Unisys Corp. Reports Operating Results (10-Q)

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Oct 30, 2009
Unisys Corp. (UIS, Financial) filed Quarterly Report for the period ended 2009-09-30.

Unisys is a worldwide technology services and solutions company. Unisys consultants apply Unisys expertise in consulting systems integration outsourcing infrastructure and server technology to help our clients achieve secure business operations. The company builds more secure organizations by creating visibility into clients' business operations. Leveraging the Unisys 3D Visible Enterprise approach we make visible the impact of their decisions--ahead of investments opportunities and risks. Unisys Corp. has a market cap of $10.81 billion; its shares were traded at around $29.18 with a P/E ratio of 2918 and P/S ratio of 2.2.

Highlight of Business Operations:

The company reported income before income taxes for the nine months ended

September 30, 2009 of $140.0 million compared with income of $15.8 million in

2008. The provision for income taxes was $58.4 million in the first nine

months of 2009 compared with a provision of $72.5 million in the year-ago

period. Included in the tax provision for the nine months ended September 30,

2009 was a U.S. refundable credit of $8.3 million, a foreign tax refund of

$2.7 million related to a 2008 refund claim and a benefit related to a prior

period adjustment of $5.0 million. Included in the tax provision for the nine

months ended September 30, 2008 was a $5.1 million benefit related to prior

years' intercompany royalties and a U.S. refundable credit of $4.1 million.



Elimi-

Total nations Services Technology

- - - -

Three Months Ended

September 30, 2009

-

Customer revenue $1,159.6 $1,006.0 $ 153.6

Intersegment - $ (33.2) 1.7 31.5

- - - -

Total revenue $1,159.6 $ (33.2) $1,007.7 $ 185.1

= = = =

Gross profit percent 26.4% 19.7% 55.2%

= = =

Operating income percent 10.2% 7.7% 21.2%

= = =

Three Months Ended

September 30, 2008

-

Customer revenue $1,312.4 $1,152.1 $ 160.3

Intersegment - $ (67.5) 4.0 63.5

- - - -

Total revenue $1,312.4 $ (67.5) $1,156.1 $ 223.8

= = = =

Gross profit percent 22.2% 17.6% 47.5%

= = =

Operating income percent 2.9% 3.1% 11.0%

= = =



Elimi-

Total nations Services Technology

- - - -

Nine Months Ended

September 30, 2009

-

Customer revenue $3,388.2 $3,019.8 $ 368.4

Intersegment - $(118.4) 5.0 113.4

- - - -

Total revenue $3,388.2 $(118.4) $3,024.8 $ 481.8

= = = =

Gross profit percent 23.6% 19.0% 43.8%

= = =

Operating income percent 6.4% 6.1% 2.8%

= = =

Nine Months Ended

September 30, 2008

-

Customer revenue $3,953.7 $3,486.2 $ 467.5

Intersegment - $(162.2) 9.4 152.8

- - - -

Total revenue $3,953.7 $(162.2) $3,495.6 $ 620.3

= = = =

Gross profit percent 22.5% 18.4% 43.4%

= = =

Operating income percent 2.2% 2.9% 3.1%

= = =



During the nine months ended September 30, 2009, cash provided by operations

was $181.8 million compared with cash provided of $116.4 million for the nine

months ended September 30, 2008. Cash expenditures for the nine months ended

September 30, 2009 related to cost-reduction actions (which are included in

operating activities) were approximately $56.2 million compared with $49.0

million for the prior-year period. Cash expenditures for prior year cost-

reduction actions are expected to be approximately $12.0 million for the

remainder of 2009, resulting in an expected cash expenditure of approximately

$68.2 million in 2009 compared with $60.4 million in 2008.



Cash used for investing activities for the nine months ended September 30, 2009

was $231.7 million compared with cash usage of $226.4 million during the nine

months ended September 30, 2008. Items affecting cash used for investing

activities were the following: Net proceeds from investments were $1.9 million

for the nine months ended September 30, 2009 compared with net purchases of

$9.8 million in the prior-year period. Proceeds from investments and purchases

of investments represent derivative financial instruments used to manage the

company's currency exposure to market risks from changes in foreign currency

exchange rates. The amount of proceeds and purchases of investments has

declined significantly from last year, principally reflecting the fact that in

the fourth quarter of 2008, the company capitalized certain intercompany

balances for foreign subsidiaries which reduced the need for these derivatives.

During the nine months ended September 30, 2009, the company used $82.5

million of cash to collateralize letters of credit. In addition, in the

current nine month period, the investment in marketable software was $43.7

million compared with $65.9 million in the year-ago period, capital additions

of properties were $32.1 million in 2009 compared with $51.8 million in 2008

and capital additions of outsourcing assets were $73.4 million in 2009

compared with $96.6 million in 2008.



On July 31, 2009, the company completed offers to exchange its 6 7/8% senior

notes due 2010 (the 2010 Notes), its 8% senior notes due 2012 (the 2012 Notes),

its 8 1/2% senior notes due 2015 (the 2015 Notes) and its 12 1/2% senior notes

due 2016 (the 2016 Notes) in private placements for new 12 3/4% senior secured

notes due 2014 (the First Lien Notes), new 14 1/4% senior secured notes due 2015

(the Second Lien Notes and, together with First Lien Notes, the New Secured

Notes), shares of the company's common stock and cash. On that date, the

company issued approximately $385.0 million aggregate principal amount of First

Lien Notes, approximately $246.6 million aggregate principal amount of Second

Lien Notes and approximately 5.2 million shares of common stock and paid $30.0

million in cash in exchange for approximately $235.1 million aggregate

principal amount of 2010 Notes, approximately $331.9 million aggregate

principal amount of 2012 Notes, approximately $134.0 million aggregate

principal amount of 2015 Notes, and approximately $59.4 million aggregate

principal amount of 2016 Notes. The New Secured Notes are guaranteed by Unisys

Holding Corporation, a wholly-owned Delaware corporation that directly or

indirectly holds the shares of substantially all of the company's foreign

subsidiaries, and by certain of the company's other current and future U.S.

subsidiaries. The First Lien Notes and Second Lien Notes are secured by first-

priority liens and second priority liens, respectively, (in each case, subject

to permitted prior liens) by substantially all of the company's assets, except

(i) accounts receivable that are subject to one or more receivables facilities,

(ii) real estate located outside the U.S., (iii) cash or cash equivalents

securing reimbursement obligations under letters of credit or surety bonds and

(iv) certain other excluded assets. The company recognized a net gain of $.5

million on the exchange in "Other income (expense), net" in the quarter ended

September 30, 2009. As a result of the exchange, annual interest expense will

increase by approximately $23 million.



Read the The complete ReportUIS is in the portfolios of Charles Brandes of Brandes Investment.