Unisys Corp Final Results

 
TIDMUSY 
 
Unisys Announces Fourth-Quarter and Full Year 2015 Financial Results 
 
BLUE BELL, Pennsylvania, Jan. 28, 2016 -- Unisys Corporation (NYSE: UIS) today 
reported fourth quarter and full year 2015 results. 
 
4Q 2015: 
 
  * Revenue of $790 million 
  * Operating profit margin of 2.0 percent; 12.1 percent(1) before cost 
    reduction charges and other expense of $53 million and pension expense of 
    $27 million 
  * Diluted earnings per share of $0.02 
  * Non-GAAP diluted earnings per share(2) of $1.58 
 
Full Year 2015: 
 
  * Revenue of $3,015 million 
  * Operating profit margin of (1.8) percent; 5.8 percent before cost reduction 
    charges and other expense of $123 million and pension expense of $109 
    million 
  * Diluted loss per share of ($2.20) 
  * Non-GAAP diluted earnings per share of $2.26 
 
"Our progress as a provider of higher-value, industry-focused IT solutions 
continues," said Unisys President and CEO Peter Altabef. "Our efforts to reduce 
costs, sharpen our market focus and enhance our offerings continued to improve 
our competitiveness and positioning in the marketplace. In the fourth quarter, 
services revenue continued to grow in constant currency, our non-GAAP operating 
profitability improved, we made a number of critical leadership additions, and 
our Stealth offering continued to gain traction." 
 
Summary of Business Results 
 
  * Fourth quarter 2015 
      + Company: 
          o Revenue of $790 million declined 13 percent year-over-year; down 6 
            percent in constant currency(3) as Services revenue growth in 
            constant currency was offset by lower Technology revenue. 
          o Overall operating profit margin of 2.0 percent includes cost 
            reduction charges and other expense and pension expense. Fourth 
            quarter 2015 non-GAAP operating profit margin was 12.1 percent, an 
            increase of 100 basis points from the prior year. 
      + Services: 
          o Service revenue, which represented 82 percent of total revenue, 
            declined by 6 percent, growing 2 percent in constant currency; the 
            fourth consecutive quarter of year-over-year growth in constant 
            currency principally reflected higher Application Services revenue. 
          o Services operating profit margin was 3.6 percent, an increase of 20 
            basis points from the prior year, reflecting the benefit of cost 
            reduction actions taken in 2015. 
      + Technology: 
          o Technology revenue, which represented 18 percent of total revenue, 
            declined 35 percent, down 30 percent in constant currency, 
            reflecting reduced ClearPath ForwardT revenue, which can vary 
            significantly from quarter-to-quarter based on the timing of 
            license renewals, and lower sales of low-margin third party 
            equipment. 
          o Operating profit margin improved to 46.8 percent from 36.1 percent 
            in the prior year due to a higher proportion of software revenue 
            and the benefit of operating cost reductions. 
  * Full Year 2015 
      + Company: 
          o Revenue of $3,015 million declined 10 percent year-over-year; down 
            2 percent in constant currency, reflecting lower Technology 
            revenue. 
          o Overall operating profit margin of (1.8) percent includes cost 
            reduction charges and other expense and pension expense. 
      + Services: 
          o Services revenue, which represented 86 percent of total revenue, 
            declined by 6 percent, growing 2 percent in constant currency. The 
            growth in constant currency principally reflected higher 
            Application Services revenue. 
          o Services operating profit margin was 2.3 percent, a decrease of 110 
            basis points from the prior year, reflecting the impact of 
            currency, which offset the benefit of cost reduction actions taken 
            in 2015. 
      + Technology: 
          o Technology revenue, which represented 14 percent of total revenue, 
            declined 28 percent, down 22 percent in constant currency, 
            reflecting reduced ClearPath ForwardT revenue and lower sales of 
            low-margin third party equipment. 
          o Technology operating profit margin improved to 24.8 percent from 
            21.9 percent in the prior year due to operating cost reductions. 
 
Cash Flow 
 
  * Fourth quarter 2015 free cash flow(4) of $63 million rose 73 percent 
    year-over-year due principally to lower capital expenditures. Adjusted free 
    cash flow(5) in fourth quarter 2015 doubled from the prior year to $117 
    million. 
  * Full year 2015 free cash flow usage of $213 million, an increase of $121 
    million from 2014, included $59 million in cost reduction payments and the 
    impact of $48 million in delayed receivable payments from a large Public 
    Sector client, which were not received until January 2016. Adjusted free 
    cash flow usage of $6 million in 2015 declined $98 million from 2014. 
  * The company ended 2015 with $365 million in cash. 
 
