Unisys Announces Fourth-Quarter and Full-Year 2009 Financial ResultsCompany reports significantly improved earnings and cash flow for fourth quarter and full year of 2009BLUE BELL, Pa., February 4, 2010 – Unisys Corporation (NYSE: UIS) today reported fourth-quarter 2009 net income of $114.5 million, or $2.64 per diluted share. This compared with a fourth-quarter 2008 net loss of $58.0 million, or a loss of $1.59 per diluted share, which included a $99.0 million pretax cost-reduction charge. Revenue in the quarter declined 5 percent to $1.21 billion compared with revenue of $1.28 billion in the year-ago quarter. Foreign exchange rates had an approximately 5 percentage-point positive impact on revenue in the quarter.
For the full year of 2009, Unisys reported net income of $189.3 million, or $4.75 per diluted share. This compared with a full-year 2008 net loss of $130.1 million, or a loss of $3.62 per diluted share, which included $103.1 million of pretax cost-reduction charges. Revenue in 2009 declined 12 percent to $4.60 billion compared with revenue of $5.23 billion in 2008. Foreign currency fluctuations had an approximately 4 percentage-point negative impact on revenue for the full year.
“This was a year of significant progress for Unisys,” said Unisys Chairman and CEO Ed Coleman. “I am pleased by the way our team rose to the challenge and executed against the priorities of our turnaround program in 2009. We did this work in a difficult economic environment, and we saw the fruits of our efforts in our results over the past three quarters. Our fourth-quarter profitability and cash flow were particularly strong, driven by a more cost-efficient services business and strong sales of ClearPath systems.
“The Unisys turnaround is not complete by any measure,” Coleman said. “While we’ve taken positive first steps, our goal is to become a consistently and predictably profitable company that generates free cash flow and delivers outstanding customer service in our targeted areas of security; data center transformation, including our server business; end user outsourcing; and application modernization. In 2010 we will focus on continuing to execute against our priorities of concentrating our resources more effectively, sharpening the value propositions for our offerings, improving the cost efficiency of our labor model, and simplifying our operations to reduce overhead.”
Overall Fourth-Quarter Highlights
Unisys reported a fourth-quarter gross profit margin of 28.0 percent, up from 18.6 percent a year ago, reflecting improved cost efficiencies in services delivery and strong sales of ClearPath servers in the current quarter as well as the cost-reduction charge in the year-ago quarter. Reflecting these factors as well as significant reductions in selling, general, and administrative expenses in 2009, the company’s operating profit margin increased to 10.8 percent compared with an operating loss of 3.7 percent a year ago.
Fourth-Quarter Business Segment Results
Services orders showed mid single-digit declines from year-ago levels as growth in outsourcing orders was offset by declines in systems integration and consulting orders. Services order backlog at December 31, 2009 was $6.5 billion, up from $6.1 billion at year-end 2008.
Customer revenue in the company’s technology segment increased 19 percent from the fourth quarter of 2008. Foreign currency fluctuations had an approximately 8 percentage-point positive impact on technology revenue in the quarter. Driven by strong sales of higher-margin ClearPath enterprise servers, the company reported a technology gross profit margin of 61.0 percent and an operating profit margin of 31.5 percent in the quarter. These compared with a gross profit margin of 43.7 percent and operating margin of 6.7 percent in the year-ago quarter.
Cash Flow and Balance Sheet Highlights
For the full year of 2009, Unisys generated $397 million of cash from operations compared with $255 million in the full year of 2008. Capital expenditures for full-year 2009 were $201 million compared with $295 million in 2008. After capital expenditures, Unisys generated $196 million of free cash flow for full-year 2009 compared with $40 million of free cash usage in 2008.
At December 31, 2009, Unisys reported $648 million of cash on hand, up from $544 million at year-end 2008.
