Unisys Achieves High End of Financial Guidance for Fourth-Quarter 2005; Company Reports Strong Growth in Orders and Cash Flow Over Year-Ago Period; Company Updates Progress on Repositioning Effort

Business Wire, Jan 26, 2006

BLUE BELL, Pa. -- Unisys Corporation (NYSE: UIS) today announced that it had achieved the high end of its fourth-quarter 2005 financial target range for pre-tax income excluding pension expense of $50 - $75 million. The company also announced strong growth in orders and cash flow over the prior-year quarter, and good progress in executing against the repositioning plan it outlined in October.

Unisys reported a fourth-quarter 2005 net loss of $31.1 million, or 9 cents per share, compared with a fourth-quarter 2004 net loss of $34.9 million, or 10 cents per share. The fourth-quarter 2005 results include a tax provision of $58.3 million as compared to a tax benefit of $55.0 million in the fourth-quarter of 2004. The fourth-quarter 2005 results also include pre-tax pension expense of $44.3 million, or 11 cents per share, compared with pre-tax pension expense of $23.1 million, or 5 cents per share, in the year-ago quarter. Excluding pension expense, fourth-quarter 2005 net income was $8.1 million, or 2 cents per share, compared with a net loss of $19.2 million, or a loss of 5 cents per share, in the fourth-quarter of 2004.

The fourth-quarter 2004 net loss included the following significant items:

--a pre-tax, non-cash asset impairment charge of $125.6 million, or 26 cents per share, to write off contract-related capitalized assets associated with a challenging outsourcing operation; and

--a tax benefit of $28.8 million, or 9 cents per share, principally due to favorable tax settlements.

On a pre-tax basis excluding pension expense, fourth-quarter 2005 pre-tax income was $71.5 million, which was at the high end of the company's targeted range of $50 - $75 million. This compared to a pre-tax loss of $66.8 million in the fourth-quarter of 2004.

Revenue for the fourth-quarter of 2005 increased 3% to $1.57 billion from $1.52 billion in the year-ago quarter. Currency had a 2 percentage-point negative impact on the company's revenue in the fourth-quarter, reflecting a stronger U.S. dollar against most major currencies worldwide.

For the full year of 2005, Unisys reported a net loss of $1.73 billion, or $5.09 per share, compared to full-year 2004 net income of $38.6 million, or 11 cents per diluted share. The full-year 2005 results included pre-tax pension expense of $181.1 million, or 47 cents per share, compared with pre-tax pension expense of $93.6 million, or 19 cents per share, in 2004. Excluding the impact of pension expense in both periods, 2005 net loss was $1.57 billion, or $4.62 per share, compared with 2004 net income of $102.2 million, or 30 cents per share. The 2005 net loss included the following items:

--an increase in the valuation allowance of $1.57 billion, or $4.62 per share, related to the company's net deferred tax assets;

--a pre-tax charge of $10.7 million, or 2 cents per share, related to a cash tender for the company's 8 1/8% notes due 2006.

Significant items included in the 2004 net income include:

--the asset impairment pre-tax charge of $125.6 million, or 26 cents per share;

--a pre-tax cost reduction charge of $82.0 million, or 18 cents per share;

--a tax benefit of $97.0 million, or 29 cents per share, related to favorable tax settlements.

Revenue for the full-year of 2005 declined 1% to $5.76 billion from revenue of $5.82 billion in 2004. Currency had a 1 percentage-point positive impact on the company's revenue for the full year of 2005.

Comments from President and CEO Joseph W. McGrath

"Unisys employees turned in a solid performance this quarter," said Joseph W. McGrath, Unisys president and chief executive officer. "We achieved our financial objectives and showed strong improvement in operating profitability and free cash flow over the year-ago quarter. Orders also showed double-digit growth over the year-ago quarter, as we closed a number of significant services and technology contracts during the quarter."

"Equally important, we are making good progress in executing against the repositioning plan that we announced in October," McGrath said. "The plan is intended to tightly focus Unisys on large, high-growth areas of the market and drive order and revenue growth through enhanced sales and marketing programs. As part of the repositioning effort, we plan to divest non-core businesses, reduce our cost base to reflect our more focused business model, and reduce our global headcount by about 10% over the next year."

"While we have much more work to do, we have already taken several positive steps toward executing against our new, more focused business model," McGrath said. "As we implement more actions going forward, we look for these efforts to enhance our margins and profitability."

During the fourth-quarter the company:

--Began the process of pooling and training its global services delivery workforce around the company's focused areas of growth - outsourcing, open source/Linux, Microsoft solutions, security, and real-time ClearPath and ES7000 infrastructure solutions; the new "integrated competency" organization was launched in January;