1st Quarter Results
April 14 2003 - 8:08AM
UK Regulatory
BW20030414002027 20030414T110811Z UTC
( BW)(UNISYS-CORP)(USY) 1st Quarter Results
Business Editors
UK REGULATORY NEWS
BLUE BELL, Pa.--(BUSINESS WIRE)--April 14, 2003--
Unisys Reports 20% Growth in First-Quarter 2003
Earnings Per Share Over Year-Ago Period
Orders Show Substantial Gains
Company Reaffirms Outlook for
Double-Digit EPS Growth for Full-Year 2003
Unisys Corporation (NYSE: UIS) today reported double-digit earnings
per share (EPS) growth for the first quarter of 2003, achieving its
targeted earnings range for the quarter. The company also reported
substantial growth in its first-quarter orders, driven by significant
long-term contract signings in business process outsourcing (BPO) and
managed infrastructure services.
Unisys reported first-quarter 2003 net income of $38.5 million, or 12
cents per share, compared to first-quarter 2002 net income of $32.7
million, or 10 cents per share, an EPS increase of 20% over the first
quarter of 2002. Revenue for the first quarter of 2003 was $1.40
billion, up from $1.36 billion of revenue a year ago. Currency had a 4
percentage-point positive impact on the company's revenue in the first
quarter, as the U.S. dollar weakened against most major currencies
worldwide.
Comments from Chairman and CEO Larry Weinbach
"We demonstrated continued solid execution in the first quarter of
2003," said Unisys Chairman and CEO Lawrence A. Weinbach. "Despite a
highly uncertain geopolitical environment, we met our earnings and
revenue targets for the quarter and achieved double-digit growth in
our earnings per share. We achieved this earnings growth even though
pension income in the first quarter of 2003 declined to approximately
$6 million from $38 million in the year-ago quarter.
"Growth in our services business this quarter was driven by strong
double-digit growth in outsourcing as we continue to expand our
strategic BPO offerings. We saw continued strong demand for our
enterprise security services, building on our work with large
organizations such as the U.S. Transportation Security Administration
and Lloyds TSB in the United Kingdom, to create secure networks. In
addition, our technology business delivered a strong profit
performance in the first quarter, driven by sales of new ClearPath
server models. Sales of our ES7000 family of high-end Intel-based
servers showed strong double-digit growth in the quarter as we benefit
from our ongoing efforts to market the significant capabilities of
these systems to both new and existing clients.
"I was particularly pleased by our new orders in the first quarter,"
Weinbach said. "We showed substantial double-digit growth in our
orders and won a number of significant BPO and managed infrastructure
services contracts. Overall, we closed more than $800 million of
long-term services business in the first quarter."
Major services contracts signed during the quarter included:
-- A 10-year business process outsourcing contract to assume
processing and administration of 2.4 million life and pensions
policies for Royal & SunAlliance in the United Kingdom;
-- A seven-year outsourcing contract with the city of Minneapolis
to provide a full range of outsourcing services to manage the
city's complete IT infrastructure, ranging from the data
center to desktops and mobile devices;
-- A three-year contract extension with the city of Chicago under
which Unisys will continue providing a full range of
outsourcing services to manage the city's distributed IT
infrastructure;
-- A three-year contract with HBOS plc, a leading financial
services firm in the United Kingdom, to provide infrastructure
support services for some 29,000 employees;
-- A four-year contract with the West Virginia Department of
Health and Human Services to become the new Medicaid fiscal
agent for the state; and
-- A five-year contract with the Board of Airline Representatives
(BARA) in Australia to implement and manage a new baggage
reconciliation system at all Australian international
airports.
"These client wins, and many others achieved during the quarter, add
to our base of annuity services business," Weinbach said. "Our ability
to win such large, value-added contracts -- particularly in the
current business environment -- speaks to the competitiveness of our
offerings and the ability of Unisys people to deliver on client
commitments."
Overall Company Highlights
Total worldwide orders showed strong double-digit growth in the first
quarter, driven by substantial order gains in international markets,
primarily Europe. U.S. orders increased slightly in the quarter over
the year-ago period. On a business segment basis, services orders
showed substantial double-digit gains while technology orders declined
in the quarter.
The company's U.S. revenue increased 17% in the first quarter to $665
million compared to $570 million in the year-ago period driven
primarily by strength in the U.S. Federal government business. Revenue
in international markets declined 7% to $734 million from $793 million
a year ago despite double-digit growth in Japan.
