Unisys Announces Third-Quarter 2009 Financial ResultsCompany reports $61 million in net income and generates free cash flow as results continued to benefit from turnaround program
BLUE BELL, Pa., October 28, 2009 – Unisys Corporation (NYSE: UIS) today reported third-quarter 2009 net income of $61.1 million, or $1.48 per diluted share, compared with a net loss of $34.7 million, or a loss of $.96 per diluted share, in the third quarter of 2008. The earnings per share amounts reflect the company’s previously announced reverse stock split discussed below. The company’s revenue declined 12% to $1.16 billion compared with revenue of $1.31 billion in the year-ago quarter. Foreign exchange rates had an approximately 5 percentage-point negative impact on revenue in the quarter. On a constant currency basis, revenue declined 7 percent.
“We continue to make progress in our turnaround program,” said Unisys Chairman and CEO Ed Coleman. “For the second consecutive quarter, the company was solidly profitable at the bottom line. Driven by a more cost-efficient services business and a strong profit performance in our technology business, we tripled our operating income over the year-ago quarter and achieved an operating profit margin of 10.2 percent in the quarter. We also met a key goal of generating free cash flow in the quarter, and we are now free cash flow positive for the first nine months of 2009.
“I’m pleased by the improvement we’re seeing, particularly given the difficult economic environment in which we’ve been operating this year,” Coleman said. “While we have a great deal of work to do, these are positive signs that our turnaround is working.”
Coleman also cited progress in strengthening the company’s balance sheet. During the quarter Unisys successfully completed private offers to exchange unsecured senior notes for secured senior notes, cash and Unisys common stock. As a result of the exchange, the company reduced its long-term debt and cut its 2010 debt maturities to $66 million.
Overall Third-Quarter Highlights
Unisys third-quarter gross profit margin improved to 26.4 percent from 22.2 percent a year ago as the company benefited from improved cost efficiencies in services delivery and a stronger mix of high-end enterprise servers. Reflecting these factors as well as significant reductions in selling, general, and administrative expenses, the company’s operating profit margin increased to 10.2 percent compared with 2.9 percent a year ago.
Services orders showed substantial gains from a year ago, driven primarily by outsourcing contract renewals. Services order backlog at September 30, 2009 was $6.4 billion.
Customer revenue in the company’s technology segment declined 4 percent (3 percent in constant currency) from the third quarter of 2008. Gross profit margin in the technology business increased to 55.2 percent compared with 47.5 percent in the year-ago quarter, while technology operating margin increased to 21.2 percent compared with 11.0 percent in the third quarter of 2008.
Cash Flow and Balance Sheet Highlights
On July 31, 2009, the company completed its private debt exchange offers for the exchange of an aggregate $760.4 million of unsecured senior notes for an aggregate $631.6 million of secured senior notes along with $30 million of cash and 5.2 million shares of Unisys common stock (adjusted for the reverse stock split). The exchange offers reduced the company’s overall long-term debt at September 30, 2009 to $911 million and increased shares outstanding to 42.3 million shares (adjusted for the reverse stock split).
Subsequent to September 30, the Unisys Board of Directors approved a reverse stock split of the company’s common stock at a ratio of one for ten. The reverse stock split, which was authorized by the company’s shareholders at the company’s annual meeting in May, became effective after the close of the market on October 23, 2009. The financial statements reflect the impact of the reverse stock split applied on a retroactive basis.
Conference Call
UNISYS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Millions, except per share data)
Three Months Nine Months
Ended September 30 Ended September 30
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2009 2008 2009 2008
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Revenue
Services $1,006.0 $1,152.1 $3,019.8 $3,486.2
Technology 153.6 160.3 368.4 467.5
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1,159.6 1,312.4 3,388.2 3,953.7
Costs and expenses
Cost of revenue:
Services 793.1 937.6 2,402.7 2,814.2
Technology 60.7 82.8 187.0 250.5
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853.8 1,020.4 2,589.7 3,064.7
Selling, general and
administrative 163.5 218.4 506.3 701.9
Research and development 24.3 35.7 76.8 98.6
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1,041.6 1,274.5 3,172.8 3,865.2
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Operating profit 118.0 37.9 215.4 88.5
Interest expense 25.4 21.5 68.4 64.3
Other income (expense), net (3.3) (0.9) (7.0) (8.4)
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Income before income taxes 89.3 15.5 140.0 15.8
Provision for income taxes 26.2 45.1 58.4 72.5
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Consolidated net
income (loss) 63.1 (29.6) 81.6 (56.7)
Net income attributable to
noncontrolling interests (2.0) (5.1) (6.8) (15.4)
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Net income (loss) attributable to
Unisys Corporation $61.1 ($34.7) $74.8 ($72.1)
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Earnings (loss) per share attributable
to Unisys Corporation
Basic $ 1.51 ($ .96) $ 1.96 ($ 2.01)
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Diluted $ 1.48 ($ .96) $ 1.93 ($ 2.01)
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Shares used in the per share
computations (thousands):
Basic 40,569 36,094 38,215 35,797
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Diluted 41,403 36,094 38,666 35,797
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On January 1, 2009, Unisys adopted SFAS 160, which required
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 more than 26,000 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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