarter 2013 net income of $117.4 million, or $2.37 per diluted share, which included $23.2 million of pension expense. In the fourth quarter of 2012, the company reported net income of $81.8 million, or $1.67 per diluted share, which included $30.4 million of pension expense. Excluding pension expense, non-GAAP diluted earnings per share in the fourth quarter of 2013 was $2.82 compared with $2.27 in the fourth quarter of 2012. Fourth-quarter 2013 revenue grew 2 percent to $996 million from $979 million in the fourth quarter of 2012. Foreign currency translations had a negligible impact on revenue comparisons in the fourth quarter.

For the full year of 2013, Unisys reported net income of $92.3 million, or $2.08 per diluted share, which included $90.0 million of pension expense. For the full year of 2012, the company 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. Excluding pension expense in both years and the debt reduction charges in 2012, non-GAAP earnings per share for the full year of 2013 was $3.87 compared with $5.50 for the full year of 2012. Full-year 2013 revenue declined 7 percent to $3.46 billion from full-year 2012 revenue of $3.71 billion. Foreign currency translations had a one percentage-point negative impact on full-year 2013 revenue comparisons.

"We closed 2013 with a good fourth quarter, reporting significantly increased profitability on higher revenue," said Unisys Chairman and CEO Ed Coleman. "We grew both our services and technology businesses while continuing to show good cost discipline across the business. We were particularly pleased by the higher operating profit margins in our services business, where we also grew orders for the third consecutive quarter. 

"As we move into 2014, we are excited by the opportunities in front of us," Coleman said. "We are seeing growing market interest in our Stealth cybersecurity software products, our new Forward! by Unisys fabric-based servers, our cloud-based offerings, and other innovative solution offerings.  We are focused on continuing our fourth-quarter momentum and driving profitable revenue growth in the year ahead."

Fourth-Quarter Company and Business Segment Highlights

International revenue grew 2 percent (3 percent on a constant currency(3) basis) in the fourth quarter as growth in Europe and Asia Pacific more than offset declines in Latin America. U.S. revenue was flat compared to the fourth quarter of 2012. 

The company reported an overall fourth-quarter 2013 gross profit margin of 31.7 percent, up from 29.2 percent in the year-ago quarter. Operating expenses (SG&A and R&D expenses) decreased 7 percent from the year-ago period, reflecting effective cost management. The company reported fourth-quarter 2013 operating profit of $155.9 million, or 15.7 percent of revenue, compared with fourth-quarter 2012 operating profit of $114.6 million, or 11.7 percent of revenue.

Fourth-quarter 2013 services revenue increased 1 percent (2 percent on a constant currency basis) as growth in outsourcing and systems integration offset declines in core maintenance. Reflecting a richer mix of higher-margin services and solutions as well as a continued focus on cost control, fourth-quarter 2013 services gross profit margin improved to 21.9 percent from 20.2 percent a year ago and services operating profit margin improved to 9.8 percent from 6.6 percent a year ago.  

Fourth-quarter 2013 services orders grew from the fourth quarter of 2012, driven by higher orders for outsourcing and systems integration services. Services backlog at December 31, 2013 was $4.8 billion, down 5 percent from services backlog at December 31, 2012.  

Fourth-quarter 2013 technology revenue grew 5 percent from the prior-year quarter. Fourth-quarter 2013 technology gross profit margin declined to 61.4 percent from 68.1 percent in the year-ago quarter, resulting from a higher mix of third-party product sales, and technology operating profit margin declined to 40.6 percent from 43.9 percent in the year-ago quarter.  

Cash Flow and Balance Sheet Highlights

In the fourth quarter of 2013, Unisys generated $141 million of cash from operations, which included $46 million of pension contributions. In the fourth quarter of 2012, the company generated $154 million of cash from operations, which included $26 million of pension contributions. Capital expenditures in the fourth quarter of 2013 were $48 million compared with $36 million in the year-ago quarter. The company generated $93 million of free cash flow in the fourth quarter of 2013 compared with free cash flow of $118 million in the fourth quarter of 2012. Free cash flow before pension contributions was $138 million in the fourth quarter of 2013 compared with $144 million in the year-ago quarter.  

Unisys made a total of $147 million in pension contributions in 2013 compared with $202 million of pension contributions in 2012. For the full year of 2013, the company generated free cash flow of $183 million before pension contributions compared with $330 million of free cash flow before pension contributions in 2012.

