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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) April 15, 2004
- -----------------------------------------------------------------------------
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)
Item 7. Exhibits.
(c) The following exhibit is being furnished herewith:
99 News Release, dated April 15, 2004, of Unisys Corporation
Item 12. Results of Operations and Financial Condition.
On April 15, 2004, Unisys Corporation issued a news release to report
its financial results for the quarter ended March 31, 2004. The release is
furnished as Exhibit 99 hereto. The information in this Item 12 and the Exhibit
attached hereto shall not be deemed "filed" for purposes of Section 18 of the
Securities Exchange Act of 1934.
SIGNATURE
---------
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: April 15, 2004 By: /s/ Janet B. Haugen
-------------------
Janet B. Haugen
Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
-------------
Exhibit
No.
- ------
99 News Release, dated April 15, 2004, of Unisys Corporation.
News Release
UNISYS
Media Contacts:
Elizabeth Douglass, 215-986-6583 elizabeth.douglass@unisys.com
Jacqueline Lewis, 215-986-5204 jacqueline.lewis@unisys.com
Investor Contact:
Jim Kerr, 215-986-5795 jim.kerr@unisys.com
UNISYS MEETS HIGH END OF EARNINGS TARGET FOR FIRST QUARTER OF 2004
COMPANY RECONFIRMS EARNINGS GUIDANCE FOR FULL YEAR
BLUE BELL, Pa., April 15, 2004 - Unisys Corporation (NYSE: UIS) today reported
30% growth in its first-quarter 2004 earnings per share, excluding the impact
of pension accounting, over the prior-year quarter. The company also reported
a sharp improvement in cash flow from the prior year, generating $116 million
of operational cash flow compared with an operational cash usage of $65
million in the prior-year quarter.
Excluding the impact of pension accounting, Unisys reported first-quarter 2004
net income of $44.0 million, or 13 cents per diluted share, compared with
first-quarter 2003 net income of $34.2 million, or 10 cents per diluted share.
As previously announced, pension accounting will have a negative impact on the
company's reported results in 2004. The first-quarter 2004 results include
pension expense of $22.2 million, compared with pension income of $6.4 million
in the prior-year quarter. On a GAAP basis including pension accounting in
both periods, net income for the first quarter of 2004 was $28.9 million, or 9
cents per diluted share, compared with net income of $38.5 million, or 12 cents
per diluted share, in the year-ago period. Revenue for the first quarter of
2004 grew 5% to $1.46 billion from revenue of $1.40 billion in the first
quarter of 2003. Currency had a 7 percentage-point positive impact on the
company's revenue in the first quarter, reflecting a weak U.S. dollar against
most major currencies worldwide.
COMMENTS FROM CHAIRMAN AND CEO LARRY WEINBACH
"We got off to a good start in the new year by continuing our focus on
operational execution," said Unisys Chairman and CEO Lawrence A. Weinbach. "We
grew our earnings per share by 30%, excluding pension accounting, and showed
continued consistency in meeting our quarterly earnings targets. Equally
encouraging, our cash flow continued to improve. Unisys generated $16 million
of free cash flow (cash from operations less capital expenditures) in the
quarter -- an improvement of $170 million over the first quarter of 2003. This
progress reflects the focus we have placed on cash flow and higher value-added
business throughout our operations.
"In our services business, we continued to make progress in improving our
operating margin -- a key objective for 2004. Our first-quarter 2004 services
operating margin improved 120 basis points from the prior-year quarter to 4.1%,
excluding the impact of pension accounting in both years. In our technology
business, revenue grew 2% in the quarter. Sales of our ES7000 systems showed
strong double-digit growth in the quarter, and we continued to bring on new
clients such as Cox Communications, Pier 1 Imports, Safeco Insurance, and TPG
Post, the largest mail delivery organization in the Netherlands.
"We continue to work with a strong pipeline of services opportunities, and we
won several key awards in the first quarter," Weinbach said. "In outsourcing,
Unisys signed a five-year agreement with Interpay of the Netherlands with an
estimated value of $110 million for payment processing. This will allow Unisys
to establish an important new payment processing utility in continental Europe,
complementing our business process utilities in the United Kingdom and
Australia. We also won major multi-year services contracts from Avis Europe,
WMC Resources in Australia, and others. Also in the first quarter, the state
of Louisiana notified us of its intent to award Unisys a contract to provide
Medicaid administration services for the Louisiana Department of Health and
Hospitals.