First-quarter 2003 gross profit and operating margins reflected lower
pension income in the quarter compared to the first quarter of 2002.
The company's overall first-quarter 2003 gross profit margin declined
to 27.7% from 28.6% in the year-ago period, while operating profit
margins declined to 5.5% from 5.8% in the year-ago quarter. Selling,
general, and administrative (SG&A) expenses were approximately flat
with first-quarter 2002 levels. SG&A expenses represented 17.4% of
revenue in the first quarter of 2003 compared to 18.0% of revenue in
the year-ago quarter.
Business Segment Highlights
Customer revenue in the company's services business increased 6% in
the first quarter over the year-ago period. Double-digit growth in
outsourcing revenue was offset by slight revenue declines in systems
integration and consulting and infrastructure services. Reflecting the
lower levels of pension income, gross profit margins in the services
business declined 3 percentage points from year-ago levels to 18.7%,
and services operating margins declined 2 percentage points from a
year ago to 3.1%.
Customer revenue in the company's technology business declined 7% in
the first quarter, reflecting lower sales of specialized equipment and
enterprise servers. Within enterprise servers, strong growth in
Intel-based ES7000 servers was offset by a single-digit revenue
decline in ClearPath systems. Reflecting a richer mix of higher-margin
ClearPath sales in the quarter, gross margins in the technology
business increased 7.5 percentage points from year-ago levels to
50.0%, and technology operating margins increased 3 percentage points
from a year ago to 11.1%.
Cash Flow and Balance Sheet Highlights
Unisys used $65 million of cash from operations in the first quarter
compared to operational cash flow of $10 million in the year-ago
quarter. The change in year-over-year cash from operations primarily
reflected lower levels of customer prepayments and payment of 2002
incentive compensation. Cash expenditures for prior restructuring
actions were $30 million in the first quarter of 2003 compared to $35
million in the first quarter of 2002.
The company spent $89 million in the first quarter on capital
expenditures, including $58 million invested in revenue-generating
projects.
During the quarter Unisys issued $300 million of 6 7/8% senior notes
due March 15, 2010. The company plans to use the proceeds for general
corporate purposes. Unisys ended the March 31, 2003 quarter with $433
million of cash on hand.
Business Outlook
"We're off to a solid start toward achieving our financial goals for
2003," Weinbach said. "While the global business environment remains
highly challenging, we are growing our earnings and revenue while
continuing to build our base of multi-year, annuity-based business.
For the second quarter of 2003, we look for earnings per share in the
14 - 17 cents range on modest revenue growth. We remain comfortable
with our previous expectation for double-digit earnings growth for
2003 overall, with full-year earnings per share in the 77 - 82 cents
range."
Conference Call
Unisys will hold a conference call today from approximately 9:15 -
10:15 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 systems integration,
outsourcing, infrastructure, server technology and consulting 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. 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. The
factors that could affect the company's future financial results are
discussed more fully in the company's periodic reports as filed with
the Securities and Exchange Commission.
RELEASE NO.: 0403/8265 (See accompanying financial information)
http://www.unisys.com/about__unisys/news_a_events/04148265.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
------------------
2003 2002
-------- --------
Revenue
Services $1,107.0 $1,049.2
Technology 291.9 313.3
-------- --------
1,398.9 1,362.5
Costs and expenses
Cost of revenue:
Services 882.5 802.4
Technology 129.3 170.8
-------- --------
1,011.8 973.2
Selling, general and
administrative 243.7 245.4
Research and development 66.8 65.1
-------- --------
1,322.3 1,283.7
-------- --------
Operating income 76.6 78.8
Interest expense 15.7 17.5
Other income
(expense), net (3.4) (12.4)
-------- --------
Income before income taxes 57.5 48.9
Provision for income taxes 19.0 16.2
-------- --------
Net income $38.5 $32.7
======== ========
Earnings per share
Basic $ .12 $ .10
======== ========
Diluted $ .12 $ .10
