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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) November 9, 2005
_______________________________________________________________________________
UNISYS CORPORATION
_______________________________________________________________________________
(Exact Name of Registrant as Specified in its Charter)
Delaware 1-8729 38-0387840
_______________________________________________________________________________
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
Unisys Way,
Blue Bell, Pennsylvania 19424
_______________________________________________________________________________
(Address of Principal Executive Offices) (Zip Code)
(215) 986-4011
_______________________________________________________________________________
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions (see General Instruction A.2. below):
\ \ Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
\ \ Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
\ \ Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b)
\ \ Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On November 9, 2005, Unisys Corporation issued a news release
announcing its final financial results for the quarter ended September 30, 2005.
The release is furnished as Exhibit 99 to this Current Report.
The information in this Current Report, including the Exhibit attached hereto,
shall not be deemed "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, or otherwise subject to the liabilities of
that section. The information contained herein and in the accompanying Exhibit
shall not be incorporated by reference into any registration statement or other
document filed with the Securities and Exchange Commission by Unisys
Corporation, whether before or after the date hereof, regardless of any general
incorporation language in such filing, except as shall be expressly set forth by
specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(c) The following exhibit is being furnished herewith:
99 News Release, dated November 9, 2005, of Unisys Corporation
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNISYS CORPORATION
Date: November 9, 2005 By: /s/ Janet B. Haugen
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Janet B. Haugen
Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
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Exhibit
No.
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99 News Release, dated November 9, 2005, of Unisys Corporation.
News Release
UNISYS
Media Contact: Jacqueline Lewis, 215-986-5204 jacqueline.lewis@unisys.com
Investor Contact: Jim Kerr, 215-986-5795 jim.kerr@unisys.com
UNISYS ANNOUNCES FINAL THIRD-QUARTER 2005 FINANCIAL RESULTS; COMPANY TAKES $1.6
BILLION NON-CASH CHARGE FOR A DEFERRED TAX ASSET VALUATION ALLOWANCE
COMPANY DRIVES ACTION PLAN TO REFOCUS ITS BUSINESS MODEL FOR PROFITABLE GROWTH
BLUE BELL, Pa., November 9, 2005 - Unisys Corporation (NYSE: UIS) announced
today its final third-quarter 2005 financial results. The company's
preliminary results, issued on October 18, 2005, were updated to reflect the
results of the completed review of its net deferred tax assets. This review
resulted in the company recording an additional valuation allowance of $1.57
billion, or $4.62 per share. This non-cash charge does not affect the
company's compliance with the financial covenants under its credit agreements.
"We conducted the review of our deferred tax assets and, given our recent
operating losses, have reserved against all of our deferred tax assets in the
U.S. and certain international subsidiaries," said Unisys President and CEO
Joseph W. McGrath. "As we announced on October 18, Unisys is pursuing an
aggressive series of actions to restructure its business model, focus on high-
growth markets, and reduce its cost structure. I believe the plan we have put
in place will enable us to significantly enhance our profitability over the
coming years. As we generate taxable income in the future, these deferred tax
assets could be realized over time."
Including the $1.57 billion non-cash charge, as well as the pre-tax charge of
$10.7 million related to the company's cash tender for its 8 1/8% notes due
2006, the company reported a third-quarter 2005 net loss of $1.63 billion, or
$4.78 per share. This compared with third-quarter 2004 net income of $25.2
million, or 7 cents per diluted share. The year-ago results included a net
benefit of $8.2 million, or 2 cents per diluted share, from a tax benefit net
of a charge for cost reduction actions.
After this increase in its valuation allowance, the company now has a full
valuation allowance against its deferred tax assets for all of its U.S.
operations and certain foreign subsidiaries. The increase to the valuation
allowance was due to the company's assessment of a number of factors. These
factors include its recent financial performance, its reduced 2005 financial
expectations as communicated in the company's October 18, 2005 preliminary
earnings release, and the impact over the short term of its recently announced
plan to restructure its business model by divesting non-core businesses,
reducing its cost structure, and focusing on high-growth core markets.
The company's plan to restructure its business model announced last month
involves taking actions in the following areas:
* Focused investments. The company will focus its resources on high-growth
market areas - outsourcing, open source/Linux, Microsoft solutions, and
security - delivered through a vertical industry focus. Within its technology
business, the company remains strongly committed to its ClearPath and ES7000
systems and will continue to invest in operating systems and software to drive
continuous improvements in new features and capabilities.
* Divestitures. As it concentrates its resources on the areas discussed above,
the company plans to divest non-strategic areas of the business and use the
proceeds from such asset sales or divestitures to implement cost reduction
actions, fund its core growth businesses, and pursue complementary tuck-in
acquisitions.
* Cost reduction. The company plans to rightsize its cost structure to support
its more focused business model and to improve margins. As a result of a
series of actions in services delivery, research and development, and selling,
general, and administrative areas, the company plans to reduce its headcount by
10% of its current workforce over the next year. Unisys expects to take cost
restructuring charges of approximately $250 - $300 million through 2006 for
these actions. These actions are expected to yield approximately $250 million
of annualized cost savings on a run-rate basis by the end of 2007.
