Unisys Announces Fourth-Quarter and Full-Year 2009

Unisys Announces Fourth-Quarter and Full-Year 2009 Financial Results

Company reports significantly improved earnings and cash flow for fourth quarter and full year of 2009

Unisys Corporation (NYSE: UIS) today reported fourth-quarter 2009 net income of US$114.5 million, or US$2.64 per diluted share. This compared with a fourth-quarter 2008 net loss of US$58.0 million, or a loss of US$1.59 per diluted share, which included a US$99.0 million pretax cost-reduction charge. Revenue in the quarter declined 5 percent to US$1.21 billion compared with revenue of US$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 centre transformation, including our server business; end-user outsourcing; and application modernisation. 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 labour model, and simplifying our operations to reduce overhead.”

Overall Fourth-Quarter Highlights
Revenue in the United States declined 14 percent to $495 million. Revenue in international markets increased 1 percent to $715 million. Foreign currency fluctuations had an approximately 9 percentage-point positive impact on international revenue in the quarter.

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
Customer revenue in the company’s services segment declined 9 percent compared with the year-ago quarter. Foreign currency fluctuations had an approximately 5 percentage-point positive impact on services revenue in the quarter. Gross profit margin in the services business improved to 18.2 percent compared with 16.9 percent a year ago, while services operating margin improved to 6.4 percent compared with 3.2 percent a year ago.

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
Unisys generated $215 million of cash from operations in the quarter compared with $138 million in the year-ago quarter. Capital expenditures in the fourth quarter of 2009 were $52 million compared with $80 million in the year-ago quarter. After capital expenditures, the company generated $163 million of free cash flow in the quarter compared with free cash flow of $58 million in the fourth quarter of 2008.

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.

ENDS

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