Conference Call
UNISYS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Millions, except per share data)
Three Months Year
Ended December 31 Ended December 31
------------------ ------------------
2009 2008 2009 2008
-------- -------- -------- --------
Revenue
Services $1,017.1 $1,117.4 $4,036.9 $4,603.6
Technology 192.4 162.1 560.8 629.6
-------- -------- -------- --------
1,209.5 1,279.5 4,597.7 5,233.2
Costs and expenses
Cost of revenue:
Services 811.7 951.7 3,214.4 3,765.9
Technology 59.6 90.1 246.6 340.6
-------- -------- -------- --------
871.3 1,041.8 3,461.0 4,106.5
Selling, general and
administrative 182.9 255.1 689.2 957.0
Research and development 25.1 30.4 101.9 129.0
-------- -------- -------- --------
1,079.3 1,327.3 4,252.1 5,192.5
-------- -------- -------- --------
Operating profit (loss) 130.2 (47.8) 345.6 40.7
Interest expense 26.8 20.8 95.2 85.1
Other income (expense), net (8.8) (11.7) (15.8) (20.1)
-------- -------- -------- --------
Income (loss) before
income taxes 94.6 (80.3) 234.6 (64.5)
Provision (benefit) for
income taxes (16.8) (19.3) 41.6 53.2
-------- -------- -------- --------
Consolidated net
income (loss) 111.4 (61.0) 193.0 (117.7)
Net (income) loss attributable to
noncontrolling interests 3.1 3.0 (3.7) (12.4)
-------- -------- -------- --------
Net income (loss) attributable to
Unisys Corporation $114.5 ($58.0) $189.3 ($130.1)
======== ======== ======== ========
Earnings (loss) per share attributable
to Unisys Corporation
Basic $ 2.71 ($ 1.59) $ 4.82 ($ 3.62)
======== ======== ======== ========
Diluted $ 2.64 ($ 1.59) $ 4.75 ($ 3.62)
======== ======== ======== ========
Shares used in the per share
computations (thousands):
Basic 42,285 36,520 39,241 35,978
======== ======== ======== ========
Diluted 43,307 36,520 39,834 35,978
======== ======== ======== ========
On January 1, 2009, Unisys adopted SFAS 160, which required
certain reclassifications of noncontrolling interests to
the 2008 income statement. All references to "net income"
or "net loss" contained in this press release are intended
to refer to the income statement line item titled "Net income
(loss) attributable to Unisys Corporation".
The financial statements reflect the impact of the one-for-ten
reverse stock split which became effective on October 23, 2009
on a retroactive basis.
UNISYS CORPORATION
SEGMENT RESULTS
(Unaudited)
(Millions)
Elimi-
Total nations Services Technology
-------- -------- -------- ----------
Three Months Ended
December 31, 2009
------------------
Customer revenue $1,209.5 $1,017.1 $192.4
Intersegment ($52.4) 1.9 50.5
-------- -------- -------- --------
Total revenue $1,209.5 ($52.4) $1,019.0 $242.9
======== ======== ======== ========
Gross profit percent 28.0% 18.2% 61.0%
======== ======== ========
Operating profit
percent 10.8% 6.4% 31.5%
======== ======== ========
Three Months Ended
December 31, 2008
------------------
Customer revenue $1,279.5 $1,117.4 $162.1
Intersegment ($69.8) 4.5 65.3
-------- -------- -------- --------
Total revenue $1,279.5 ($69.8) $1,121.9 $227.4
======== ======== ======== ========
Gross profit percent 18.6% 16.9% 43.7%
======== ======== ========
Operating profit (loss)
percent (3.7%) 3.2% 6.7%
======== ======== ========
Year Ended
December 31, 2009
------------------
Customer revenue $4,597.7 $4,036.9 $560.8
Intersegment ($170.8) 6.9 163.9
-------- -------- -------- --------
Total revenue $4,597.7 ($170.8) $4,043.8 $724.7
======== ======== ======== ========
Gross profit percent 24.7% 18.8% 49.6%
======== ======== ========
Operating profit
percent 7.5% 6.2% 12.4%
======== ======== ========
Year Ended
December 31, 2008
------------------
Customer revenue $5,233.2 $4,603.6 $629.6
Intersegment ($232.0) 13.9 218.1
-------- -------- -------- --------