* Sales and marketing. The company continues to make significant changes to
its sales and marketing programs to support its more focused model and drive
profitable order and revenue growth. In the sales area, Unisys has recently
significantly strengthened its business development skills by recruiting first-
class sales management and personnel and by implementing high-impact training
to more effectively manage relationships with large accounts and drive new
business.
* Focused Alliances. The company is focused on driving profitable growth by
expanding its activities with a select group of world-class information
technology firms. Unisys recently signed a memorandum of understanding with
NEC Corporation to negotiate a partnership to collaborate in technology
research and development, manufacturing, and solutions delivery. The alliance
would cover a number of areas of joint development and solutions delivery
activities focusing on server technology, software, integrated solutions, and
support services. Other focused alliance partners include Microsoft, Oracle,
IBM, EMC, Intel, Dell, Cisco, and SAP.
Regarding the fourth quarter of 2005, the company previously gave earnings per
share guidance, excluding pension expense and any possible impact of the
planned actions, of between 10 to 15 cents per share, which equates to
approximately $50 - $75 million of pre-tax income. The company is reiterating
this fourth-quarter 2005 pre-tax income guidance. The earnings per share
guidance assumed a tax rate of 32%. As a result of the change in the deferred
tax asset valuation allowance, the company's fourth-quarter 2005 tax rate will
change depending upon the geographic mix of income.
The company's final third-quarter 2005 financial results are discussed more
fully in its Form 10-Q filed today with the Securities and Exchange Commission.
ABOUT UNISYS
Unisys is a worldwide technology services and solutions company. Our
consultants apply Unisys expertise in consulting, systems integration,
outsourcing, infrastructure, and server technology to help our clients achieve
secure business operations. We build more secure organizations by creating
visibility into clients' business operations. Leveraging Unisys 3D Visible
Enterprise, we make visible the impact of their decisions-ahead of investments,
opportunities and risks. 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, contract values 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. In particular, the company's ability to divest non-strategic
areas of the business and to use the proceeds as planned is dependent upon the
market for these businesses and on the company's ability to sell them for an
acceptable price. In addition, the estimated charges associated with planned
cost-reduction actions are subject to change based upon the degree to which the
company generates cash, the degree to which the company's financial covenants
allow such charges, the location and length of service of the affected
employees, the number of employees who leave the company voluntarily, and other
factors. The anticipated cost savings associated with the planned headcount
reductions are subject to the risk that the company may not implement the
reductions as quickly or as fully as currently planned. The partnership with
NEC is subject to completion of definitive agreements covering the matters
outlined in the memorandum of understanding between the parties. The company's
ability to realize the deferred tax assets will depend on its ability to
generate future taxable income. Statements in this release regarding the
expected effects of the company's focused investment and sales and marketing
strategies are based on various assumptions, including assumptions regarding
market segment growth, client demand and the proper skill set of and training
for sales and marketing management and personnel, all of which are subject to
change. Other risks and uncertainties that could affect the company's future
results include general economic and business conditions; the effects of
aggressive competition in the information services and technology markets on
the company's revenues, pricing and margins and on the competitiveness of its
product and services offerings; the level of demand for the company's products
and services and the company's ability to anticipate and respond to changes in
technology and customer preferences; the company's ability to grow outsourcing
and infrastructure services and its ability to effectively and timely complete
the related solutions implementations, client transitions to the new
environment and work force and facilities rationalizations; the company's
ability to effectively address its challenging outsourcing operations through
negotiations or operationally and to fully recover the associated outsourcing
assets; the company's ability to drive profitable growth in consulting and
systems integration; the level of demand for the company's high-end enterprise
servers; the company's ability to effectively rightsize its cost structure; the
performance and capabilities of the company's alliance partners; the risks of
doing business internationally and the potential for infringement claims to be
asserted against the company or its clients. Additional discussion of these
and other factors that could affect Unisys future results is contained in its
periodic filings with the Securities and Exchange Commission. Unisys assumes
no obligation to update any forward-looking statements
PRESENTATION OF INFORMATION IN THIS PRESS RELEASE
This release presents information that excludes pension expense. This
financial measure is considered non-GAAP. Generally, a non-GAAP financial
measure is a numerical measure of a company's performance, financial position,
or cash flows where amounts are either excluded or included not in accordance
with generally accepted accounting principles. The company believes that this
information will enhance an overall understanding of its financial performance
due to the significant change in pension expense from period to period and the
non-operational nature of pension expense. The presentation of the non-GAAP
information is not meant to be considered in isolation or as a substitute for
results prepared in accordance with accounting principles generally accepted in
the United States ("GAAP"). A reconciliation of this non-GAAP measure to the
most directly comparable GAAP measure accompanies this release.
###
RELEASE NO: xxxx/xxxx (See accompanying reconciliation)
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
RECONCILATION OF GAAP TO NON-GAAP
FORWARD-LOOKING ESTIMATED PRETAX INCOME
(Millions)
Three
Months
Ending
12/31/2005
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Pretax income -
on a GAAP basis $5 - $30
Add back estimated pension expense 45
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Pretax income -
on a NON-GAAP basis
(excluding pension expense) $50 - $75
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NOTE: See section in press release entitled
"Forward-Looking Statements."