"Additionally in the first quarter, Unisys was awarded a five-year agreement
with a potential value of up to $345 million with the Department of Defense's
Counterintelligence Field Activity (CIFA) to help the department develop a
system that integrates all counterintelligence activities of U.S. military
services, defense agencies, joint staff and combatant commands. The first task
award under this agreement is valued at approximately $11 million. This win
continues the strong momentum that we experienced in 2003 in our federal
government business."
Weinbach said that on an overall basis, these and other new multi-year wins
have a potential revenue of more than $850 million to Unisys over the next five
or so years. The majority of these wins were not included in orders in the
first quarter; the wins will be reflected in orders as contracts are finalized
or as task orders are awarded.
FIRST-QUARTER COMPANY HIGHLIGHTS
On a geographic basis, U.S. revenue grew 3% to $682 million. Revenue in
international markets increased 6% to $781 million, as growth in Europe and
South Pacific offset revenue declines in other international regions.
Overall orders showed double-digit declines in the quarter. Orders, excluding
outsourcing, had strong single-digit growth in the first quarter of 2004
compared with the prior year. Orders for consulting and systems integration,
infrastructure services, and technology all grew in the quarter. Outsourcing
orders, which can vary significantly from quarter to quarter due to contract
size and complexity, declined double-digits from the first quarter of 2003,
which included a very large contract with a U.K. insurance company valued at
more than $450 million. The company's pipeline of large outsourcing deals
remains strong.
Excluding the impact of pension accounting in both periods, first-quarter 2004
gross profit margin improved 20 basis points over the prior year to 27.8% while
first-quarter operating margin improved 50 basis points year-over-year to 5.5%.
On a reported basis including the impact of pension accounting in both years,
first-quarter 2004 gross margin declined from year-ago levels to 26.8% and
operating margin declined to 4.0%.
SG&A expenses, excluding the impact of pension accounting, represented 17.5% of
revenue in the first quarter of 2004, compared with 17.6% of revenue in the
year-ago quarter. Including pension expense, SG&A expenses represented 17.9%
of revenue in the quarter.
FIRST-QUARTER BUSINESS SEGMENT HIGHLIGHTS
Customer revenue in the company's services segment grew 5% in the first quarter
of 2004, driven by growth in outsourcing and in consulting and systems
integration. Excluding the impact of pension accounting in both periods,
services gross profit margin improved to 20.4% in the first quarter of 2004
compared with 18.7% in the year-ago period, while services operating margin
improved to 4.1% in the first quarter of 2004 from 2.9% in the year-ago quarter.
On a reported basis including the impact of pension accounting, gross profit
margin in the services business improved 40 basis points from year-ago levels
to 19.1% and services operating margin declined from a year ago to 2.5%.
Customer revenue in the company's technology segment grew 2% in the first
quarter, driven by growth in ES7000 enterprise servers and certain specialized
technologies. Excluding the impact of pension accounting in both periods,
technology gross margin declined to 48.4% in the first quarter of 2004 compared
with 49.6% in the year-ago quarter, while technology operating margin declined
to 9.5% compared with 9.9% in the year-ago period. On a reported basis
including the impact of pension accounting, technology gross margin declined
from year-ago levels to 48.3% and operating margin declined to 8.6%.
CASH FLOW HIGHLIGHTS
Unisys generated $116 million of cash flow from operations in the first quarter
compared with an operational cash usage of $65 million in the year-ago quarter.
The year-over-year cash flow improvement reflects the company's continued focus
on enhancing its business model to be a generator of free cash flow. Capital
expenditures in the first quarter of 2004 were $100 million, including $64
million invested in revenue-generating projects. After deducting capital
expenditures, Unisys generated $16 million of free cash flow in the first
quarter of 2004 and ended the quarter with $671 million of cash on hand.
BUSINESS OUTLOOK
"After a solid first quarter, we remain focused on achieving our strategic and
financial objectives for 2004," Weinbach said. "While the industry remains
extremely competitive, Unisys is winning in the marketplace because of the
value-added solutions we are able to bring to clients. We continue to focus on
executing our value-added strategy and delivering consistent profitable growth.
