- 16 April 2004 12:03
Unisys strengthens management team with appointment of new managing director for Australia-New Zealand
Please note, Unisys' first quarter announcement follows beneath Mike Ettling's appointment announcement. The full Unisys financial statement is available on request, or can be found at the following link: www.unisys.com/about__unisys/news_a_events/04158404.htm.
Sydney, 16 April 2004 - Unisys has appointed Mike Ettling to the position of Managing Director, Australia and New Zealand. Based in Sydney, Mr Ettling will provide senior leadership and direction across operations within the two countries.
Mr Ettling joins a newly constituted Asia Pacific management team built by Andrew Barkla, Vice President and General Manager Asia Pacific, over the past nine months. In addition to his regional management role, Mr Barkla also managed the Australian-New Zealand operations during this period, as well as the continued transition of the company to becoming a services business. IT services now contribute 90% of revenues in Asia Pacific, with Australia-New Zealand contributing about half the region’s revenue.
“Mike’s broad experience in the UK, working in senior management positions for several of the world’s leading technology companies, will prove invaluable in his new role with Unisys,” commented Andrew Barkla. “Unisys is a services-led, technology enabled business. Mike’s experience in IT services and outsourcing will continue to drive the evolution and success of Unisys as a services company.”
As the new Managing Director, Mr Ettling will work closely with Unisys clients across five main vertical market sectors-financial services, public sector, transportation, telecommunications and media, and commercial.
“Our first quarter has seen a solid performance in the Australia-New Zealand cluster,” comments Mr Ettling. “Highlights include winning an ITO contract with WMC Resources in Australia, and a contract with ASB in New Zealand for infrastructure management services.
“Our infrastructure business performed well in Australia and New Zealand and we continue to see both business process and IT outsourcing opportunities, particularly in Australia.
“Our focus will continue across all five vertical markets. The first quarter has seen Unisys make significant investments in our public sector and financial services practices, and we have launched a new solution for the telecommunications sector, called Communications Ensemble.
“In the public sector, we continue the roll out of the Web services internet network for the New South Wales Department of Education and Training and we have also boosted our management strength with the appointment earlier in the quarter of Dr Michael Lisle-Williams as Managing Partner, Public Sector. We are also boosting our team in Canberra and have similar plans for Wellington.
“In financial services we see continuing opportunities in the areas of risk management and security, as well as outsourcing. Reputation risk - driven partly by regulatory pressure - is now firmly on the agendas of many boards in the financial services sector. Unisys has particular expertise in providing solutions that help manage risk. Under John Billington, the new Managing Partner for Financial Services, we will be focusing on risk management and wealth creation solutions in this market.”
Prior to joining Unisys, Mr Ettling was the Board Director of UK-listed technology infrastructure outsourcing services company, Synstar International, where he was responsible for that company’s UK and German operations. Mr Ettling’s leadership resulted in Synstar being well positioned in the IT managed services industry.
Before joining Synstar, Mr Ettling held a number of senior positions at EDS in the UK, with responsibilities spread across Europe and other countries.
Born in South Africa, Mr Ettling holds a Masters in Finance from the London Business School and is a graduate of the University of Witwatersrand in South Africa.
Unisys Meets High End of Earnings Target for First Quarter of 2004
Company Reconfirms Earnings Guidance for Full Year
SYDNEY, 16 April 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 organisation 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 finalised 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 specialised 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."
About Unisys 3D Visible Enterprise Unisys, together with our clients, is building and delivering the vision of the future for IT and business services. Unisys systems rely on a proprietary methodology called 3D Visible Enterprise which looks at every facet of a company, providing insight into cause-effect relationships between vision, operations and the IT systems that support them.
About Unisys Asia Pacific Unisys Asia Pacific helps clients eliminate business and IT complexity providing specialised services delivered by trusted consultants. Drawing on a history of industry innovation and expertise, Unisys Asia Pacific delivers services and solutions through subsidiaries in Australia, New Zealand, China, Hong Kong, Korea, Malaysia, The Philippines, Singapore, Taiwan and Thailand and through distributors or resellers in other countries in the region. For more information, visit www.unisys.com.au .
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 .
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