2016 Outlook 
 
  * Unisys will discuss the 2016 outlook during the quarterly earnings 
    conference call. 
 
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. 
 
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. Management uses supplemental 
non-GAAP financial measures internally to understand, manage and evaluate the 
business and assess operational alternatives. 
 
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 operating profit - During the fourth quarter and full year 2015, 
Unisys recorded pretax pension expense and a pretax charge in connection with 
cost reduction actions and other expense. In order to provide investors with 
additional understanding of the company's operating results, these changes are 
excluded from the operating profit. 
 
 (2) Non-GAAP diluted earnings per share - During the fourth quarter and full 
year 2015, Unisys recorded pension expense, net of tax, and a charge, net of 
tax, in connection with cost reduction actions and other expense. 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/loss per share 
calculations. 
 
(3) Constant currency - The company refers to growth rates in constant currency 
or on a constant currency basis 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 is calculated by retranslating current and prior 
period results at a consistent rate. 
 
(4) Free cash flow - The company defines free cash flow 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. 
 
(5) Adjusted free cash flow - Adjusted free cash flow provides free cash flow 
before the company's pension contributions or cost reduction payments in an 
effort to provide investors with a perspective on the company's free cash flow 
generation before these items. 
 
About Unisys 
Unisys is a global information technology company that works with many of the 
world's largest companies and government organizations to solve their most 
pressing IT and business challenges. Unisys specializes in providing 
integrated, leading-edge solutions to clients in the government, financial 
services and commercial markets. With more than 20,000 employees serving 
clients around the world, Unisys offerings include cloud and infrastructure 
services, application services, security solutions, and high-end server 
technology. 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 
innovation in its industry; the company's ability to maintain and grow its 
technology business; the company's ability to improve margins in its services 
business; the company's ability to drive efficiencies across all of its 
operations; the company's significant pension obligations and requirements to 

(MORE TO FOLLOW) Dow Jones Newswires

January 29, 2016 02:00 ET (07:00 GMT)

make significant cash contributions to its defined benefit plans; financial 
market conditions that may inhibit the company's ability to access capital and 
credit markets to address its liquidity needs; the company's ability to 
attract, motivate and retain experienced and knowledgeable personnel in key 
positions; 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 contracts may not be as profitable as 
expected or provide the expected level of revenues; cybersecurity breaches 
could result in significant costs and could harm the company's business and 
reputation; a significant disruption in the company's IT systems could 
adversely affect the company's business and reputation; 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 adverse effects 
of global economic conditions, acts of war, terrorism or natural disasters; 
contracts with U.S. governmental agencies may subject the company to audits, 
criminal penalties, sanctions and other expenses and fines; the risks of doing 
business internationally when a significant portion of the company's revenue is 
derived from international operations; 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.: 0128/9388 
 
Unisys and other Unisys products and services mentioned herein, as well as 
their respective logos, are trademarks or registered trademarks of Unisys 
Corporation. Any other brand or product 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    Ended December 31 
                                               31 
 
                                         2015     2014       2015      2014 
 
Revenue 
 
  Services                               $649.1   $688.7 * $2,605.6  $2,785.7 * 
 
  Technology                              140.8    217.1 *    409.5     570.7 * 
 
                                          789.9    905.8    3,015.1   3,356.4 
 
Costs and expenses 
 
  Cost of revenue: 
 
    Services                              592.0    573.9 *  2,306.7   2,337.8 * 
 
    Technology                             38.9     87.2 *    167.5     240.8 * 
 
                                          630.9    661.1    2,474.2   2,578.6 
 
Selling, general and administrative       130.0    144.0      519.6     554.1 
 
Research and development                   13.2     18.3       76.4      68.8 
 
                                          774.1    823.4    3,070.2   3,201.5 
 
Operating profit (loss)                    15.8     82.4     (55.1)     154.9 
 
Interest expense                            3.6      2.6       11.9       9.2 
 
Other income (expense), net                 0.2      8.8        8.2     (0.2) 
 
Income (loss) before income taxes          12.4     88.6     (58.8)     145.5 
 
Provision for income taxes                 11.1     23.9       44.4      86.2 
 
Consolidated net income (loss)              1.3     64.7    (103.2)      59.3 
 
Net income attributable to 
 
 noncontrolling interests                   0.2      2.9        6.7      12.6 
 
Net income (loss) attributable to 
Unisys 
 
 Corporation                                1.1     61.8    (109.9)      46.7 
 
Preferred stock dividend                      -        -          -       2.7 
 
Net income (loss) attributable to 
Unisys 
 
 Corporation common shareholders           $1.1    $61.8   ($109.9)     $44.0 
 
Earnings (loss) per common share 
 
 attributable to Unisys Corporation 
 
   Basic                                $   .02  $  1.24         ($    $  .89 
                                                              2.20) 
 
   Diluted                              $   .02  $  1.24   ($          $  .89 
                                                            2.20) 
 
Shares used in the per share computations 
(thousands): 
 
  Basic                                  49,937   49,689     49,905    49,280 
 
  Diluted                                50,049   49,948     49,905    49,584 
 
* Changed to conform with the 2015 
presentation. 
 