For the full year of 2004, we are reconfirming our previous outlook for mid
single-digit revenue growth, with earnings per share of about 83 - 87 cents
excluding the impact of pension accounting. In the second quarter of 2004, we
look for mid single-digit revenue growth and earnings per share of about 14 to
17 cents, excluding the impact of pension accounting."
CONFERENCE CALL
Unisys will hold a conference call today at 8:15 a.m. Eastern Time to discuss
its results. The listen-only Webcast, as well as the accompanying presentation
materials, can be accessed via a link 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 services and solutions company.
Our people combine expertise in consulting, systems integration, outsourcing,
infrastructure and server technology with precision thinking and relentless
execution to help clients, in more than 100 countries, quickly and efficiently
achieve competitive advantage. 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. Statements in
this release regarding the company's financial outlook are based in part on
the company's assumptions for the economy. 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 continue to accelerate growth in outsourcing and infrastructure
services, the company's ability to drive profitable growth in systems
integration and consulting, the degree of market acceptance of the company's
high-end enterprise servers, the company's ability to maintain tight cost
controls, the risks of doing business internationally and the potential for
infringement claims to be asserted against the company or its clients.
Statements in this release regarding the potential value of multi-year
agreements are based upon assumptions regarding future volumes of business,
which are subject to change and are not guaranteed. In addition, agreements
with governmental agencies are terminable by the government before the end of
their terms and are subject to the availability of appropriated funds.
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 income/expense and also
provides disclosure of free cash flow. These financial measures are 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. A reconciliation of these non-GAAP measures to the most
directly comparable GAAP measures, as well as disclosure of the reasons why the
company uses these measures, is included in the financial information
accompanying this release.
###
RELEASE NO: 04158404 (See accompanying financial information)
http://www.unisys.com/about__unisys/news_a_events/04158404.htm
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
(Millions, except per share data)
Three Months
Ended March 31
------------------
2004 2003
-------- --------
Revenue
Services $1,165.0 $1,107.0
Technology 297.9 291.9
-------- --------
1,462.9 1,398.9
Costs and expenses
Cost of revenue:
Services 925.7 882.5
Technology 145.7 129.3
-------- --------
1,071.4 1,011.8
Selling, general and
administrative 261.2 243.7
Research and development 71.5 66.8
-------- --------
1,404.1 1,322.3
-------- --------
Operating income 58.8 76.6
Interest expense 17.0 15.7
Other income
(expense), net 0.6 (3.4)
-------- --------
Income before income taxes 42.4 57.5
Provision for income taxes 13.5 19.0
-------- --------
Net income $28.9 $38.5
======== ========
Earnings per share
Basic $ .09 $ .12
======== ========
Diluted $ .09 $ .12
======== ========
Shares used in the per share
computations (thousands):
Basic 332,722 327,208
======== ========
Diluted 338,048 328,824
======== ========
UNISYS CORPORATION
SEGMENT RESULTS
(Millions)
Elimi-
Total nations Services Technology
-------- -------- -------- ----------
Three Months Ended
March 31, 2004
- ------------------
Customer revenue $1,462.9 $1,165.0 $297.9
Intersegment ($45.7) 4.8 40.9
-------- -------- -------- --------
Total revenue $1,462.9 ($45.7) $1,169.8 $338.8
======== ======== ======== ========
Gross profit percent 26.8% 19.1% 48.3%
======== ======== ========
Operating profit
percent 4.0% 2.5% 8.6%
======== ======== ========
Three Months Ended
March 31, 2003
- ------------------
Customer revenue $1,398.9 $1,107.0 $291.9
Intersegment ($70.0) 5.6 64.4
-------- -------- -------- --------
Total revenue $1,398.9 ($70.0) $1,112.6 $356.3
======== ======== ======== ========
Gross profit percent 27.7% 18.7% 50.0%
======== ======== ========
Operating profit
percent 5.5% 3.1% 11.1%
======== ======== ========
UNISYS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Millions)
March 31, December 31,
