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.
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."
More information:
http://www.unisys.com/investor.
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
http://www.unisys.com.