Total revenue $5,233.2 ($232.0) $4,617.5 $847.7
======== ======== ======== ========
Gross profit percent 21.5% 18.1% 43.5%
======== ======== ========
Operating profit
percent 0.8% 3.0% 4.1%
======== ======== ========
UNISYS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Millions)
December 31, December 31,
2009 2008
---------- ----------
Assets
Current assets
Cash and cash equivalents $647.6 $544.0
Accounts and notes receivable, net 790.7 818.5
Inventories
Parts and finished equipment 57.5 64.7
Work in process and materials 43.0 70.7
Deferred income taxes 19.9 23.8
Prepaid expense and other
current assets 144.7 116.7
---------- ----------
Total 1,703.4 1,638.4
---------- ----------
Properties 1,374.3 1,416.0
Less accumulated depreciation
and amortization 1,146.4 1,139.5
---------- ----------
Properties, net 227.9 276.5
---------- ----------
Outsourcing assets, net 277.1 314.9
Marketable software, net 154.9 202.0
Prepaid postretirement assets - 20.7
Deferred income taxes 180.6 87.6
Goodwill 198.5 189.4
Other long-term assets 214.5 94.6
---------- ----------
Total $2,956.9 $2,824.1
========== ==========
Liabilities and stockholders' deficit
Current liabilities
Current maturities of long-term debt $65.8 $1.5
Accounts payable 307.4 379.2
Other accrued liabilities 1,021.6 1,045.7
---------- ----------
Total 1,394.8 1,426.4
---------- ----------
Long-term debt 845.9 1,059.1
Long-term postretirement liabilities 1,640.6 1,497.0
Other long-term liabilities 347.3 265.4
Commitments and contingencies
Total stockholders' deficit (1,271.7) (1,423.8)
---------- ----------
Total $2,956.9 $2,824.1
========== ==========
UNISYS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Millions)
Year Ended
December 31
--------------------
2009 2008
-------- --------
Cash flows from operating activities
Consolidated net income (loss) $193.0 ($117.7)
Add (deduct) items to reconcile
consolidated net income (loss) to net
cash provided by operating activities:
Employee stock compensation expense .7 1.1
Company stock issued for U.S. 401(k) plan - 41.8
Depreciation and amortization
of properties 96.9 105.7
Depreciation and amortization of
outsourcing assets 151.0 162.6
Amortization of marketable software 104.6 149.7
Disposals of capital assets 10.8 12.9
Loss on sale of assets 8.8 -
Increase in deferred income taxes, net (87.9) (9.9)
Decrease in receivables, net 62.1 186.7
Decrease in inventories 14.0 27.2
Decrease in accounts payable
and other accrued liabilities (70.7) (110.9)
Increase (decrease) in other liabilities 37.3 (79.1)
Increase in other assets (121.9) (119.7)
Other (1.9) 4.2
------- -------
Net cash provided by operating activities 396.8 254.6
------- -------
Cash flows from investing activities
Proceeds from investments 404.1 6,208.2
Purchases of investments (402.8) (6,190.3)
Collateralized letters of credit (86.8) -
Investment in marketable software (57.6) (84.5)
Capital additions of properties (45.9) (76.9)
Capital additions of outsourcing assets (97.8) (133.1)
Purchases of businesses (1.9) (6.4)
Proceeds from sale of assets 17.4 -
------- -------
Net cash used for investing activities (271.3) (283.0)
------- -------
Cash flows from financing activities
Net reduction in short-term borrowings - (.1)
Payments of long-term debt (30.0) (200.0)
Financing fees (16.1) (.8)
------- -------
Net cash used for financing
activities (46.1) (200.9)
------- -------
Effect of exchange rate changes on cash
and cash equivalents 24.2 (56.9)
------- -------
Increase (decrease) in cash and
cash equivalents 103.6 (286.2)
Cash and cash equivalents, beginning of
period 544.0 830.2
------- -------
Cash and cash equivalents, end of period $647.6 $544.0
======= =======
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
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