2004 2003
---------- ----------
Assets
Current assets
Cash and cash equivalents $671.4 $635.9
Accounts and notes receivable, net 1,002.6 1,027.8
Inventories
Parts and finished equipment 119.1 121.7
Work in process and materials 138.7 116.9
Deferred income taxes 271.4 270.0
Other current assets 111.9 85.7
---------- ----------
Total 2,315.1 2,258.0
---------- ----------
Properties 1,342.9 1,352.7
Less accumulated depreciation
and amortization 914.6 928.5
---------- ----------
Properties, net 428.3 424.2
---------- ----------
Outsourcing assets, net 522.9 477.5
Marketable software, net 332.0 332.2
Investments at equity 167.6 153.3
Prepaid pension cost 50.3 55.5
Deferred income taxes 1,384.6 1,384.6
Goodwill 176.7 177.5
Other long-term assets 195.9 211.8
---------- ----------
Total $5,573.4 $5,474.6
========== ==========
Liabilities and stockholders' equity
Current liabilities
Notes payable $28.3 $17.7
Current maturities of long-term debt 150.8 2.2
Accounts payable 522.3 513.8
Other accrued liabilities 1,311.5 1,305.7
Income taxes payable 206.1 214.1
---------- ----------
Total 2,219.0 2,053.5
---------- ----------
Long-term debt 899.8 1,048.3
Accrued pension liabilities 446.9 433.6
Other long-term liabilities 543.9 544.0
Stockholders' equity
Common stock 3.4 3.3
Accumulated deficit (385.9) (414.8)
Other capital 3,836.5 3,818.6
Accumulated other comprehensive loss (1,990.2) (2,011.9)
---------- ----------
Stockholders' equity 1,463.8 1,395.2
---------- ----------
Total $5,573.4 $5,474.6
========== ==========
UNISYS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Millions)
Three Months Ended
March 31
------------------
2004 2003
------- -------
Cash flows from operating activities
Net income $28.9 $38.5
Add (deduct) items to reconcile
net income to net cash provided
by (used for) operating
activities:
Depreciation and amortization
of properties and outsourcing assets 60.1 50.0
Amortization of marketable software 29.3 29.7
(Increase) in deferred income
taxes, net (1.4) (1.0)
Decrease in receivables, net 54.2 91.9
(Increase) decrease in inventories (19.1) 2.6
Increase (decrease) in accounts
payable and other accrued liabilities 8.2 (270.1)
(Decrease) increase in income
taxes payable (8.0) 6.1
Increase in other liabilities 6.8
(Increase) in other assets (40.3) (20.3)
Other 3.9 .9
------- -------
Net cash provided by (used for)
operating activities 115.8 (64.9)
------- -------
Cash flows from investing activities
Proceeds from investments 1,408.3 1,279.1
Purchases of investments (1,413.7) (1,292.7)
Investment in marketable software (29.0) (40.0)
Capital additions of properties
and outsourcing assets (70.7) (49.4)
Purchases of businesses (.8)
------- -------
Net cash used for investing activities (105.1) (103.8)
------- -------
Cash flows from financing activities
Net proceeds from short-term borrowings 10.6 1.3
Proceeds from employee stock plans 11.1 6.3
Payments of long-term debt (1.0) (2.4)
Proceeds from issuance of long-term debt 293.3
------- -------
Net cash provided by financing activities 20.7 298.5
------- -------
Effect of exchange rate changes on cash
and cash equivalents 4.1 1.5
------- -------
Increase in cash and cash equivalents 35.5 131.3
Cash and cash equivalents, beginning of
period 635.9 301.8
------- -------
Cash and cash equivalents, end of period $671.4 $433.1
======= =======
Reconciliation of GAAP to Non-GAAP
Financial Information
The preceding release presents information with and
without pension expense or income. Unisys believes
that this information will enhance an overall
understanding of its financial performance due to the
significant change in pension expense or income from
period to period and the non-operational nature of
pension expense or income. In addition, the release
provides disclosure of free cash flow. The company
defines free cash flow as net cash provided by
(used for) operating activities less capital
expenditures. This measure of free cash flow may not
be comparable to similarly titled measures of other
companies. Free cash flow is not intended as an
alternative measure of cash flow from operations (as
determined in accordance with GAAP). Rather, free cash
flow is presented as additional information because the
company believes it to be a useful indicator of its
ability to execute its business strategy without
reliance on additional borrowing or the use of its cash
or liquid investments. The presentation of 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.