 
 
                              UNISYS CORPORATION 
 
                                SEGMENT RESULTS 
 
                                  (Unaudited) 
 
                                  (Millions) 
 
                                   Total    Eliminations   Services  Technology 
 
Three Months Ended 
 
December 31, 2015 
 
Customer revenue                   $789.9                    $649.1      $140.8 
 
Intersegment                                      ($8.4)          -         8.4 
 
Total revenue                      $789.9         ($8.4)     $649.1      $149.2 
 
Gross profit percent                20.1%                     16.2%       68.4% 
 
Operating profit percent             2.0%                      3.6%       46.8% 
 
Three Months Ended 
 
December 31, 2014 * 
 
Customer revenue                   $905.8                    $688.7      $217.1 
 
Intersegment                                     ($35.5)          -        35.5 
 
Total revenue                      $905.8        ($35.5)     $688.7      $252.6 
 
Gross profit percent                27.0%                     17.9%       58.2% 
 
Operating profit percent             9.1%                      3.4%       36.1% 
 
Year Ended 
 
December 31, 2015 
 
Customer revenue                 $3,015.1                  $2,605.6      $409.5 
 
Intersegment                                     ($49.0)        0.1        48.9 
 
Total revenue                    $3,015.1        ($49.0)   $2,605.7      $458.4 
 
Gross profit percent                17.9%                     15.8%       55.3% 
 
Operating profit (loss) percent  (1.8%)                        2.3%       24.8% 
 
Year Ended 
 
December 31, 2014 * 
 
Customer revenue                 $3,356.4                  $2,785.7      $570.7 
 
Intersegment                                     ($58.4)        0.3        58.1 
 
Total revenue                    $3,356.4        ($58.4)   $2,786.0      $628.8 
 
Gross profit percent                23.2%                     17.4%       55.3% 
 
Operating profit percent             4.6%                      3.4%       21.9% 
 
* Changed to conform with the 2015 
presentation. 
 
 
 
                            UNISYS CORPORATION 
 
                        CONSOLIDATED BALANCE SHEETS 
 
                                (Unaudited) 
 
                                (Millions) 
 
                                                December 31,  December 31, 
 
                                                    2015          2014 
 
Assets 
 
Current assets 
 
Cash and cash equivalents                             $365.2        $494.3 
 
Accounts and notes receivable, net                     581.6         619.3 
 
Inventories 
 
   Parts and finished equipment                         20.9          22.2 
 
   Work in process and materials                        22.9          24.5 
 
Deferred income taxes                                   24.1          16.4 
 
Prepaid expense and other current assets               121.0         140.6 
 
Total                                                1,135.7       1,317.3 
 
Properties                                             876.6       1,059.4 
 
Less accumulated depreciation and amortization         722.8         890.7 
 
Properties, net                                        153.8         168.7 
 
Outsourcing assets, net                                182.0         150.9 
 
Marketable software, net                               138.5         144.1 
 
Prepaid postretirement assets                           45.1          19.9 
 
Deferred income taxes                                  114.5         154.6 
 
Goodwill                                               177.4         183.9 
 
Other long-term assets                                 196.2         209.3 
 
Total                                               $2,143.2      $2,348.7 
 
Liabilities and deficit 
 
Current liabilities 
 
Notes payable                                          $65.8          $0.0 
 
Current maturities of long-term debt                    11.0           1.8 
 
Accounts payable                                       219.3         262.5 
 
Deferred revenue                                       335.1         348.3 
 
Other accrued liabilities                              339.3         385.1 
 
Total                                                  970.5         997.7 
 
Long-term debt                                         235.5         222.2 
 
Long-term postretirement liabilities                 2,111.3       2,369.9 
 
Long-term deferred revenue                             123.3         119.5 
 
Other long-term liabilities                             81.2          91.8 
 
Commitments and contingencies 
 

(MORE TO FOLLOW) Dow Jones Newswires

January 29, 2016 02:00 ET (07:00 GMT)