======== ========
Shares used in the per share
computations (thousands):
Basic 327,208 321,469
======== ========
Diluted 328,824 323,307
======== ========
UNISYS CORPORATION
SEGMENT RESULTS
(Millions)
Elimi-
Total nations Services Technology
-------- -------- -------- ----------
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%
======== ======== ========
Three Months Ended
March 31, 2002
------------------
Customer revenue $1,362.5 $1,049.2 $313.3
Intersegment ($80.7) 11.5 69.2
-------- -------- -------- --------
Total revenue $1,362.5 ($80.7) $1,060.7 $382.5
======== ======== ======== ========
Gross profit percent 28.6% 21.7% 42.5%
======== ======== ========
Operating profit
percent 5.8% 4.9% 7.7%
======== ======== ========
UNISYS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Millions)
March 31, December 31,
2003 2002
---------- ----------
Assets
Current assets
Cash and cash equivalents $433.1 $301.8
Accounts and notes receivable, net 862.7 955.6
Inventories
Parts and finished equipment 156.9 165.3
Work in process and materials 133.3 127.5
Deferred income taxes 312.3 311.3
Other current assets 97.4 84.5
---------- ----------
Total 1,995.7 1,946.0
---------- ----------
Properties 1,576.0 1,542.7
Less accumulated depreciation
and amortization 958.2 932.9
---------- ----------
Properties, net 617.8 609.8
---------- ----------
Investments at equity 111.8 111.8
Marketable software, net 322.1 311.8
Deferred income taxes 1,476.0 1,476.0
Goodwill 161.7 160.6
Other long-term assets 367.8 365.4
---------- ----------
Total $5,052.9 $4,981.4
========== ==========
Liabilities and stockholders' equity
Current liabilities
Notes payable $78.6 $77.3
Current maturities of long-term debt 2.5 4.4
Accounts payable 434.9 532.5
Other accrued liabilities 1,152.9 1,341.4
Income taxes payable 235.0 228.9
---------- ----------
Total 1,903.9 2,184.5
---------- ----------
Long-term debt 1,046.3 748.0
Accrued pension liabilities 715.1 727.7
Other long-term liabilities 486.0 465.2
Stockholders' equity
Common stock 3.3 3.3
Accumulated deficit (635.0) (673.5)
Other capital 3,775.9 3,763.1
Accumulated other comprehensive loss (2,242.6) (2,236.9)
---------- ----------
Stockholders' equity 901.6 856.0
---------- ----------
Total $5,052.9 $4,981.4
========== ==========
UNISYS CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Millions)
Three Months Ended
March 31
------------------
2003 2002
------- -------
Cash flows from operating activities
Net income $38.5 $32.7
Add (deduct) items to reconcile
net income to net cash (used for)
provided by operating activities:
Depreciation and amortization
of properties 42.2 36.0
Amortization:
Marketable software 29.7 29.7
Deferred outsourcing contract costs 7.8 3.9
(Increase) in deferred
income taxes, net (1.0) (1.5)
Decrease in receivables, net 91.9 147.6
Decrease in inventories 2.6 32.2
(Decrease) in accounts payable
and other accrued liabilities (267.8) (199.1)
Increase (decrease) in income
taxes payable 6.1 (5.8)
Increase (decrease) in other liabilities 4.5 (19.4)
(Increase) in other assets (20.3) (77.0)
Other .9 30.3
------- -------
Net cash (used for) provided by
operating activities (64.9) 9.6
------- -------
Cash flows from investing activities
Proceeds from investments 1,279.1 701.7
Purchases of investments (1,292.7) (699.1)
Investment in marketable software (40.0) (36.3)
Capital additions of properties (49.4) (39.4)
Purchases of businesses (.8)
------- -------
Net cash used for investing activities (103.8) (73.1)
------- -------
Cash flows from financing activities
Proceeds from issuance of long-term debt 293.3
Net proceeds from short-term borrowings 1.3 15.9
Proceeds from employee stock plans 6.3 7.4
Payments of long-term debt (2.4) (.5)
------- -------
Net cash provided by financing activities 298.5 22.8
------- -------
Effect of exchange rate changes on cash
and cash equivalents 1.5 (1.9)
------- -------
Increase (decrease) in cash
and cash equivalents 131.3 (42.6)
Cash and cash equivalents, beginning of
period 301.8 325.9
------- -------
Cash and cash equivalents, end of period $433.1 $283.3
======= =======
Short Name: Unisys Corp
Category Code: QRF
Sequence Number: 00003898
Time of Receipt (offset from UTC): 20030411T233155+0100
--30--tav/ny
CONTACT: Unisys
Jim Kerr, 215/986-5795
jim.kerr@unisys.com
KEYWORD: PENNYSLVANIA UNITED KINGDOM INTERNATIONAL EUROPE
INDUSTRY KEYWORD: COMPUTERS/ELECTRONICS EARNINGS
SOURCE: Unisys Corp
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