At December 31, 2013, the company reported a cash balance of $640 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) Non-GAAP diluted earnings per share – For the full years of 2013 and 2012, Unisys recorded pension expense of $90.0 million and $105.4 million, respectively. In addition, for full year 2012 the company incurred debt reduction charges of $30.6 million as a result of debt reduction actions. 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.

(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, free cash flow before pension funding is also provided.

(3) 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.

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.: 0130/9222

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




2013


2012


2013


2012

Revenue









  Services


$813.4


$805.7


$2,996.1


$3,192.4

  Technology


182.5


173.6


460.4


514.0




995.9


979.3


3,456.5


3,706.4

Costs and expenses









  Cost of revenue:









    Services


608.4


640.7


2,405.5


2,567.7

    Technology


72.1


52.7


202.6


165.2




680.5


693.4


2,608.1


2,732.9

Selling, general and administrative


140.6


150.8


559.4


572.8

Research and development


18.9


20.5


69.5


81.5




840.0


864.7


3,237.0


3,387.2

Operating profit


155.9


114.6


219.5


319.2











Interest expense


2.2


2.5


9.9


27.5

Other income (expense), net


(1.3)


(2.7)


9.8


(37.6)

Income before income taxes


152.4


109.4


219.4


254.1











Provision for income taxes


28.2


20.5


99.3


97.3

Consolidated net income


124.2


88.9


120.1


156.8

Net income attributable to










noncontrolling interests


2.7


3.0


11.6


11.2

Net income attributable to Unisys 










Corporation


121.5


85.9


108.5


145.6











Preferred stock dividend


4.1


4.1


16.2


16.2

Net income attributable to Unisys 










Corporation common shareholders


$117.4


$81.8


$92.3


$129.4











Earnings per common share










attributable to Unisys Corporation










  Basic


$   2.67


$  1.86


$  2.10


$  2.95


  Diluted


$   2.37


$  1.67


$  2.08


$  2.84











Shares used in the per share computations (thousands):







  Basic


43,947


43,976


43,899


43,864

  Diluted


51,319


51,307


44,347


51,216

 

UNISYS CORPORATION

SEGMENT RESULTS

(Unaudited)

(Millions)










  Total


 Eliminations


 Services


Technology

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%









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%









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%









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%

 

UNISYS CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Millions)








December 31,


December 31,



2013


2012

Assets





Current assets





Cash and cash equivalents


$639.8


$655.6

Accounts and notes receivable, net


683.1


670.2

Inventories





  Parts and finished equipment


32.8


29.3

  Work in process and materials


22.3


20.7

Deferred income taxes


24.1


21.6

Prepaid expense and other current assets


138.7


115.0

Total


1,540.8


1,512.4






Properties


1,095.5


1,262.2

Less accumulated depreciation and amortization


920.8


1,085.8

Properties, net


174.7


176.4

Outsourcing assets, net


115.5


126.3

Marketable software, net


129.1


124.2

Prepaid postretirement assets


83.7


3.3

Deferred income taxes


112.3


162.7

Goodwill


188.7


192.3

Other long-term assets


165.2


122.8

Total


$2,510.0


$2,420.4






Liabilities and deficit





Current liabilities





Current maturities of long-term debt


$0.0


$0.3

Accounts payable


246.7


228.6

Deferred revenue


402.4


389.5

Other accrued liabilities


375.7


411.9

Total


1,024.8


1,030.3







Long-term debt


210.0


210.0

Long-term postretirement liabilities


1,697.2


2,553.5

Long-term deferred revenue


122.7


123.1

Other long-term liabilities


119.2


92.2

Commitments and contingencies





Total deficit


(663.9)


(1,588.7)

Total


$2,510.0


$2,420.4

 

UNISYS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Millions)












 Year Ended 





 December 31 





2013


2012 *

Cash flows from operating activities





Consolidated net income


$120.1


$156.8

Add (deduct) items to reconcile consolidated net





income to net cash provided by operating activities:





Foreign currency transaction loss


6.5


-

Loss on debt extinguishment


-


30.6

Employee stock compensation


12.5


14.3

Company stock issued for U.S. 401(k) plan


-


6.2

Depreciation and amortization of properties


46.7


54.7

Depreciation and amortization of outsourcing assets


53.5


57.9

Amortization of marketable software


59.4


62.0

Disposals of capital assets


2.0


6.3

Loss (gain) on sale of business


1.5


(11.7)

Pension plans contributions


(147.2)


(201.5)

Decrease in deferred income taxes, net


29.4


26.3

Increase in receivables, net


(63.5)


(11.2)

(Increase) decrease in inventories


(6.5)


14.2

Increase (decrease) in accounts payable and other accrued liabilities


1.9


(80.7)

Change in other assets, liabilities and other


71.1


137.1

Net cash provided by operating activities


187.4


261.3








Cash flows from investing activities





Proceeds from investments


5,315.9


4,108.5

Purchases of investments


(5,325.8)


(4,107.2)

Restricted deposits


(1.3)


(0.6)

Investment in marketable software


(64.3)


(56.4)

Capital additions of properties


(47.2)


(40.1)

Capital additions of outsourcing assets


(39.9)


(36.1)

Net proceeds from sale of business


(0.1)


5.2

Net cash used for investing activities


(162.7)


(126.7)








Cash flows from financing activities





Purchases of common stock


(11.7)


-

Payments of long-term debt


-


(388.9)

Dividends paid to noncontrolling interests


-


(4.5)

Dividends paid on preferred shares


(16.2)


(16.2)

Proceeds from exercise of stock options


4.9


0.4

Proceeds from issuance of long-term debt


-


204.8

Net cash used for financing activities


(23.0)


(204.4)








Effect of exchange rate changes on cash and cash equivalents


(17.5)


10.5








Decrease in cash and cash equivalents


(15.8)


(59.3)

Cash and cash equivalents, beginning of period


655.6


714.9

Cash and cash equivalents, end of period


$639.8


$655.6








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


Year




Ended December 31


Ended December 31




2013


2012


2013


2012

GAAP net income









  attributable to Unisys Corporation









  common shareholders


$117.4


$81.8


$92.3


$129.4











Debt reduction charges, net of tax


0.0


0.0


0.0


30.6

FAS87 pension charges, net of tax


23.2


30.4


90.0


105.4











Non-GAAP net income









  attributable to Unisys Corporation









  common shareholders


140.6


112.2


182.3


265.4











Add preferred stock dividend


4.1


4.1


16.2


16.2











Non-GAAP net income









  attributable to Unisys Corporation









  for diluted earnings per share


$144.7


$116.3


$198.5


$281.6











Weighted average shares (thousands)


43,947


43,976


43,899


43,864











Plus incremental shares from assumed conversion:









Employee stock plans


460


419


448


439


Preferred stock


6,913


6,913


6,913


6,913











GAAP Adjusted weighted average shares


51,319


51,307


51,260


51,216





















Diluted earnings per share



















GAAP basis









GAAP net income









  attributable to Unisys Corporation









  for diluted earnings per share


$121.5


$85.9


$92.3


$145.6











Divided by adjusted weighted average shares


51,319


51,307


44,347


51,216











GAAP net income (loss) per diluted share


$   2.37


$   1.67


$   2.08


$   2.84











Non-GAAP basis









Non-GAAP net income 









  attributable to Unisys Corporation









  for diluted earnings per share


$144.7


$116.3


$198.5


$281.6











Divided by Non-GAAP adjusted weighted average shares

51,319


51,307


51,260


51,216











Non-GAAP net income per diluted share


$   2.82


$   2.27


$   3.87


$   5.50

 

( 2 )

UNISYS CORPORATION

RECONCILIATION OF GAAP TO NON-GAAP

(Unaudited)

(Millions)











FREE CASH FLOW














Three Months


Year




Ended December 31


Ended December 31




2013


2012


2013


2012

Cash provided by operations


$141.2


$153.9


$187.4


$261.3

Additions to marketable software


(17.0)


(13.5)


(64.3)


(56.4)

Additions to properties


(21.1)


(14.1)


(47.2)


(40.1)

Additions to outsourcing assets


(10.3)


(8.3)


(39.9)


(36.1)

Free cash flow


92.8


118.0


36.0


128.7

Pension funding


45.6


26.4


147.2


201.5

Free cash flow before pension funding


$138.4


$144.4


$183.2


$330.2

 

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