UNISYS CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP
CONSOLIDATED STATEMENTS OF INCOME
(Millions, except per share data)
Three Months Ended
March 31, 2004
----------------------------
US GAAP Less Without
as Pension Pension
Reported Expense Expense
-------- -------- --------
Revenue $1,462.9 $1,462.9
Costs and expenses
Cost of revenue 1,071.4 ($15.5) 1,055.9
Selling, general and
administrative 261.2 (4.9) 256.3
Research and development 71.5 (1.8) 69.7
-------- -------- --------
1,404.1 (22.2) 1,381.9
-------- -------- --------
Operating income 58.8 22.2 81.0
Interest expense 17.0 17.0
Other income
(expense), net 0.6 0.6
-------- -------- --------
Income before income taxes 42.4 22.2 64.6
Provision for income taxes 13.5 7.1 20.6
-------- -------- --------
Net income $28.9 $15.1 $44.0
======== ======== ========
Diluted earnings per share $ .09 $ .04 $ .13
======== ======== ========
Three Months Ended
March 31, 2003
----------------------------
US GAAP Less Without
as Pension Pension
Reported Income Income
-------- -------- --------
Revenue $1,398.9 $1,398.9
Costs and expenses
Cost of revenue 1,011.8 $1.2 1,013.0
Selling, general and
administrative 243.7 2.0 245.7
Research and development 66.8 3.2 70.0
-------- -------- --------
1,322.3 6.4 1,328.7
-------- -------- --------
Operating income 76.6 (6.4) 70.2
Interest expense 15.7 15.7
Other income
(expense), net (3.4) (3.4)
-------- -------- --------
Income before income taxes 57.5 (6.4) 51.1
Provision for income taxes 19.0 (2.1) 16.9
-------- -------- --------
Net income $38.5 ($4.3) $34.2
======== ======== ========
Diluted earnings per share $ .12 ($ .02) $ .10
======== ======== ========
UNISYS CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP
SEGMENT RESULTS OF OPERATIONS
(Millions)
Three Months Ended
March 31, 2004
----------------------------
Less Without
As Pension Pension
Reported Expense Expense
-------- -------- --------
Services Segment
Total revenue $1,169.8 $1,169.8
Gross profit 222.9 ($15.2) 238.1
% of revenue 19.1% 20.4%
Operating income 29.2 (19.3) 48.5
% of revenue 2.5% 4.1%
Technology Segment
Total revenue $338.8 $338.8
Gross profit 163.8 (0.3) 164.1
% of revenue 48.3% 48.4%
Operating income 29.2 (2.9) 32.1
% of revenue 8.6% 9.5%
Total Company
Total revenue $1,462.9 $1,462.9
Gross profit 391.5 (15.5) 407.0
% of revenue 26.8% 27.8%
Operating income 58.8 (22.2) 81.0
% of revenue 4.0% 5.5%
Three Months Ended
March 31, 2003
----------------------------
Less Without
As Pension Pension
Reported Income Income
-------- -------- --------
Services Segment
Total revenue $1,112.6 $1,112.6
Gross profit 208.4 $0.0 208.4
% of revenue 18.7% 18.7%
Operating income 34.4 1.9 32.5
% of revenue 3.1% 2.9%
Technology Segment
Total revenue 356.3 356.3
Gross profit 178.1 1.2 176.9
% of revenue 50.0% 49.6%
Operating income 39.6 4.5 35.1
% of revenue 11.1% 9.9%
Total Company
Total revenue 1,398.9 1,398.9
Gross profit 387.1 1.2 385.9
% of revenue 27.7% 27.6%
Operating income 76.6 6.4 70.2
% of revenue 5.5% 5.0%
UNISYS CORPORATION
RECONCILIATION OF GAAP FINANCIAL MEASURES
TO NON-GAAP FINANCIAL MEASURES
(in millions of dollars)
Free cash flow is computed as follows:
Three Months Three Months
Ended 3/31/04 Ended 3/31/03
------------- -------------
Net cash provided by
operating activities $115.8 ($64.9)
Less: capital expenditures (99.7) (89.4)
------------- -------------
Free cash flow $16.1 ($154.3)
============= =============
UNISYS CORPORATION
RECONCILATION OF GAAP TO NON-GAAP
FORWARD-LOOKING ESTIMATED DILUTED EARNINGS PER SHARE
Three
Months Year
Ending Ending
6/30/2004 12/31/2004
---------- ----------
Diluted earnings per share-
on a GAAP basis .09-.12 .65-.69
Add back estimated pension expense,
net of tax .05 .18
--------- ---------
Diluted earnings per share-
on a NON-GAAP basis
(excluding pension expense) .14-.17 .83-.87
========= =========
NOTE: See section in press release entitled
"Forward-Looking Statements".