Unisys Announces Fourth-Quarter and Full-Year 2012 Financial Results

     Unisys Announces Fourth-Quarter and Full-Year 2012 Financial Results

PR Newswire

BLUE BELL, Pa., Jan. 29, 2013

BLUE BELL, Pa., Jan. 29, 2013 /PRNewswire/ --

Fourth-Quarter 2012

  oRevenue down 1 percent vs. 4Q 2011; flat on a constant currency^(1) basis
  oDiluted EPS of $1.67 vs. $1.94 in 4Q 2011
  oNon-GAAP diluted EPS^(2) of $2.27 vs. $2.22 in 4Q 2011
  oFree cash flow^(3) of $118 million; free cash flow of $144 million before
    pension contributions

Full-Year 2012

  oRevenue down 4 percent vs. FY 2011; down 1 percent on a constant currency
    basis
  oDiluted EPS of $2.84 vs. $2.71 for FY 2011
  oNon-GAAP diluted EPS of $5.50 vs. $5.18 for FY 2011
  oFree cash flow of $129 million; free cash flow of $330 million before
    pension contributions

Unisys Corporation (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      -          249.7
issuance costs
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            10.5       (14.9)
equivalents
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:
Employee stock plans               419       494       439       553
Preferred stock                    6,913     6,913     6,913     5,780
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    51,307    50,799    51,216    49,478
shares
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   51,307    50,799    51,216    49,478
average shares
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



SOURCE Unisys Corporation

Website: http://www.unisys.com
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
 
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